Lots of online influencers have written blog posts, created videos, podcast, Facebook posts and Twitter (X) threads about the difference between rich parents and the not so well off parents. Here’s a summary of what they say broke parents never teach their children that rich parents do:
- Assets vs. Liabilities
While many people do not distinguish between assets and liabilities, leading to financial drain, the well-off invest in income-generating assets. They understand that wealth is built through strategic investments in assets. - Entitlement vs. Performance
Well-off parents stress that wealth must be earned through performance, not taken for granted. They teach their children that success comes from hard work and effective actions rather than inheritance alone. - Viewing Money as a Tool
The wealthy see money as a tool to build more wealth, investing in assets such as stocks and real estate. In contrast, those less well-off might have a negative perception of money and misuse it, missing opportunities for financial growth. - Financial Literacy
Financial education is a cornerstone in well-off families. They equip their children with the knowledge to make sound financial decisions. On the other hand, poor financial literacy among less well-off parents means they cannot pass on these crucial skills. - Importance of Networking
Building a robust social network is a lesson taught by successful parents. Networking opens doors to opportunities and helps their children navigate high-income social circles, which is pivotal for career and financial advancement. - Understanding Debt
Wealthy individuals distinguish between good debt and bad debt. They use good debt to invest and generate income, whereas bad debt leads to financial strain. This knowledge helps their children leverage debt wisely to build wealth. - Applying the Pareto Principle
The 80/20 rule is another principle Well-off parents instil in their children. They emphasize focusing on the critical 20% of activities that yield 80% of the results, optimizing efficiency and productivity. - Prioritizing Knowledge Over Money
Investment in education and skills is valued more than mere accumulation of money. Well-off parents believe that knowledge and expertise drive success and that wealth follows as a result of providing value. - Solving Problems to Generate Wealth
Wealth creation is tied to solving problems. Well-off parents teach their children that by addressing significant issues, they can create solutions that people are willing to pay for, thus increasing their potential earnings. - True Nature of Money
Money does not define character but rather amplifies it. Well-off parents teach their children to use money responsibly, for the betterment of their community and the world, recognizing that it can solve but also create problems. - Increasing Income vs. Reducing Expenses
Instead of focusing solely on cutting costs, Well-off families prioritize increasing income through investments. This approach, coupled with the power of compounding, significantly enhances wealth over time. - Making Money Work for You
Wealthy individuals invest to save time, in contrast to those who trade time for money. By investing in assets, Well-off families teach their children how to make money work for them, generating ongoing revenue and building long-term wealth.
All the influencers say that these principles, when ingrained from a young age, set the foundation for financial success and help children of Well-off families continue the cycle of wealth generation.
Now, of course these rich parents mostly had money to start off with, most likely from their rich parents. My point here is it is difficult to do any of the above without a load of starting capital.
How then can a person who has none of the above get into a position to move towards riches?
Well, it all depends how you define ‘rich’, if you envisage rich as having so much money to buy whatever you lay your eyes on as you coast along life’s highway then that is very difficult to achieve.
No matter how much you visualise having hundreds of thousands, or even millions of pounds in the bank or living in that mansion, it’s 99.99% of the time just not a viable solution for anyone.
If you define ‘rich’ as being able to live your ideal life, you know the one you have dreamt about for years or maybe even decades then that is an entirely different proposition.
If you look around this website, you will see that my wife Ann and I have done just that. It all started with a 4-Step Process (although at the time I didn’t know that it existed). Learn more about this process right here in my guide the 4-Step Process Guide. Let me know what you think.
