The kids of millionaires typically have advantages in life, including money lessons learned early on. Here are five money lessons millionaires teach their kids early.
Check Out: I’m a Financial Advisor: My Wealthiest Clients All Do These 3 Things
Read Next: 6 Subtly Genius Moves All Wealthy People Make With Their Money
Delayed Gratification
Investments, saving and compound interest are all financial topics that can fall under delayed gratification. Time and patience are often key to building wealth. So instead of buying your kid everything they could possibly want right now, consider having conversations about saving toward a bigger purchase.
“The earlier kids make saving (and investing) a habit, the more their money has a chance to grow,” said Victor Wang, CEO of Stockpile.
The important part is starting the overall money conversations early.
Learn More: 4 Secrets of the Truly Wealthy, According To Dave Ramsey
Passive Income
Passive income investments run the gamut, from marketing affiliates to buying rental properties, but ultimately, they extend to what frees up your time to make your life easier — while still making money.
Like the saying “Time is money,” millionaires understand the value of their time. Passive income can help open up time in one’s day through, say, hiring a housecleaner or finding a babysitter, which in turn improves their standard of living.
Avoid Lifestyle Creep
While a comfortable lifestyle might feel synonymous with millionaires, avoiding lifestyle creep — when your standard of living increases along with your discretionary income — is essential to long-term security and success.
This could include investing in your home instead of buying all the latest gadgets or taking several five-star hotel trips a year. After all, just because you can buy something doesn’t mean you should.
Christine Landis of Peacock Parent avoids living a “reactionary life.” “We don’t say yes to everything — we protect our time and energy like the valuable resources that they are,” she said.
“A family can become millionaires whether they earn $150K per year or $750K per year, if they save properly,” added Paul Feinstein, CEO of Audent Global Asset Management. “But either of those households could also live in ruinous debt. It always comes down to spending less than you earn.”
Profit and Loss
Tracking income and expenses becomes crucial later on in life, but kids can learn the basics of profit and loss early on through a task as simple as a lemonade stand.
“The family can act as the ‘bank’ and front the kids the $20 to invest in the supplies for the lemonade or treats they sell,” said Landis. “And the kids can determine pricing based on how many cups of lemonade they think they will sell and to pay back the ‘bank’ and also make a profit.”
Entrepreneurial Thinking
Thinking bigger and taking calculated risks can mean greater potential, ultimately gaining you more than you could otherwise. For many millionaires, an entrepreneurial spirit guides them toward an array of money-making paths.
So whether it’s turning hobbies into lucrative side hustles or launching an online store, kids of millionaires understand the endless possibilities in building a business from the ground up.
More From GOBankingRates
- 9 Costco Items Retirees Need To Buy Ahead of Fall
- 5 Ways 'Loud Budgeting' Can Make You Richer, According to Vivian Tu
- 5 Clever Ways Retirees Are Earning Up to $1K Per Month From Home
- 9 Low-Effort Ways to Make Passive Income (You Can Start This Week)
This article originally appeared on GOBankingRates.com: 5 Money Lessons Millionaires Teach Their Kids Early
