The Millionaire Next Door is one of those books that really opens your eyes on how to manage your finances. The authors Thomas Stanley and William Danko are college professors who have conducted extensive research on millionaires and their lifestyles. The most important lesson to learn is that most millionaires do not live flashy lifestyles like those you see on reality TV. In fact, a good portion of them live in the same neighborhood as you and drive regular cars. Here are five key lessons millionaires teach their children.
1. Don’t tell your children that you are rich/wealthy. Children that are told they are wealthy are more prone to spend money on lavish lifestyles. They think ” hey! we are rich, we can afford it” without realizing how difficult it is to earn money. These children grow up feeling entitled and spoiled, they become accustomed to a certain standard of living and when they become adults, they aim to maintain the lifestyle even when their income does not support it.
2. No matter how wealthy you are, teach your children discipline and frugality. Financial habits are picked up from parents. If you’re a spendthrift, it’s very likely your children will also be excessive spenders. Teach them to work hard and not waste. Teach them the value of a dollar and the effort that goes into earning it.