A new study report on Money suggests that when parents instill good (firm) family values in their children, there is a chance of financial success, no matter the family’s income or class level.
Perhaps this is because the right family values can create smart financial habits that build wealth. Bad family values, on the other hand, could breed bad habits – which could lead to financial troubles down the line.
Financial Planning and Investment expert Aaron Hatch says;
“It is important to realize that just as positive financial habits can be passed down to generations, so too can negative financial habits,”
“Many people learn the value of money – or other important lessons about money and finances – from grandparents who may have learned those values or habits from their grandparents.”
They believe financial habits and family values can span across multiple generations, with each generation reinforcing the same values and habits for the next.
Family values that can make you rich
1. Trust and Honesty
Many families believe talking honestly and openly about finances is a taboo.
“Generally, people would rather have a root canal than talk openly about money or their financial issues,”
But, not being honest and transparent can lead to dire consequences for some families that want to pass down their wealth to their heirs. According to TWG, a “lack of trust and communication are the single most important issues that undermine successful transfer of family wealth.”
Therefore they suggest that if you want future generations to retain the family wealth or become wealthy in the future, you and your family members should start talking about money openly and honestly to build trust.
There’s no way around being frugal, it is a crucial part of saving money and growing wealth. By teaching your kids and family members how to economize and live below their means, your family can build a sizable savings nest egg that could one day morph into a large family fortune.
Practicing frugality also teaches family members and children how to avoid situations that can destroy wealth. For example, people who are frugal stick to their budgets and won’t pull out a credit card for items they can’t afford. By keeping the plastic in their pockets, they’re avoiding credit card interest that can chip away at their hard-earned savings.
3. Hard Work
Expanding your means is just as important as living below them if you want to get rich. But expanding your means often requires hard work.
In his book “Rich Kids: How to Raise Our Children to Be Happy and Successful in Life,” author Tom Corley writes that expanding your means can involve creating more income sources, such as starting a part-time business or developing a new, marketable skill that can lead to higher earnings.
To teach this family value to your kids, have them perform chores to earn an allowance. And if they’re old enough, encourage them to take on jobs outside of the house. Since learning new money-making skills takes time, teach your children when they’re young so they have more time to grow their wealth.
When it comes to money, you can only do so much on your own. Recognizing this limitation, wealthy people often create teams of people who can provide financial advice and counsel, Hatch says.
“[They] recognize that it is hard to stay 100 percent objective when you are making decisions about their own money since money can often be a very emotional subject. Likewise, financially successful families also realize that they need to work together in order to convert their income into wealth.”
Creativity has always been the key to great inventions and it’s an important trait for social interactions, as well as identifying what you’re passionate about. Passion for work is a key part of success and can help unlock this enthusiasm in your kids and relatives by supporting creative activities that can generate money.
“The key is to be able to engage in some lifelong creativity activity that also pays you enough money to help support a family,” Corley writes. “You can’t be successful in life if you don’t have a passion for what you do for a living, and you can only find your passion in life by pursuing creative activities.”
6. Higher Education
Attaining higher learning in a good University gives a better chance at financial freedom. According to a 2013 College Board data, the median earnings of bachelor’s degree recipients without an advanced degree are 65% higher than secondary school graduates’ median earnings. With this statistic in mind, you and your family should value higher education.
They remind us that attending the University is not just about getting a fancy piece of paper that will help you secure a job; it’s about investing in yourself for the long term. You’ll develop new skills, make new contacts and join a large network of professionals – all of which can help you expand your means and make more money.
By inculcating the act of giving or helping others as part of your family values, it can create an improved sense of well-being. Knowing that you sacrificed something such as time, finances or property in order to help others in need can give you a sense of purpose in life or work, and inner satisfaction. It helps you and your family members achieve financial goals.