Will you be teaching children or students what it takes to build wealth this year? What will you teach them or encourage them to do?
Think back to your time growing up. You probably can point to an event or a set of experiences that greatly influenced how you manage finances today. Recollections such as these were discussed extensively in the The Millionaire Next Door and The Millionaire Mind. Successful, financially independent Americans recounted childhood or early work experiences that impacted how they achieved financial independence.
Below is a question we asked participants in one of our latest studies on wealth accumulation…and a lesson plan based on their responses.
What experience do you WISH YOU HAD while growing up or in high school that would have helped prepare you to manage your household’s finances and/or build wealth today?
1. Responsibility, working, earning an income
I wish I had participated in more paid opportunities because they would have taught me the value of hard work/labor and the respect deserved of money.
– Male, 49, Chemical Engineer; household income: $170,000; net worth: $500,000.
I wish I had a job when in high school so that I could have gotten the experience of earning my own money rather than relying on an allowance. This would have given me some practical experience in earning wages, paying taxes, etc. early on instead of waiting until college.
– Male, 31, Programmer; household income: $60,000; net worth: $114,000
2. Saving and general financial management skills
I wish my parents had taught me more about saving money and not just handed me money whenever I wanted it so that I learned the value of a dollar.
– Female, 30, Attorney; household income: $130,000; net worth: $65,000.
How to budget, how to save, how to determine how much to save, how to balance large debts…
– Female, 32, Teacher; household income: $65,000; net worth: -$120,000.
3. Understanding the importance of retirement savings
I wish I learned more about the various types of retirement accounts, how to plan for retirement, and why it is so important to begin at an early age.
– Male, 32, Air Traffic Controller; household income: $75,000; net worth: $10,000.
4. An education in investing
I wish I had a lesson in investing, I didn’t understand that it was an option. My parents talked about cash, savings and that was it.
– Female, 46, Marketing Strategist; household income: $55,000; net worth: $350,000.
I wish that I had learned how to invest in stocks/mutual funds at a much earlier age.
– Male, 49, Sales Representative; household income: $150,000; net worth: $800,000
In addition to financial management behaviors, there are clear sets of experiences that can influence wealth accumulation, regardless of age and income. These range from receiving financial management mentoring to discussing potential career opportunities throughout one’s time growing up. Data Points measures these experiences scientifically and uses them to predict one’s ability to build wealth over time, while also providing recommendations for improving how to save, invest, and plan for the future.
Understanding the past, as well as how one manages finances today, can greatly influence what changes need to be made to guarantee a successful financial future. Likewise, taking an objective look back can help determine how to teach and mentor those who are just starting out on their path to financial success.