Do you see patterns in your spending, saving, and investing behaviors that mirror those of your parents? Or, have you changed because, perhaps, their behaviors didn’t provide the best illustration of how to successfully manage finances?
What types of parental experiences are positively related to a child’s future net worth? What sets of experiences would lead to someone accumulating more than his peers, regardless of income, age, and what what gifted to him? In examining the book content and analyzing the data from The Millionaire Next Door, The Millionaire Mind, and Stop Acting Rich, Data Points has identified the sets of experiences and behaviors that are significantly related to one’s net worth.
One of the important factors, not surprisingly, is the impact of parents’ money behavior on an individual’s future net worth. The same characteristics that make someone a millionaire next door, if demonstrated as a parent, can impact a child’s ability to accumulate wealth, independent of age, income, and percentage of wealth that he may have inherited. In other words, regardless of any transfer of wealth to an adult child, parents’ behavior while the child was growing up impacted the child’s net worth as an adult. This is a pattern of good money mentoring, not just one or two silver bullets, that include demonstrating and teaching good money management skills and living below one’s means.
Having financially responsible and thoughtful caregivers isn’t the only piece that matters: we build wealth based on a large set of experiences and behaviors: from how we set goals to how we interact with others. Likewise, we know that critical incidents, those (mostly) negative and perhaps shocking experiences, can also greatly impact one’s ability to accumulate wealth, too: they can alter a trajectory from under accumulation to responsible financial management.