5 Things Wealthy Parents Teach Their Kids That the Middle Class Might Not
Written by
Dawn Allcot
Edited by
Amen Oyiboke
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It’s often said, especially in the United States, that the rich get richer. It’s obviously easier to build wealth if you already have money to invest, a financial education and successful parents who can guide you.
For instance, Amazon may not exist today if Jeff Bezos’ parents’ had not shelled out close to $250,000 in start-up capital so he could launch the online bookstore in his garage, as widely reported by multiple sources. But it wasn’t just their cash that gave the young entrepreneur a leg up. In an article published by People, Bezos referred to his parents as “loving and supportive.”
Besides start-up capital and a safety net that enables people with more money to take bigger risks, what else do wealthy parents give their children that most middle-class parents don’t?
Real-Life Lessons on the Importance of Earning
While middle-class families may offer children an allowance to teach the basics of saving and compound interest, wealthy families emphasize the importance of earning.
“We don’t recommend that wealthy families just give an allowance — especially if the kids aren’t earning it in any way,” said Brian Weiner, founder of the Family Office Resource Group.
Taryn Pumphrey, president of Ledger Lift, agreed, describing how one local retail business owner she worked with involved her children in the family business.
“Rather than simply giving allowances, she tied their earnings to specific business tasks like inventory counting or organizing receipts, teaching both financial literacy and business operations simultaneously,” she said.
How To View Money as a Tool
Wealthy families often have neutral conversations about money, which can alleviate stress and help children view money as a tool, rather than the end goal.
“As a financial advisor working with wealthy families, I’ve noticed they teach kids to view money as a tool for creating value rather than just something to spend,” said Jonathan Gerber, president of RVW Wealth.
Investing vs. Saving
Hand-in-hand with this philosophy, children start to learn the difference between using money as an asset to generate more revenue, versus buying things that don’t hold their value or generate income.
Weiner pointed out that children can begin investing as early as elementary school, which is when he opened a brokerage account for his son.
“I asked him what the basic necessities are that he thinks people need. He said ‘food, shelter, [health], and entertainment,’ [to] which I agreed. I told him to find companies operating in those industries and buy stock in [the] ones he feels most interested in and comfortable with … While he had some wins and some losses, he is learning about how the market works,” Weiner said.
Pumphrey agreed: “This hands-on experience with investing often starts much earlier in wealthy households compared to middle-class families who might focus primarily on saving.”
Taxes
With investments come the inevitability of taxes. Wealthy families don’t keep their kids in the dark about taxes and how to minimize tax liabilities.
“I’ve helped my son learn, for example, that every time he sells a stock that he doesn’t own for at least 12 months, he’s going to have taxes that need to be paid on it,” Weiner said. “It’s really important for kids to know that what you earn is not ultimately what you take home.”
Entrepreneurship
Most importantly, the experts agreed that teaching entrepreneurship is crucial to show kids how to grow wealth.
“It’s never too early,” Weiner said. “Start as soon as you can and as young as you can. Help them realize that they can provide a service or a product that people need and that they can earn money for doing that.”
Likewise, Gerber shared his own experience as a parent. “When my 12-year-old wanted a new bike, instead of buying it outright, I helped him create a small dog-walking business to earn it, teaching him about profit margins and customer service along the way,” he said.
These endeavors, especially if young entrepreneurs begin to scale their business by hiring other teens to help, can also teach valuable lessons about growing wealth through business ownership rather than just personal service, Pumphrey said.
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