When I travel the country speaking to high school and college students about exactly what they need to do to become financially successful in life, I like to begin my presentation by asking the same three questions:
“How many want to be financially successful in life?”
“How many think they will be financially successful in life?”
Almost every time I ask the first two questions, every hand rises in the air.
Then I ask the magic third question:
“How many have taken a course in school on how to be financially successful in life?”
Not one hand rises in the air, ever.
Clearly every student wants to be successful and thinks they will be successful, but none have been taught how.
Not by their parents and not by their teachers.
Not only are there no courses on basic financial success principles, but there are no structured courses teaching basic financial literacy.
Is it any wonder that most Americans live paycheck to paycheck?
That most Americans accumulate more debt than assets?
That many Americans lose their homes when they lose their job?
Is it any wonder that most Americans cannot afford college for their children and that student loan debt is now the largest type of consumer debt?
We are raising our children to be financially illiterate and that leads to financial struggles later in life
And these habits put them on autopilot for financial success as adults.
In my five-year study of the daily habits of the rich and the poor, I uncovered specific habits that were common among those struggling financially.
Below are 16 ways parents pre-program their children for poverty, extracted from my bestselling books, Rich Habits, Rich Kids and Rich Habits Poor Habits:
- Not Reading to Learn – 63% of self-made millionaires in my study were required by their parents to read to learn. Their parents made them read two or more books every month on topics such as: history, biographies of successful people, science, self-improvement, etc. 97% of the poor in my study said their parents never made them read to learn and thus never forged this Rich Habit.
- No Dreams or Goals – 82% of the self-made millionaires had a clear vision of who they wanted to be. They had dreams and goals that motivated them to forge Rich Habits which enabled them to realize their dreams and achieve their goals. Conversely, 97% of the poor had no dreams or goals. They lacked a clear vision of who they wanted to be in the future.
- Failure to Experiment – Parents who push their children to experiment with different activities during childhood, increase the likelihood that their children will discover an innate talent or something they enjoy doing, which could lead to a lifelong vocation. The Boy Scouts and Girl Scouts institutionalize experimentation through their badge system. This enables scouts to explore things that interest them so that they can learn valuable marketable skills.
- Eating Unhealthy Food – 21% of the wealthy in my study were overweight vs. 66% of the poor. 78% of self-made millionaires ate little to no junk food (less than calories a day). 97% of the poor consistently ate too much junk food (more than 300 calories a day). Children eat what their parents eat. If their parents are heating junk food, their kids will eat junk food. Junk food includes fast food.
- Do-Nothing Habits – 63% of the wealthy in my study spent less than 1 hour per day on recreational Internet use. 74% of the poor spent more than an hour a day in the Internet. 67% of the wealthy watched less than 1 hour of TV per day vs 23% of the poor. 9% of the wealthy watched reality TV shows vs. 78% of the poor. Besides, TV and the Internet, time wasting habits also include Snapchat, Instagram, video games, etc.
- Absentee Parents – 83% of the wealthy in my study attended back to school night for their kids vs. 13% of the poor. 29% of the wealthy had one or more children who made the honor roll vs. 4% of the poor. When parents are engaged with teachers and the school. they become accountability partners to their children.
- No Daily Self-Improvement – The drive to improve was a hallmark of the self-made millionaires in my study. Daily self-improvement was a habit forged in their childhood years thanks to their parents. The poor in my study said their parents did not make self-improvement a priority growing up.
- Poor Money Habits – 73% of the wealthy in my study had smart money habits, long before they became wealthy. 95% of the poor did not. Many were, in fact, financially illiterate, as were their parents. This is the main reason so many who struggle financially, fall into the credit debt trap as young adults. They just don’t know any better.
- Toxic Friends – 79% of the wealthy surrounded themselves with like-minded, upbeat individuals who were pursuing similar dreams and goals. Only 16% of the poor said they did this. Habits spread like a virus throughout your social network. How well do you know the friends of your children? Do they possess the traits or habits you are trying to instill in your children?
- Anti-Rich Bias – 78% of the wealthy in my study said they believed the wealthy were good, hardworking and persistent individuals. created their own good luck through hard work, persistence, daily practice, determination and goal achievement. 95% of the poor believed the rich were not good, hardworking people. 52% of the poor believed the rich were rich primarily because of random good luck. They did not believe the pursuit of wealth is what made that luck possible.
- Victim Mindset – 79% of the wealthy in my study said that they believed they were personally responsible for their success or failure in life. 82% of the poor believed they were poor because of factors outside their control, such as Wall Street, banks, the rich, government policies, circumstances they were born into, etc. Are you raising your children to take individual responsibility for their life circumstances? Do you, as a parent, constantly blame rich people, employers, the government, Wall Street or society for your poverty? Do your children see poverty as dictated by fate, which only leads to a feeling of hopelessness and helplessness?
- Entitlement Mindset – Children must be taught to work for the things they want, such as cell phones, video games, toys, etc. When they are given everything they want by their parents, it’s easy for kids to develop an Entitlement Mindset. having a Victim Mindset leads to an Entitlement Mindset, especially when you look to government to solve your financial problems. The adult world punishes those with an Entitlement Mindset.
- Lack of Consistent Exercise – 95% of self-made millionaires in my study exercised aerobically 30 minutes or more per day, four days a week. Only 23% of poor did the same. Studies have shown that daily aerobic exercise improves brain health, brain efficiency and IQ. Children mimic the habits of their parents. Do you, as a parent, exercise daily? Do you make your children exercise daily?
- No Success Mentors – Almost all of the self-made millionaires in my study had some success mentor in life. Success mentors put you on the fast track for success. They teach you what to do and what not to do. They also teach you the habits you’ll need in order to succeed in life. The mentors of my millionaires were one of their parents (56%), a career mentor (24%), a teacher (8%) or someone else (4%). Parents are often the only shot most have at having a success mentor in life. Only 4% of the poor said that they had a success mentor in their lives. Are you a success mentor for your child? Do you actively seek success mentors for your children? You can find success mentors in the Boy Scouts/Girl Scouts, Big Brothers and other similar organizations. Are your children part of any mentoring organizations within your community?
- Negative Mindset – 63% of the wealthy in my study had a positive, optimistic, upbeat mindset. 94% of the poor had a negative, pessimistic, hopeless mindset. Studies, such as the Broaden and Build Study, have shown that a negative mental outlook inhibits and depresses the ability to focus, creativity and certain other brain functions. The expression of emotions and your positive or negative outlook on life are habits. Children pick up the habits of their parents. Are your Parent emotions and mindset negative or positive?
Thanks to something called mirror neurons, children are hardwired to mimic the habits of their parents.
Good or bad, they will mimic your habits.
If those habits are good, your children will mimic your good habits.
If those habits are bad, they will mimic your bad habits.
According to a Brown University Study, in which the habits of 50,000 families were analyzed, the author of the study, Dr. Pressman, found that most of our adult habits were forged by the age of nine.
In another study by Nicholas Christakis, he found that habits spread throughout our social network.
Parents are a big part of that social network.
Since children spend most of their early lives with their parents, these two studies show the critical role parents play in the habits all of us forge in life.
We don’t have a wealth gap in this country, we have a habit gap. We don’t have income inequality, we have habit inequality
If parents have too many Poor Habits, what’s the remedy?
Teachers can fill the void.
The school system can step in and instill in their students good habits.
Habit education must, therefore, become a structured part of our education system.
Furthermore, high schools should be teaching very specific financial education courses to students beginning in freshman year:
- How to Pay Bills and Balance a Checkbook (freshman year)
- How to Save and Invest Your Savings (sophomore year)
- How Insurance Works – Auto Insurance, Home Owners Insurance, Health Insurance (junior year)
- Understanding Student Loans (junior year)
- Personal Income Tax Fundamentals (senior year)
Schools teach what they are required to teach and nothing more.
It’s unfortunate, but few financial education courses are a requirement in most schools.
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