Let’s face it, being wealthy would be pretty fantastic.
Student debt worries? Gone. Increasing rent or big mortgage commitments? Gone (and replaced with a snazzy mansion). Missing bills or defaulting on loans? A thing of the past.
But as a young person growing up in a diverse society, how do you climb the money ladder?
Here are seven things that wealthy people teach their kids about earning more money.
1. Make your own luck
To get lucky, you need to:
- Be in the right place
- At the right time, and, importantly
- Know how to seize upon the opportunity presented
With greater education, knowledge, experience and discipline you start to make your own luck. More opportunities present themselves, and you will have a better chance of seizing them.
Sure, the lotto might seem like a great way to earn big, but the probability of actually winning is incredibly low. According to an SBS interview with mathematician Professor Peter Taylor, even if you bought 18 tickets, your chances of winning are still over 2 million to one.
So rather than spending your $10 every week on lotto tickets, why not put it somewhere which can return some growth in the future?
2. Get educated
A good education could land you a higher paying job.
However, a scattershot approach to education – gaining lots of bits of paperwork saying you’re smart – isn’t necessarily the way to go. You need specific knowledge, writes author of ‘How Rich People Think’ Steve Siebold.
“Many world-class performers have little formal education, and have amassed their wealth through the acquisition and subsequent sale of specific knowledge,” he states.
With a high level of knowledge in specific industries, you are more likely to climb the ladder.
3. Earn early
At a younger age, many of the rich will focus on earning.
The earlier you start earning, the more lifetime wealth you will accumulate, and the earlier you will get specific industry / business knowledge.
And remember, the earlier you start working, the earlier your superannuation starts to grow, helping to set you up for retirement.
4. Research success
Wealth will come from success, but do you know how to be successful? Look in the libraries of self-made millionaires and the chances are you’ll see plenty of educational books on how to further yourself.
Rich people want their children to be successful too. That means it’s important they teach their kids to put down the gossip magazines and pick up some books on how to make smart decisions about money.
5. Take risks
We all know the old adage, ‘you have to bet big to win big.’
Taking risks can be scary stuff, but it could also increase the chances of reaping greater rewards.
Just look at Donald Trump. According to Forbes, the guy has filed for corporate bankruptcy at least four times, but always bounces back. Today he is worth US$4 billion!
Obviously, you’ll need to manage risks – we’re not suggesting you mortgage the house or put bankruptcy on a pedestal. Rather, taking small steps outside your comfort zone can help develop a greater appetite for taking risks and discovering new opportunities.
6. Learn from mistakes
You need to remember the bigger picture. Earning big isn’t about individual, instant profits and losses – it’s about your achievements over your entire life. Thomas Edison is credited as saying (to paraphrase) that he never ‘failed’. Rather he successfully discovered hundreds of ways that things did not work.
If you decide to take a risk and it fails, it’s going to hurt a bit. But what you learn from that error could mean you don’t make it a second time. The next time you embark on a new plan, you’re more likely to gain the rewards.
7. Invest in the future
In addition to investing in education and experience, one of the big ways wealthy people save money for the future is by investing, and investing over a long period of time.
Historically, share and property indexes have outpaced wage growth and inflation, meaning those with invested assets are more likely to get richer over time than those without investments.
It actually serves to widen the gap between the asset-rich and the asset-poor members of society, so if you are in a position to save and invest, you might want to consider it. Superannuation is one of the longest investments you’ll ever make, and it pays to keep an eye on the way your super is being invested and whether it aligns with your risk appetite.
Virgin Super has two product offerings: Virgin Super Essentials, for those who prefer a pre-mixed investment strategy and Virgin Super Plus, for those who prefer to have more control over their investment options. It is important to remember that any investment comes with risk, so speak to a financial advisor before making such investment decisions.
What will teach your children to help them earn big?