Everyone wants to be rich and wealthy. Given a choice, not even a single person in this world would like to remain poor. But, the reality is totally different. Hardly, 5 percent of the people are able to lead a financially independent life. The other 95 percent keep striving hard their whole life to be rich and wealthy. One of the foremost reasons that may be attributed to this is that the subject of money is not taught in schools and colleges. All the people learn about money by observing their parents and the way the money matters are dealt with in their respective homes. The lessons people learn during their upbringing have a major role to play in deciding whether they become rich or poor. Generally, the lessons taught by the rich to their kids are different to those taught by the poor. As a result, in most of the cases the children to rich continue to be rich and the children of poor continue to be poor. There are certain lessons which if learnt and practiced honestly would make you rich and wealthy. These are the lessons which generally the wealthy and successful people teach their kids knowingly or unknowingly.
1) Understand the Importance of money and how it works:
One of the main obstacles to becoming rich and wealthy is the lack of understanding the importance of money and how it works. Its not good to continue being slaves for a few thousand bucks your whole life, when you can be rich and wealthy. All self made millionaires and rich people understand the importance of money. They teach their children that money is important to have options and a better quality of life. They consider money as a tool and a good thing. Money gives freedom to live their life the way they want. It gives them the ability to help others. They understand that money is a tool that will help them navigate through their life. Poor people blame misfortunes for the lack of money in their lives and attribute a concept of negativity to money.It’s because even if they get money they face more problems, which they don’t know how to tackle. The poor rarely talk about money with their kids. They teach their children that money is not that important in life to justify their conditions. It adversely affects their children in the long run because they grow in a financial driven world without caring properly about their personal finances. Therefore, its important to learn the importance of money and how it works as early as possible in life.
2) Understand the difference between an asset and a liability:
Assets bring money to you whereas liabilities are those that take away money from you. For example: if you buy a house that brings rent every month, then it is an asset for you.It is because it generates cash flow for you every month in the form of rent. On the other hand, if you buy a car for yourself then it is a liability for you. Its because it takes away money from you in the form of monthly installments and maintenance costs. The rich teach their children to create assets and avoid liabilities. This way they can create assets that generate cash flows on a recurring basis and avoid negative cash flow generating liabilities.
This is one of the reasons why two people getting the same amount of salary may be rich or poor depending on their spending patterns and whether they create assets or liabilities for themselves .Suppose, we have two persons who earn $ 8000 every month. They have different spending patterns. On receiving salary one of them pays bills and then spends rest of the money shopping and buying clothes, costly phone and dining at fancy restaurants. He buys a nice house, nice car for himself by taking loans. He spends money on things that make him look good and rich. Actually, he ends up being on a lot of debt. He has little or no savings and a lot of debt in the form of credit card, car loan, home loan, personal loans etc. He is stuck in the vicious circle of huge debt and spends his life paying debts. Now, let’s see the second person. He also receives the same salary of $ 8000 every month. He doesn’t go out on every weekend to shopping and dining. He only buys the clothes or things which he really needs. This person doesn’t buy a nice car or a nice house. He lives on a $ 5000 monthly budget and saves $ 3000 every month. By the end of year he has a savings of $ 36000. He invests this $ 36000 in assets that generates cash flow for him on a recurring basis .As a result; he is able to save $40000 next year. He continues to invest more amount year on year in the same way. After a decade these two individuals getting the same amount of salary would be at two different financial positions because of their spending habits. Therefore, its important for you to learn the difference between the assets and liabilities and invest in assets that create recurring income for you.
3) Learning how to manage money:
It is a very crucial skill. The rich teach their children about planning and managing their household expenses. They familiarize their children about living expenses. They teach their children about making budgets and living by the budget. The poor parents rarely talk about money with their children. They do not have any planned budget. Their children therefore remain ignorant about planning and managing living expenses. This adversely affects their spending patterns in future and they do not budget their expenses.
As a result they fail to learn about managing money. Its a very important learnable skill. If you don’t learn to manage money, you will end up squandering whatever you earn.
4) Learning different ways to earn money:
Wealthy parents teach their children different ways of earning money. They let their children do normal different jobs. It’s because this will help them in learning different ways in which money can be earned. One way is doing normal job or freelancing where the time is exchanged for money. The other way is to make a system or a business to generate money by leveraging other people time and efforts. One may also create online system for leveraging their time by creating passive income sources. Other ways may be creating or acquiring assets that generate cash.It’s important to teach your kids different ways of earning money so that they do not remain stuck to only one way of earning money.
5) Focus on increasing your income instead of lowering expenses:
One of the most valuable skills which you can teach your children is how to generate more income.“It takes the same amount of effort of work to barely survive or make a fortune.”This might seem peculiar to some of you but it is true.Poor people are always focused on lowering expenses instead of increasing their income. Instead rich focus all their attention on the amount of money flowing in their life.If you increase your income you will have lots of money left at your disposal.
6) Learning to create daily productive habits:
One of the valuable skills that you can teach your children is how to create daily productive habits for themselves. Rich parents focus on imbibing and developing productive habits in their children. Once you realize that how valuable they can be, your life will change. It normally takes 21 days to create a new habit. Once you are through those 21 days that habit becomes part of you. You may create habit of reading, exercising etc. in such way.The rich use the power of habit to get ahead in life where as the poor is habituated to toxic habits which keep them poor.The rich chooses wealth creation actions as their daily habits while poor pick negative routines. Be careful about what type of habits you instill in your children.
“Children learn from what you do, not what you teach them to do.”
7) Knowledge is more valuable than money:
Invest in yourself, it pays the best dividend. It has little to do whether you go to school or read books. It means that the more the knowledge and skills you have the more valuable you are to the world. The world rewards people who are valuable because such people bring value for others. The concept of becoming valuable is not taught to the poor. Poor people are less likely to teach their children to read because they themselves don’t read. There are many ways of becoming valuable from filling a position in a company to creating a product or service that people use. You are showcasing your talent to the entire world. The more valuable you are, the richer you will become. The only way to become valuable is through increase of knowledge and skills. Learn to become better and continue it consistently so that you are able to see noticeable differences. It takes 10000 hours to master anything.A person with knowledge will always be able to make money because he brings value to the marketplace.
8) Make money work for you:
This is centre piece information of how to get rich. Time is exchanged by poor people for money whereas the rich use the money they earn to generate more money. There are big differences in finances for these two classes of people. Most People remain poor because they think they need large amount of money to invest. The rich keep on looking for the smallest drop of passive income to add to their earnings. It’s not about amount; it’s about freeing up your time.You can start a business with less than 100 dollars if you know what you are doing.Once you have generated the money use someone to do the things which you used to do. Keeps that business running as you focus on growing and other things.The concept of passive income and knowing how to use money to generate more money is the foundation of any wealth building strategy.
9) Having patience:
We must work consistently every day and wait with patience for the bigger results. Wealth and happiness do not fall in the instant category. Poor people expect to get rich quick.Even if they get huge sum of money, they are not educated enough to know what to do with that money and they blow it away. Rich teach their children to think of long term and to grow money.Think of life in terms of long patches of time like 5 years, 10 years, 15 years, 29 years etc.”Most People over estimate what they can do in 1 year and underestimate what they can do in 10 years.
10) Learn to solve problems:
The best way to make money is to help solve problems. The world is full of problems waiting to be solved. The quick money lies in solving these problems. Poor people take care of something that someone needs done. For example: delivery of newspapers, washing the car, answering the phone etc. It’s like doing the same things over and over again. Rich people don’t do repetitive work because it can easily be outsourced. Theyfocus on the big problems. The bigger the problem you fix, the richer you get.Elon Musk, Mark Zuckerberg, Jeff Bezos they all got super rich by solving problems for humanity and creating products and services to serve the people.So, if you want to get rich quickly, then solve a problem which is affecting large number of people.
