Simple Truths that Prepare Your Child for a Happy & Prosperous Life
It’s great to be financially literate. It’s necessary in order to create wealth. Is it sufficient? Ahhh…. Unfortunately, it’s not. Take the families in the top 20% wealth bracket. Out of 5 kids in that wealth bracket, 2 are going to fall out of it. Is it because they lack financial literacy? Presumably, wealthy families can buy financial literacy. They can hire people who will help them manage their money. So, we need something else. Something outside the realm of finance – namely, psychology. To be precise, it comes from teaching certain character traits, behaviors and values. Let’s look at each of these in turn.
If you’d like to create (and keep) wealth, you need certain character traits that parents can help their children develop early (around 3 years of age). They include patience and self-control. They also include critical beliefs that parents can emphasize over and over again, for example “there are some things that we JUST NEED TO DO.” Meaning, we are not going to have a discussion over it, or expect a magical whiff of inspiration to carry us on its wings. We brush our teeth, put away toys, go to school, do our homework, and so on. There are some things we just need to do.
There are certain critical beliefs and behaviors that need to be developed. Coping skills and ability to deal with criticism come to mind. It’s impossible to create and run a business without being criticized. If you would like your child to grow up and prosper, teach them not to be devastated by any passing remark. Teach them resilience skills.
Family values that are friendly to creating wealth (and happiness, we will speak about that a little later) are both discussed and modeled. If you call every wealthy person “a crook” or “a miser”, it’s not going to do much good to declare that being prosperous is acceptable. If you spend everything that you earn, then giving lectures on the benefits of saving and investing is fruitless. If you don’t involve your child in purchasing decisions, they will not have a safe “lab” to learn how to make day-to-day financial decisions. And teaching them a class at school will not replace that, no matter how much we’d hope for that to happen.
Finally, let’s talk about happiness. There is a ton of research that shows that happier people achieve more financial success. And it’s not just financial success – they have better, supportive relationships, better mental health, and even physical health and longevity. Research by Barbara Fredrickson found the link between happiness and long-term success and well-being. This link works as follows: happy moments that we experience build lasting resources, a buffer that protects us in trying times. This gives us positive reserves to be resilient. It helps us stay in the game. You and I have enough experience to know that staying in the game is half the battle, whether we speak about achievement or dealing with people.
We all want the best for our children, and we have the right to define that “best” as we deem necessary. My grandmother, who was a doctor, defined it as health. She would often tell me that “as long as you have your health, you have everything.” My parents defined it as education. They would often tell me that I was expected to complete a graduate degree, and that I was expected to understand and appreciate art and music (I do all that). As a parent, I respect these family values, but I added a few of my own. I would like my child to be happy and wealthy. I’d like her to have great relationships. I’d like her to have solid cognitive skills (cognitive flexibility, self-control, ability to focus, executive function). I’d like her to have powerful coping skills. This might sound to you as a long list. But these are easy to develop. In my experience, everything that my family focused on, came to be. Everything that I focus on for my child is coming to life, too.