You may not be rich, but if you know some of the strategies rich people use to set their kids up for success, you may be inclined to follow along. The greatest thing about some of these strategies is that you don’t even have to be rich to do them.
If you have kids or are planning to have kids, take a minute to digest some of these tips and implement them for the best outcome.
8 Ways Rich People Set Up Their Kids for Success
Research has shown that rich people spend a lot of time instilling certain mindsets into their kids to ensure they have what they need to be successful in life. Here are just a few of them:
1. Be Mindful of Where You Live
If you’re concerned about your kids being in the best schools and getting a top-notch education, where you live is essential. Schools are generally funded locally, and while it may not always seem fair, a school’s location plays a significant part in how much funding it gets. Better neighborhoods mean better schools. While it may seem impossible to buy the nicest house in the best of neighborhoods, it may be more reasonable to buy the cheapest home in the best neighborhood you can afford.
Still, buying into the right neighborhood may cost a pretty penny over time. In the end, your child gets an excellent education and is surrounded by peers that will help with the growth mindset needed for success.
2. Set High Expectations
Rich people encourage their children to set high expectations to meet. While some successful people set unreasonably high expectations for themselves, they’re not afraid to think big and encourage their children to do the same.
3. Be Prepared To Solve Problems
Any business owner will tell you they formed their business by solving a problem. Countless problems exist throughout this world, and when you can figure out how to solve any of them, you can build a successful business. Rich people don’t just stop at a tiny problem; they gravitate to multiple significant problems. In their eyes, the bigger and more significant the problems you solve, the more chances of your success. People are compensated accordingly based on the complexity of the problem they solve.
4. Don’t Be Afraid To Be Uncomfortable
Solving big problems is nothing to take lightly; it puts you in the spotlight. That’s why rich people also help their kids understand that being uncomfortable is okay. Successful people know that in order to reach their highest potential, they have to get out of their comfort zone. Never stay in a box. You must be willing to put yourself out there regardless of how it feels. It’s okay to be afraid to reach those new levels of success; in fact, it’s natural to be afraid. Just don’t let the fear keep you from going farther.
5. Know There’s An Abundance of Money
When you help your kids see money through the eyes of abundance and freedom, it can help them realize the unlimited supply available to them. Once they realize that money is not a scarce resource, it becomes more about how they can go about acquiring more of it. Rich people raise their kids, reminding them that opportunity is all around them and money is everywhere. They just have to work, solve the necessary problems, and keep the right mindset to cash in on the abundance of money that’s available.
6. Never Overspend
Believe it or not, while wealthy parents show their kids how to make more money, they also encourage them to live frugally. Just because you make a lot of money doesn’t mean you have to be spending a lot of it. Discipline is the key! Disciplined people won’t squander what they earn. People with millions of dollars have been known to lose it all because of their lack of discipline (professional athletes that go broke, for example).
Helping your kids to understand the importance of budgeting early on will go a long way, as it’ll help them become more disciplined with money, even when they’re at their most successful level.
7. Invest
Rich people are investors, not spenders. They invest the money they make to make even more money. For many of us, investing can be a scary thing. But it doesn’t have to be. You can stick to what you know or what you’re interested in. You can work with a financial advisor to help guide your decision-making or use financial apps geared toward individuals who may not know much about investing. Investing today can help ensure you have what you need for tomorrow.
8. Start a 529 Plan
Here’s a surefire way to set your kids up for success even if you’re not rich. A 529 plan is an investment account you can start even before your kids are born. It’s tax-advantaged and designed to pay for your child’s educational costs. The funds can be used whether they go to private school for early education or college. The best part is the funds don’t have to go unused just because your child later decides they don’t want to go to college because starting in 2024, up to $35K can be rolled into a Roth Individual Retirement Account (IRA) if it’s not used for education.
Because of this new addition, a 529 plan is a win-win for your child, whether they attend college or not. One, using the money in your 529 plan will help your child afford the education to further their goals in life. Two, should they decide school is not for them or receive full scholarships, it’s still a win because now you can set them up early for retirement.
Here are some stipulations for rolling the funds from your 529 plan into a Roth IRA:
- The Roth IRA must be set up for the beneficiary of the 529 plan (the student) and not the account owner
- No more than $35,000 per beneficiary can be moved from the 529 plan
- The 529 plan must have been in place for at least 15 years
- Contributions to the 529 plan within the last five years are not eligible to be rolled into the Roth IRA
The Bottom Line
You don’t have to be rich to set your child up for success as rich parents do; you just have to know their trade secrets to instill them in your child. Consider these steps and a 529 plan to give your child the edge they need to garner much success in life.
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