16 Ways Parents Pre-Program Their Children To Be Poor

Tip of the Morning

 

 

 

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.

Parents who are success mentors to their children, teach them specific good daily habits. 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:

  1. 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. 
  2. Gambling – 6% of the wealthy in my study played the lottery vs. 77% of the poor. Worse, the poor admitted to playing the lottery regularly. According to Nicolas Christakas Habits (Yale University researcher), habits spread like a virus within your social network. Children are constantly observing what their parents do. If parents gamble, their children will very likely gamble as adults.
  3. 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.
  4. Failure to ExperimentParents 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.
  5. 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.
  6. 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.
  7. 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.
  8. 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.
  9. 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.
  10. 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?
  11. 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.
  12. 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?
  13. 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.
  14. 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?
  15. 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?
  16. 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.

Mentored For Success – The Mentors Behind Self-Made Millionaires

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Mentors are critical to breaking free of poverty or a middle-class upbringing. Almost 92% of the self-made millionaires in my study had some mentor that they could point to who helped them become rich. These mentors taught them new habits, new beliefs, how the rich think, how the rich set and achieve goals, processes that lead to success and tricks that put helped put them on the fast track of success.

Who were their mentors? [Read more…]

16 Qualities of a Good Mentor

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Finding a mentor in life is the fast track to success. In my Rich Habits Study, 93% of the self-made millionaires who accumulated the most wealth in the shortest amount of time said that they had a mentor who taught them what to do and what not to do. A good mentor takes the “risk” out of success.

So, what qualities should you look for in a mentor? A good mentor should have the following 16 qualities:

  1. They have an infectious positive outlook – Good mentors have a positive, optimistic outlook on life that infects you like a virus.
  2. They are patient – Good mentors are patient. They understand that the skills and knowledge they are sharing with you will take time to digest.
  3. They are likeable – You need to like your mentor. A good mentor is someone you like being around.
  4. They are generous with their time – Good mentors devote time to your development.
  5. They hold you accountable – Good mentors always circle back with you and make sure fulfill your role as a mentee. If they ask you to do something, a good mentor will follow-up to make sure you did what they asked you to do.
  6. They are demanding – Good mentors push you outside your comfort zone. They understand that growth occurs outside the comfort zone.
  7. They are considerate – Good mentors understand that sometimes life goes wrong and they give you space to deal with life’s problems. They are sympathetic (to a point).
  8. They are responsive – Good mentors respond to your needs and provide you with the tools and information to help you develop the skills and knowledge to grow.
  9. They are empathetic – Good mentors understand your pain. Growth is painful and they get it.
  10. They have good habits – Good mentors have their own set of good habits that they are happy to share with you.
  11. They are humble – Good mentors check their egos at the door. Their humility creates a comfortable learning environment.
  12. They are good communicators – Good mentors are able to communicate complex concepts in a language you understand and are in constant communication with you.
  13. They are process-driven – Good mentors have processes that work and can be learned.
  14. They are accessible – Good mentors are available. They are never too busy to invest their time in you.
  15. They are inspiring – Good mentors pump you up, motivate you and inspire you to push yourself.
  16. They are successful – Good mentors have a proven track record. They are successful in their field.

3 Types of Rich People

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I’ve been studying the wealthy and the poor for nearly 12 years now. One of the things that I’ve noticed is that almost 100% of the time the media misinforms its readers with respect to the definition of wealth. So, I thought I’d clear it up for you using the same language used by the media.

Three Classes of Rich:

  1. Affluent – These are individuals with net assets (assets minus liabilities) of between $100,000 – $1 million.
  2. High Net Worth – These are individuals with net assets (assets minus liabilities) of between $1 million and $3 million.
  3. Ultra High Net Worth – These are the individuals with net assets (assets minus liabilities) $3 million and above.

In my Rich Habits Study only Ultra High Net Worth individuals made the cut. But, in addition to having an Ultra High Net worth, in my study they needed to also have an annual gross income of $160,000 or more. Below is the two-part test every Ultra High Net Worth individual needed to satisfy in order to meet my definition of Rich:

  1. Net Assets of $3.2 million or more AND
  2. Gross Income of $160,000 or more.

Some might argue that those individuals who meet the High Net Worth category of between $1 million and $3 million are “Rich” as well. And you might be right. In order for the High Net Worth individuals to be considered “Rich”, however, they would very likely need to live what I call a minimalist lifestyle. A minimalist lifestyle is one where the individual either lives below their means or lives within their means. Examples always work best so let me give you one. Let’s say you have net assets totaling $2 million. And let’s say that that $2 million is sitting in an annuity or some other type of guaranteed investment kicking off 4% of guaranteed annual taxable income, or $80,000. If you are in the 20% Federal and State tax bracket that leaves you with $64,000. If on this $64,000 you are able to do the things you want to do in life and, at the same time, meet all of your living expenses then you are “Rich”. You don’t need to work in order to earn any income because you have more than enough income to live the life you want to live.

Now, you might also argue that 4% is too conservative a number and that it is possible to earn more income than 4% on your $2 million. This is called chasing yield and whenever you chase yield you must take on additional risk. The downside of finding an investment that pays more than 4% is the potential that that investment might return less than 4% during downturns in the economy or the investment marketplace. There are plenty of investment options out there that guarantee between 4% – 5% return without taking on any unnecessary risk. But there are not many investments out there that guarantee more than 5%. (Disclosure: my advice to you would be to find a qualified professional who can help you meet your investment goals.)

Those who are truly wealthy do not need to “work”. Their net assets generate all the income they need to live the “rich life”. The rich life means you can do as you please with your time, live the life you want to live and not have to worry about working to earn income in order to live that life.

 

I Spent 5 Years Studying Rich and Poor People, and Here’s the Most Important Things I Learned About Succeeding

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When I began my study of the rich and the poor I wanted to know the answer to one question: why are some people rich and other people poor? Five years later and over 350 interviews later, I finished my research. It wasn’t an easy thing to do. I had grouped 144 questions into 20 categories, and asked over 350 millionaires and poor people these questions. It took me five years because this wasn’t just a survey I mailed out. Surveys have very limited value. I either met with these people or spoke with them over the phone. As a result, I was able to gather far more data. If you do the math, I asked 51,984 questions of the rich and the poor. That’s a lot of questions!

But it was worth it. I learned an enormous amount about dealing with mistakes and disappointment. I gained insight into what it takes to overcome the hurdles, obstacles, rejections and the emotional downs everyone who pursues success experiences. More importantly, I learned a lot about success and failure. I learned, in particular, why some never quit on their dream and why some do. [Read more…]

I Spent 5 Years Studying Rich People, and Here are the 6 Best Pieces of Advice I Can Give You About Making More Money

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There are smart ways to try and make more money and their are the not so smart ways. Thanks to my five year study on rich people, I was able to uncover some of the best ways to make extra money. Here are six of the best pieces of advice I found from my study on making more money: [Read more…]

I Spent 5 Years Studying Rich People, and Here are the 20 Best Pieces of Advice I Can Give You About Achieving Success

Tom Corley boats - crop

When I began my study of the rich and the poor, I wanted to know the answer to one question: why are some people rich and other people poor? Five years later and over 350 interviews later, I finished my research. It wasn’t an easy thing to do. I asked each person 144 questions. It took me five years because this wasn’t a survey I mailed out. I either met with these people or spoke with them over the phone. Surveys have limited value, but actual interviews allow you to dig deeper and uncover much more valuable information. If you do the math, I asked 51,984 questions of the rich and the poor. That’s a lot of questions!

But it was worth it. What I discovered is beginning to catch the attention of the world and I am confident my discoveries will help change the lives of millions living in poverty or stuck in the middle-class. Here’s 20 of the best pieces of advice I can give you about achieving success: [Read more…]

I Spent 5 Years Studying Rich and Poor People and I Would Like to Share What Separates The Rich From the Poor

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When I began my study of the rich and the poor I wanted to know the answer to one question: why are some people rich and other people poor? Five years later and over 350 interviews later, I finished my research. It wasn’t an easy thing to do. I had grouped 144 questions into 20 categories, and asked over 350 millionaires and poor people these questions. It took me five years because this wasn’t a survey I mailed out. I either met with these people or spoke with them over the phone. If you do the math, I asked 51,984 questions of the rich and the poor. That’s a lot of questions!

But it was worth it. What I discovered is beginning to catch the attention of the world and I am confident my discoveries will help change the lives of millions living in poverty and help those stuck in the middle-class improve their financial lives. I’d like to share two ideologies that I uncovered in my research that separate the rich from the poor and which are responsible for creating wealth or causing poverty. I’d like to share those two ideologies with you. [Read more…]

The Words You Use Affect the Way Others Perceive You

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I remember my first job in NYC. I was 21 and interning for Bankers Trust right across from World Trade Center Building #1. I was finished with my work day and headed down the two story long series of escalators which delivered all of us down to street level. There were four of these escalators, two that went down and two that went up. While on one of these down escalators I ease dropped on a conversation two bankers were having in front of me. To this day I have no idea what they were talking about. But what I do remember was how impressed I was. They used words like Michelangelo used clay or paints. It bothered me that I did not understand the words they were using.

That summer I decided I was going to learn ten new words a day. So I pulled out the dictionary, took out a binder, some paper and a pencil and began writing down words I didn’t know. I did this every day for about two months. As summer came to a close, I was now the proud owner of 500 new words. And I started to use these words, weaving them into conversation. I remember playing pool in the rathskeller back at college. There was a very pretty girl in the group. She knew some of the guys I regularly played pool with. We were all discussing Poland, which was in the news. They were going through a revolution there. I remember sharing my opinion with the group about this revolution. I test drove some of the new words I learned over the summer.

About an hour later, as I was walking out the rathskeller, the pretty girl accompanied me up the stairs. She never did this before. I confess, my heart was beating like a rabbit. She said to me, “I didn’t realize you were so smart.” We became fast friends after that and had many more conversations. We came very close to dating but I never had the ask a girl out on a date confidence to ask her out. I’m of Irish decent and, at the time, I was working on my eighth year of puberty. I still looked like a man child and felt ugly and very awkward back then.

I kept that word binder, but confess that I lapsed in my devotion to learning new words. When I was finishing up my study on the daily habits of the rich and poor in 2008, I discovered that one of the Rich Habits the millionaires all seemed to have was a daily devotion to learning and self-improvement. So I found my old word binder, dusted it off and renewed my study of words. It has helped me enormously in communicating my research in the books and articles I’ve written as well as in the numerous media interviews I’ve had.

The words we use every day create perceptions. They are like magnets, drawing to us all sorts of people. Rich people had figured that out long before they became rich. The more words you know, the better your ability to communicate what you know. Words create perceptions. If you want to create the perception that you are smart, you must increase your knowledge of words and use them in conversation. Learning new words helps you grow as an individual. They increase your confidence. They transform you.

Start your word binder today. Devote just fifteen minutes a day to increasing your vocabulary. Add five new words a day to your arsenal. People will take notice. Words will elevate you and draw the right people into your inner circle.

Delayed Gratification vs. Immediate Gratification

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It’s so easy to do the easy. It’s so hard to do the hard. The other night I came home from work, hungry, tired and in need of some R&R. Dinner was waiting for me on the counter. There was a cold beer in the refrigerator just screaming out at me. I went upstairs, took off my work clothes and then I saw my sneakers staring at me. Before any of the demon voices in my head started talking, I took my sneakers, put on my shorts and headed downstairs to my basement. I got on my stair master and for the next 40 minutes I sweat. When I was done I walked into the kitchen, heated up my dinner and cracked an ice cold beer. That dinner tasted so good. That beer, so cold and delicious. As I ate and drank, I felt happy.

It’s so easy to give in to temptation. But sacrificing, by delaying gratification until something important gets done first, makes the thing you delayed gratification on infinitely more rewarding. Our lives are the byproduct of our behavior and the choices we make. When we choose the easy, life’s immediate pleasures lose their flavor. When we choose the hard, life’s eventual pleasures are heightened.

Always choose the hard. Hard and Happiness share more in common than a few letters. They are life’s yin and yang.