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4 Traits of Wealthy Kids

For your kids to grow up wealthy, it’s not about how much they know about money or how much money you have as parents (although, having money is an advantage). It’s all about the actions they take.

I’ve shared stories of rich kids who lost all their family’s money as they didn’t have the right traits, such as the Vanderbilts. I’ve also shared stories of people with little money or education who went on to become extremely wealthy, such as The Millionaire Janitor.

“It’s the money habits that your kids form that determines their financial future”

You’ll note that I have said, 4 traits of Wealthy kids, not rich kids. You can learn more about the difference between the rich and the wealthy in my blog Rich Kids vs Wealthy Kids (a link at the end of this blog).

So what are these 4 traits of Wealthy kids?

TRAIT ONE: Save each time they receive money

This first trait is the most important as it helps kids form a savings habit. It's a simple concept but very hard to do.

Remember, companies are investing billions (collectively) to stop us all from saving our money, they want us to spend our money and spend it now. The best defence against the clever marketing tactics used by companies is to put money away into savings as soon as possible. This needs to become a habit and the younger your kids start to do this, the easier it is to form the habit.

A savings habit has many other long-term benefits, including:

  • Witnessing that small amounts add up to a large pot of money over time

  • They’ll be starting an emergency fund for when they are older

  • They will be able to buy bigger and better things in the future

  • They will have the basis to grow money and start benefiting from the power of compound interest

Essentially, a savings habit is the foundation for building wealth in the future.

TRAIT TWO: Don’t spend impulsively

I never want to put people off spending money - it’s fun. Also, if you don’t spend and just hoard money then this could actually have a negative impact on their views on money.

As I say to my daughters, spend 80-90% of the money you receive. Just make sure you keep that 10-20% for the long term (Trait 1 above).

Spending sensibly is a key trait of the wealthy. They still buy the things they want and need but they do it in a much more considered manner. Rarely would they spend impulsively. They would be very aware of the marketing tactics used by companies to get them to spend (this knowledge goes some way to avoiding being sucked in).

The wealthy are also aware of the Diderot Effect. This is when you buy one thing that then leads you to buy more things as a result. For example, if you buy a fancy shirt, you are more likely to want other fancy clothes to go with the shirt. Then you'll want to go to fancy places in your new fancy clothes. Soon, your whole lifestyle has become more expensive. As they know about this effect, they are more cautious about small items which can inflate their lifestyle.

Cartoon explaining the Diderot effect

When it comes to spending, be careful not to tell your kids what they can and can’t spend their money on. We should guide our kids but ultimately let them make decisions and learn from any mistakes they make.

TRAIT THREE: Find Ways To Earn Money

Wealthy people don’t rely on one income. In fact, many millionaires have 7 different sources of income.

For kids, they could earn money by:

If kids grow up understanding that there are many other ways to earn money, in addition to a salary from a job, then they are on the path to becoming wealthy. This is a core part of the new Financial Education Program that we have developed for secondary schools.

TRAIT FOUR: Focus On Their Wealth, Not Others

This is the hardest trait for kids to adopt. This is because they are comparing themselves to the whole world on social media, not just their friends.

"The most valuable personal finance asset is not needing to impress anyone" (Morgan Housel)

Two things you need to remind them of:

  • Rich vs Wealthy: Many people who are showing off what they spend their money on are not saving. As I say to my daughters, they might have lots of nice things but we don’t know if they even have any Blue Trees (savings/investments, i.e. you don’t know who is RICH and who is WEALTHY).

  • Charity: If you encourage your kids to give a bit of money to others then it not only helps the people they are giving money to but it also means there is less basis to compare yourself to others, i.e. those people who are spending all their money might not be giving to others so you can’t compare. You can read more about the benefits of giving to charity here.

Essentially, we want to get our kids in the mindset of saying ‘Everyone is different’ so don’t compare. You only see one side of the equation - the people we compare ourselves to might not have savings, might not be giving and they might not be happy. We want them to focus on looking after their money and spending on what really makes them happy.

Don’t get me wrong, this isn’t easy but it is super important.

You need to be a role model

You, as a guardian, have a big role to play when it comes to helping your kids form these 4 traits. If you are demonstrating these traits yourself then your kids are significantly more likely to follow suit. Conversely, if you don’t save, you spend impulsively, rely solely on your salary to earn money and care about what other people have, then this is going to give mixed messages.

It’s never too late to change your own money habits. Use this blog as a catalyst to start forming these great money habits for yourself and it will rub off on your kids.


Take a few moments to reflect on your kids' money traits/habits - are they aligned with the 4 traits set out below?

  1. Save each time they receive money

  2. Don’t spend impulsively

  3. Find ways to earn money

  4. Focus on their wealth, not others

All kids have the ability to form these traits, if you provide guidance and become a role model.

You’ll notice that I haven’t said kids need to ‘understand this, that or the other’ or be great at maths or come from a rich family. Whilst these points can be helpful, they are secondary to kids forming the right habits.

The best way to help your kids form these money habits is to give them some weekly pocket money/allowance (if you can afford to do so). This allows them to make money decisions and form great money habits, with your guidance.

Thanks for reading!


Useful links:

P.S. If you want to teach your kids about these 4 Traits in a fun way, grab a copy of my best-selling book, Grandpa's Fortune Fables. Available on Amazon.


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