The Superpower of the Financially Healthy and Wealthy
Warren Buffett, one of the world's wealthiest people, is seen as a superhero in the finance world. He has amassed billions by making large investments in well-known companies. When he holds his annual shareholder meetings, thousands of people attend to hear what he has to say.
What is the superpower that has given him such superhero status?
You might be thinking his superpower is spotting opportunities where others can't, his courage to act when opportunities do arise or his ability to say 'no'.
These are all traits that he has and utilised to a very high degree. However, they are not his most important superpower.
The Answer?
He’s been investing since he was a kid. He's now in his nineties. Arguably, that's his greatest superpower. Not some secret formula, just decades of using one superpower longer than almost anyone else alive.
The superpower of the financially healthy and wealthy is …. PATIENCE!
Now, you might be thinking ..."That's it? That's a bit basic. How disappointing!"
That reaction is exactly why it works as a superpower. Everyone thinks it's too easy and boring, so they ignore it and go looking for something else. Something more exciting.
The truth is, you can teach your kids everything there is to know about money but if they aren’t patient, they are unlikely to become wealthy.
Let me set out why it’s such a superpower and then I'll share some hacks to help train your kids to have this superpower.
A Financial Life Without Patience
Many of the money mistakes that people make come from a lack of patience.
A lack of patience means you're …
… more likely to overspend (the target of 'special' & 'limited time' offers)...
… more likely to use debt to buy something now rather than wait...
… more likely to gamble...
… more likely to get scammed (scammers target people who show signs of impatience)...
… more likely to invest in something that is too risky due to the promise of quick returns
Patience When Investing
If you've been following my articles or read my books, you'll know that I want to help as many parents teach their kids to grow their money. One of the best and most sustainable ways is investing in the stock market. However, to be a good investor, you need to have patience.
👉 Read more: How to teach kids about the Stock Market
Sadly, there are people who learn to invest but don’t have patience. They end up buying and selling their investments as they hear about the latest trend. This leads to worse outcomes than the patient investor.
There is a well-known story in the investment world about a study done by a major investment firm. They wanted to learn more about tactics used by their best-performing retail investors.
They apparently gathered the returns of their customers over a long period of time (20 years, I believe) and then reached out to those with the highest returns.
What they discovered was that their top performers had:
Died
Lost their password years ago
Forgotten they had an account.
Whether this study is real or not, the lesson holds. The highest performing investors usually don’t do anything with their investments and just let them grow over a long period of time.
I actually used this idea as one of the fables in Grandpa’s Fortune Fables. In the story, Mr Lazy’s Tree, the main characters try to figure out how some trees on a faraway island grew so large, and discover, after some funny twists, the same answer; the ones with the largest trees had simply let them grow.
Patience is the superpower needed to ensure our kids avoid the many money mistakes that adults make today.
How To Train Your Kids To Have Patience With Money?
Some kids are more naturally patient than others. You might notice that if you have more than one child or have a sibling yourself.
The good news is that patience is a trait that can be taught but will require some patience from you.
Tip number 1: Use the money like seeds analogy
If kids think of money like seeds, their goal is to grow their own financial forest. To do this, they must keep some of their seeds (save), plant them (invest) and then be patient.
This works really well as kids know that trees don’t grow overnight. They understand it takes time and that trees will produce more seeds which will help their forest grow even bigger over time.
Tip number 2: Balance
When it comes to asking your kids to be patient, ensure that you allow them to have a blend of instant and delayed gratification. Rather than encouraging them to save all their money, you encourage them to save just a little bit (even just 10%) and allow them to spend the rest.
This makes saving easier and more fun.
I use this same approach myself with different things in life. For example, I like chocolate but I know it’s not good for me. So I now buy a chocolate bar and allow myself to have one piece after a meal. I’m getting some instant satisfaction but I also enjoy the fact that I know I’ll have some there tomorrow and the day after.
Tip number 3: Plan
This is an obvious one. Get them to think about what they want in the future and encourage them to save up for it. Once they do save up, they will see the benefits of having something they want rather than spending impulsively.
One of the bonuses of saving up for something is that sometimes they change what they want. This is powerful as it lets them experience that our ‘wants’ can change quite quickly if we allow for a little bit of time and patience. I know I have certainly bought something instantly and then regretted it a few days later.
When my kids were young, we had a three-pot system:
🌱 Seeds - spend now, instant gratification
🌸 Flowers - save for something specific, spending later
🔵🌳 Blue Trees - long-term wealth, not to be touched for years
Even now that they are older (12 and 14), they still refer to their savings as Flowers and Blue Trees.
Tip number 4: Reward them
As adults, we get handsomely rewarded for being patient over years. For kids, we need to reduce the time horizon and then extend it as they get older.
If your kids are putting money in a savings jar, give them a little extra if they keep it there for a week. Or if they are saving up for something, say that if they get 90% of the way there, you’ll top up the rest. This is highlighting to them that there are rewards for being patient.
Summary: Train Your Kids To Be A Financial Superhero
If you want your kids to grow up financially healthy and wealthy, you need to train them to be patient. It really is a superpower that most people ignore.
This is why 'Be Patient' is one of my 3 Rules of Wealth:
Save at least 10% of what you receive (keep some seeds)
Make your savings grow (plant the seeds you keep)
Be patient (allow your trees to grow)
These 3 Rules of Wealth might seem simple but they are very hard to follow. Many adults aren’t following them. If you can help a child follow them, you’ll be giving them more than just a small amount of money they’ll be saving as a kid. You’ll be helping them develop a mindset and habits that will determine how much wealth they build as adults, no matter how much they earn.
If you would like your kids to learn the 3 Rules of Wealth in a fun way, please check out my book, Grandpa’s Fortune Fables.
👉 Related article: How to teach kids about the Stock Market
Please share this blog to help more families help their kids become financial superheros.
Thanks for reading!
Will
p.s., Thank you to everyone who has ordered copies of my money books for kids, Grandpa’s Fortune Fables and Frankie Fortune. It would mean the world to me if you could leave a review online to help more families learn about money at home.
