News
4 financial skills I’m passing on to my children
Rawpixel.com/Shutterstock.com
Gen Alpha and future generations may be on the right path to receiving the financial education they deserve.
A new study from Bank of America titled “2024 Study on Rich Americans” reveals emerging trends across generations fortune and its influence on financial strategies. Quantitative survey data from 2024 shows that 48% of wealthy Americans said they would start the conversation when it came to teaching financial skills to their children or heirs.
To know more: How much does the average middle class person have in savings?
Try this: How to Get $340 a Year in Cash Back on Gas and Other Things You Already Buy
What types of financial skills do wealthy Americans plan to pass on to their children or heirs? GOBankingRates spoke with Dave Fortin, the investing app’s millennial co-founder Future Money and a new father, to learn more about the financial skills he plans to pass on to his children.
Rich people know the best financial secrets. Learn how to copy them.
Delayed Gratification
In March 2024, GOBankingRates surveyed 1,008 American adults on a range of questions related to financial literacy. When asked about the bad financial habits they learned since childhood, 36% of respondents said they made impulse purchases.
This will not be the case for Fortin. He told GOBankingRates that he plans to talk to his children about delayed gratification. In addition to avoiding impulse purchases, it’s a lesson that will help your children in many other aspects of their lives.
“By using the language of money, you can show your children the advantages of saving today for something in the future and how your money can grow,” Fortin said.
Read next: How can you withdraw money from a bank account? 3 ways to know
Goal setting
Another skill Fortin plans to teach his children is setting goals, which he considers important in money and life.
Learning to set a goal — whether it’s going to college, buying a car or buying your first home — is just one part of the equation, according to Fortin. He added that it is important for children to learn how to create a plan that will help them reach their goal.
Be good stewards of capital
Fortin’s list of financial skills he plans to teach his children includes comparing income and expenses, understanding taxes, basic banking products and investing basics. Many of these skills confuse adults, especially those who do not have adequate training in financial literacy. For example, nearly 17% of Americans surveyed by GOBankingRates in March 2024 said they didn’t clearly understand how taxes work.
The story continues
In a wealthy family, Fortin said it’s particularly important to teach children to be good stewards of capital. This means clearly recognizing how to manage, use and protect wealth so that it meets the needs of the current generation, as well as the next generation. A poor manager would likely be more inclined to spend recklessly rather than save money or live beyond his means.
“Wealth can support a family, finance big businesses that solve important problems in the world, and do a lot of good through charitable work,” Fortin said. “Having wealth does not exempt someone from the duties of managing their money well.”
The power of compound returns
Of all the financial skills Fortin plans to pass on to his children, the power to accumulate returns over time is one skill he considers to be the most impactful lesson a child can learn.
However, many parents fail to teach it. Nearly 30 percent of Americans surveyed by GOBankingRates said they were never taught how to invest growing up. 15 percent also cited a lack of investing as a bad financial habit they feared they could pass on to their children.
Wealthy parents who invest for their children are recommended by Fortin to show them what they are doing. By showing them how to invest, Fortin said parents can use this time to engage and get their kids excited about saving and investing and what the future holds for them.
Fortin’s hope is that by discussing these financial skills – delayed gratification, goal setting, being a good steward of capital and the power of compound returns – he will be able to spark their curiosity about money. Ideally, this spark would allow them to get involved and develop their financial literacy from an early age.
“By better understanding the value of money, they can make informed financial decisions and manage their future wealth responsibly.”
More from GOBankingRates
This article originally appeared on GOBankingRates. with: I’m a Rich Millennial: 4 Money Skills I’m Passing on to My Kids