Stuart Zadel on The Millionaire Next Door Series. Children who are well-trained on money grow up to be financially independent. That’s affirmative Action, family style.

AFFIRMATIVE ACTION. FAMILY STYLE

These times, wealth is perceived to be the key towards lifestyle security. Even then, the road towards wealth is not paved for those who only idealise its fulfillment. Coupled with your dreams to become wealthy should be a combination of the right information so that you can develop the right habits. Once the right habits are in place, you can then start taking action – the right action – to start accumulating wealth.

My name is Stuart Zadel, and welcome to the 6th installment of The Millionaire Next Door Series – a series that draws inspiration from the book The Millionaire Next Door by Thomas Stanley and William Danko.

IN REVIEW: ECONOMIC OUTPATIENT CARE

In the previous installment, I talked about Economic Outpatient Care. That is, parents providing money in some form to their children, and how doing that weakens those children. In all cases, the authors found that the more dollars children are gifted, the less dollars they will ever accumulate in their lifetime. And that kind of extended into this installment: Affirmative Action, Family Style.

AFFIRMATIVE ACTION. FAMILY STYLE

Most affluent families that have children naturally want to start distributing their assets and their estate to their children. Usually this is motivated by the tax treatment in that country when someone passes away. Often, there’s heavy estate taxes or death taxes. The decision to gift the estate to reduce taxes makes complete sense. The challenging part is how to do it.

Now, there are three points to the status quo:

• Parents with non-working daughters and temporarily unemployed adult sons have a high propensity to provide these children with heavy doses of economic outpatient care. These children are also likely to receive a disproportionately large portion of their parent’s estates.

• The more economically successful offspring is likely to receive smaller portions of economic outpatient care and inheritance.

• Many of the most highly productive sons and daughters receive no wealth transfers. That’s the reason why they are wealthy – because they weren’t weakened in the first place.

So what should you be doing?

If you want your money protected and to grow as a parent, give it to your more financially successful children. They will grow it and protect it. If you’re not concerned about that, then chances are, you’re going to give it to the people that need it the most; that have squandered the most; and have not earned it themselves at all.

In relation to the above, I’m sharing 10 rules from the book.

THE 10 RULES FOR AFFLUENT PARENTS AND PRODUCTIVE CHILDREN

• Never tell your children that their parents are wealthy.
• No matter how wealthy you are, teach your children discipline and frugality. They are going to be in charge of the money one day.
• Ensure that your children won’t realize you’re affluent until after they have established a mature, disciplined and adult lifestyle and profession.
• Minimise discussions of the items that each child or grandchild will inherit or receive as gifts.
• Never give cash to your adult children as part of a negotiation strategy.
• Stay out of your adult children’s family business.
• Don’t try to compete with your children.
• Always remember that your children are individuals.
• Emphasize your children’s achievements, no matter how small, not simply just their symbols of success.
• Tell your children that there are a lot more things more valuable than money.

INSIGHTS

So with that, I want to finish up and quote from the book: “good health, longevity, happiness, a loving family, self-reliance, five friends, (if you have five, you’re a rich man), reputation, respect, integrity, honesty, and a history of achievements.”

Money is the icing on the cake of life. You don’t ever have to cheat or steal, you don’t have to break the law, and you don’t have to cheat on your taxes. It’s easier to make money honestly than dishonestly in this country. You’ll never exist in business if you rip people off. Life is in the long run. You can’t hide from adversity. You can’t hide your children from life’s ups and downs. But once you’ve achieved, do so by experiencing and conquering obstacles even from childhood days.

These are the ones who are never denied their right to face struggles and some adversity. Others were, in reality, cheated. Those who attempted to shelter their children from every conceivable germ in society never really inoculated them from fear, worry, and the feeling of dependency. Not at all.

Watch the entire Next Door Millionaire Series episodes here.

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