7 family values that can make you rich
If your family has a strong set of values, it could lead to more wealth for you and your relatives.
U.S. Trust, a Bank of America private wealth management firm, conducted a recent survey of U.S. adults who have $3 million or more of "investable" assets. The survey uncovered some interesting results:
- The wealthy consistently say hard work, personal ambition and family values are the drivers of their success.
- 80 percent had firm disciplinarians for parents.
- Three out of four grew up poor or in the middle class.
These findings suggest that when parents instill good – yet firm – family values in their children, there is a chance of financial success, no matter the family's income or class level. Perhaps this is because the right family values can create smart financial habits that build wealth. Bad family values, on the other hand, could breed bad habits – which could lead to financial troubles down the line.
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"It is important to realize that just as positive financial habits can be passed down to generations, so too can negative financial habits," says Aaron Hatch, a certified financial planner and co-founder of financial planning and investment management firm Woven Capital.
Financial habits and family values can span across multiple generations, with each generation reinforcing the same values and habits for the next. The Wall Street Journal recently reported two economists found that the wealthiest families in Florence, Italy today are the descendants of the richest Florence families from nearly 600 years ago, which Hatch also pointed out.
"While it is naive to say that these families have retained their wealth solely because they passed along strong family values, it is nevertheless interesting to note that these families most likely inherited more than money," Hatch says. "Many people learn the value of money – or other important lessons about money and finances – from grandparents who may have learned those values or habits from their grandparents."
Every family could benefit from a strong set of family values – especially families who want to be rich. If you want to ensure financial success for your kids and even your future great-great-great grandchildren, consider adopting these seven family values.
Trust and Honesty
Many families believe talking honestly and openly about finances is taboo.
"Generally, people would rather have a root canal than talk openly about money or their financial issues," Hatch says. "If you were to ask 10 of your friends how much money their parents earned or the balances in their parents' 401k, the majority would tell you they have no idea."
But, not being honest and transparent can lead to dire consequences for some families that want to pass down their wealth to their heirs. Over a 20-year period, The Williams Group – which helps families retain control of their assets and family harmony during estate transfers – found that 70 percent of successful families end up losing control of their assets, failing to pass down the wealth from generation to generation. According to TWG, a "lack of trust and communication are the single most important issues that undermine successful transfer of family wealth."
If you want future generations to retain the family wealth, you and your family members should start talking about money openly and honestly to build trust.
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Being frugal is a crucial part of saving money and growing wealth. By teaching your kids and family members how to be frugal and live below their means, your family can build a sizable savings nest egg that could one day morph into a large family fortune.
Practicing frugality also teaches family members and children how to avoid situations that can destroy wealth. For example, people who are frugal stick to their budgets and won't pull out a credit card for items they can't afford. By keeping the plastic in their pockets, they're avoiding credit card interest that can chip away at their hard-earned savings.
Expanding your means is just as important as living below them if you want to get rich. But expanding your means often requires hard work.
In his book "Rich Kids: How to Raise Our Children to Be Happy and Successful in Life," author Tom Corley writes that expanding your means can involve creating more income sources, such as starting a part-time business or developing a new, marketable skill that can lead to higher earnings.
To teach this family value to your kids, have them perform chores to earn an allowance. And if they're old enough, encourage them to take on jobs outside of the house. Since learning new money-making skills takes time, teach your children when they're young so they have more time to grow their wealth.
When it comes to money, you can only do so much on your own. Recognizing this limitation, wealthy people often create teams of people who can provide financial advice and counsel, Hatch says.
"[They] recognize that it is hard to stay 100 percent objective when you are making decisions about their own money since money can often be a very emotional subject," he says. "Likewise, financially successful families also realize that they need to work together in order to convert their income into wealth."
Creativity is an important trait for social interactions, as well as for identifying what you're passionate about. Passion for your work is a key part of success, and you can help unlock this enthusiasm in your kids and relatives by supporting creative activities that can generate money.
"The key is to be able to engage in some lifelong creativity activity that also pays you enough money to help support a family," Corley writes. "You can't be successful in life if you don't have a passion for what you do for a living, and you can only find your passion in life by pursuing creative activities."
Donating to charity could lead to a richer, more satisfying life. Plus, giving back can help you and your family members achieve financial goals, which in return can help you achieve the wealth you've always wanted.
"Often, by choosing to allocate money toward specific causes, it helps people set priorities and align their finances with their values," Hatch says. "People who are clear about their priorities and align their finances with their financial goals tend to be more satisfied with their life."
Over the course of a 40-year full-time working life, the median earnings of bachelor's degree recipients without an advanced degree are 65 percent higher than high school graduates' median earnings, according to 2013 College Board data. With this statistic in mind, you and your family should value higher education.
And remember that going to college isn't just about getting a fancy piece of paper that will help you secure a job; it's about investing in yourself for the long term. You'll develop new skills, make new contacts and join a large network of professionals – all of which can help you expand your means and make more money.
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Copyright 2016 U.S. News & World Report