The Truth About Inheriting Wealth!

Transcript

You said, “What is reality?” Because a lot of times, what we think is true and what is actually true do not align. We have a false sense of reality, and this next financial truth I think is really interesting. What I think a lot of people get wrong is that they believe in order to be wealthy, you have to have been born into it, or you have to have financial resources handed down from your parents or grandparents. The fact of the matter is, that’s just not the case. The vast majority of wealthy people don’t inherit their wealth. Yeah, this is one I grew up with. I grew up in a household where there was a lot of jealousy or frustration, thinking that those wealthy people are born into it. It wasn’t until I started doing taxes after graduating with an accounting degree that I remember calling my mom and asking, “Did these people pay a lot of taxes?” I mean, it’s not… you know, that’s taxes. But that’s also what I found from the research.

During that same time, I got my first accounting job and read “The Millionaire Next Door” and “The Wealthy Barber.” I started seeing research that was whispering in my ear, “No, a lot of these people, the stats show around 80 percent of millionaires are first generation.” That was pretty exciting when I saw it. I was like, “Wait a minute, so I could do this. I could be in that.” It even expanded because, as I told you, the 80 percent stat came from 1996 when “The Millionaire Next Door” was published. Dr. Stanley’s daughter, Sarah, came out with a book called “The Next Millionaire Next Door” a few years ago. She actually did the research and expanded it back to the 1800s. The stat was around 84 percent first generation. Then, Ramsey Solutions did their own huge study of millionaires and found that the number was around 79 percent. I even saw a clip recently where Dave mentioned that if you took into account the people who inherited less than ten thousand dollars and the ones who made a million dollars before they inherited, the number goes up closer to 90 percent. Even our own millionaire study, where we used a very low threshold, showed that 74 percent were self-made in our most recent data.

I think people need to hear that because we constantly hear that the system is rigged against us, and we can’t do this. That’s why with the financial order of operations, the money multiplier, everything we’re trying to do is to show you that you shouldn’t listen to the negativity. Just use today to do something positive because you can do it. You can be the first person that does this and change your life, change your family’s life, and just start making something happen today. I love it! How your journey started does not define how it ends, so don’t fall into the trap of other people telling you that is the case. If you want to be wealthy and you live in this country, it is possible; it is available to you. You just have to figure out those three ingredients of wealth creation and start moving towards that.

The next one is so important. Teaching your children about financial success matters because we just made it through the research point that 80 percent of millionaires are first generation, meaning they are the first ones in their families to reach the seven-figure mark. But that stat is only true if you understand that, by the time the kids inherit the money, 70 percent of them go broke, and by the time the grandkids inherit the money, 90 percent of them ruin it. That’s how the cycle renews itself. It’s just this constant churn of wealth, and that’s something you want to avoid. So if you are a person on your journey of building wealth, I’ve got to tell you, teach your kids well so that you don’t fall into that horrible stat. I hope my daughter falls into the 30 percent that doesn’t blow through everything I’ve created in this lifetime, and then her children will hopefully be part of that 10 percent that are the exception to the rule because all of our peers have a very dysfunctional relationship with how money works and wealth creation.

What I love about this truth, Brian, is that it should say, “Teaching your children about financial success matters for both you and for them.” Because it’s really interesting when we think about Dr. Stanley’s work when he wrote “The Millionaire Next Door” and he talked about these seven factors of wealth. Two of them immediately stick out. Number four: their parents did not provide them economic outpatient care, meaning the parents did not give money to the kids to subsidize their lives. The kids had to figure it out on their own. But look at the flip side of this. Number five: their adult children are economically self-sufficient because they didn’t receive help from their parents; they created kids who aren’t also looking for help from them. It’s a beautiful cycle. If you can create the wealth cycle the right way, you can do really remarkable things. But it has to start early. If you have young children, it is not too early to start teaching them about money. If you have older children who are getting into high school or getting ready for college, it’s not too late to start teaching them about money. But what you want to make sure you do is you want to be the one having the conversation with them because if you let society, social media, or the world around them teach them about money, they’re going to learn about credit cards, debt, borrowing, and the hottest trends. That’s not the lesson you want your kids to receive. So you be an agent to teach the next generation how to continue it on.

Yeah, and I’ve shared, you know, my daughter turned 15, my oldest turned 15. We started doing just like your employer primes the pump with a dollar-for-dollar match or 50 cents on the dollar, you can do the same thing with your children. As they start working and they start coming into money, use that as a tool to say, “Hey, can you allocate a portion to savings and get a free match to turbo-charge that?” It has worked incredibly well with my oldest, and I hope you, too, will employ that behavior as you’re working through it as well.