Rich parents give their kids a head start less through money than through mindset, teaching them how money works, why to buy assets, and why to earn more rather than cut costs. The right advice at the right time makes a big difference over the long run. The kids of the rich usually start with a massive head start, and the video argues this comes less from resources and more from the mindset their parents instil, backed by decades of wisdom from people who built major success.
Here are the 15 lessons, plus a bonus, set out as the video presents them. You do not need to be a parent to use them.
Watch the full video here, or skip to the breakdown below.
The 15 lessons at a glance
- Understanding how money works (0:28)
- The difference between an asset and a liability (1:36)
- They are not entitled to anything (3:08)
- How to be sociable and connect with other people (5:27)
- Increasing income instead of lowering expenses (7:52)
- How to create daily habits that give incredible advantages (9:09)
- Money is a tool, and it’s a good thing (10:23)
- Stop expecting immediate results and avoid magical thinking (11:03)
- Knowledge is more valuable than money in the long run (13:37)
- Don’t work for money, have money work for you (14:46)
- Solving problems is the quickest way to get rich (15:38)
- Not wasting time on things that do not correlate to the real world (16:25)
- How to use good debt instead of bad debt (17:39)
- 80% of the results come from 20% of the effort (18:49)
- Having money doesn’t make you a better person
- Bonus: raise their expectations
1. Understanding how money works
It sounds basic, yet few people ask how people make money. Why does my employer pay me this much? What decides my salary or revenue? How do taxes work, and can they be optimised? What needs to happen to improve my finances?
Rich parents tend to talk about the value and importance of money at home as early as possible. Kids see household expenses, work for what they get and learn quickly that money is harder to earn than it seems.
Contrast that with households where money is never discussed. How much the parents earn and spend stays a secret, and kids only hear about money when the adults argue about not having enough, so they link the whole subject with a negative feeling.
2. The difference between an asset and a liability
An asset makes you money, and a liability costs you money. By this definition, the car you drive to the grocery store and the house you live in are liabilities, because they bring in no revenue and demand money to keep running. The same goes for a new iPhone, fancy clothes and a smart TV bought without thinking.
The rich spend their time and money acquiring assets: an apartment that generates rent, a book that earns revenue, a share in a business that is doing well. Many of them still own fancy cars and houses, but the assets pay for the luxuries.
Want a fancy new car? Work out how to buy two apartments and use the rent to pay for leasing it. When you give the car up, the income keeps coming. As soon as money starts arriving, buy assets instead of spending it.
3. They are not entitled to anything
The rich know the world can take everything away if they stop performing. Being born into a wealthy family brings better tools and resources and no worry about basic needs, but it also brings threats that poorer families do not face. There is a lot more to lose, so the pressure stays on.
Wealthy parents teach their children that the road ahead is just as long as everyone else’s and that they must keep growing, and not merely keep pace. Whether they succeed depends on their own actions, and daddy’s money only goes so far.
A familiar pattern follows: family fortunes where children feel entitled tend to crumble in the third generation. The first is hungry and builds the wealth, the second believes it only has to maintain it, and the third has lost the hunger and spends it all badly.
4. How to be sociable and connect with other people
A pleasant conversation matters more than most people realise. According to the video, successful people socialise their kids before the age of four.
The logic is simple. A child who is socialised early gets invited to play, and if they behave well, other parents are happy to look after them. That snowballs for life.
When people like you and like being around you, doors open that would otherwise stay shut. Teachers treat you better, job opportunities improve and you make better friends. A whole tree of benefits grows from early socialisation.
5. Increasing income instead of lowering expenses
One of the most valuable lessons a parent can pass on is how to generate more money. The video claims it takes the same effort to barely survive as to make a fortune. The difference is the approach and the knowledge behind the effort, and the smarter you are financially, the less effort you need to deploy. That is why Wall Street brokers earn far more than miners.
It says poor families focus on cutting expenses to the point where life is barely worth living. Do the rich care whether they spend $5 on a coffee or $30 on a movie? They put their attention on increasing the money flowing in.
Raise your income sharply and there is always a large amount left at the end of the month. Combine this lesson with lesson two and you are well on your way.
6. How to create daily habits that give incredible advantages
Teaching a child to build a habit is one of the most valuable skills you can give them. Around 21 days is the normal time to create a new habit, according to the video, and after that it becomes part of you.
Turn reading time into a habit if you do not read enough. Do the same with the gym if motivation never shows up. Organising and optimising your workflow as a habit opens up big parts of your day for other things.
The power of habit is a tool that magnifies what you feed it. Wealth-building actions become daily habits for the rich, while the poor, in the video’s view, nurture toxic ones. Be careful what you instil, because children learn from what you do, not from what you tell them to do.
7. Money is a tool, and it’s a good thing
How often have you heard that money is the root of all evil? Think about how successful and happy the person saying it was. The video argues that people who struggle often blame a lack of money and attach negativity to the concept, partly because when money does arrive it brings problems they do not know how to handle.
Wealthy people do the opposite and treat money as a tool for running your life. It is pieces of paper and plastic with drawings on them that we exchange for material value, nothing more.
Think of scissors: you can cut hair with them or stab yourself in the eye. Stop taking money personally, use it for what it was made for, and the game changes.
8. Stop expecting immediate results and avoid magical thinking
We live in an instant environment. Want a movie? Stream it. Want food? Order in. Want a relationship? Swipe. But wealth and happiness do not work that way.
Some people expect to get rich quickly, win a large sum or inherit property, the video says, and believe life will magically improve. Even if they did get the money, they would not know what to do with it and would blow through it.
Rich parents teach the long game, and long-term thinking is one of the traits that separate the rich. Bill Gates is quoted as saying most people overestimate what they can do in one year and underestimate what they can do in ten. So instead of the new year, new me routine, plan your next decade.
9. Knowledge is more valuable than money in the long run
The quote the team kept hearing early on was: invest in yourself, it pays the best dividends. It has little to do with school or reading books and a lot to do with increasing how valuable you are to the world.
The world rewards valuable people because they create value for others, and in exchange they can get what they want. There are many ways to become valuable, from filling a position in a company to building a product or service people use to showing your talent to everyone.
The only route is more knowledge, skill and time. Mastering anything takes 10,000 hours, the video cites, and that is why the rich have their children try many activities to get a head start on the hours. Knowledge can always generate money, while the reverse does not always hold, since knowledge can be too expensive to buy.
10. Don’t work for money, have money work for you
This is described as the centrepiece of getting rich, the idea underneath every book, seminar and MBA. Many people exchange time for money and then spend it. The rich use the money they get to create more money.
Many stay poor, the video argues, because they believe you need large sums to invest and there is no point otherwise. Wealthy people look for the smallest drop to add to the bucket of passive income, because it is less about the amount and more about getting used to growing something yourself.
You can start a business today with less than $100 if you know what you are doing, or even for free if you put in the time. Once revenue comes in, pay someone to do what you used to do, and use the freed time to grow.
11. Solving problems is the quickest way to get rich
Rich parents explain the difference between getting paid and getting rich. Getting paid means taking care of something someone else needs done, like delivering the newspaper, washing the car or answering the phone. These are single-activity jobs where you repeat the same thing.
They avoid repetitive work because it is easy to outsource. They focus on the bigger problem, and the bigger the problem you fix, the richer you get.
Newspaper delivery became content websites the same way: same result, less hustle. People will pay for you to solve their problems, and kids who learn that are off to the races.
12. Not wasting time on things that do not correlate to the real world
This is the video’s most blunt opinion: nobody really cares about your degree. It calls the educational system pretty messed up, saying it repeats what made sense a while back with disregard for the future.
Its argument is that you can end up in massive debt over skills with no direct link to the marketplace. If you are passionate about something and put in the time to master it, you have a better shot at making it on your own.
Its advice is not to take degrees you will never pay back for jobs that no longer exist, which it says is what people have been doing for the past 40 years.
13. How to use good debt instead of bad debt
Bad debt makes you poor and good debt makes you rich, and the video suggests most of us were never told so growing up. It is all about the purpose of the debt.
Borrowing to buy a new car, a new phone or to cover necessities is borrowing to buy liabilities. They only borrow to generate more money. Banks and investors like to lend to that kind of project, as long as you can clearly explain how their money stays safe and how you will pay it back.
That is how people build skyscrapers: not from their own pockets, not even for the land. The bank is confident you can sell or rent the building and takes the risk with you. You only have to prove you know what you are doing and have done it successfully before.
14. 80% of the results come from 20% of the effort
Rich parents do not necessarily want their kids at the top of the class. The reason is the 80/20 rule, also called the Pareto principle: 80% of the outcome comes from just 20% of the action.
In business, 80% of the revenue comes from 20% of the customers, and 20% of employees do 80% of the work. It calls it a ratio proven quite accurate in almost every enterprise and in life.
Becoming first in class means pouring in much more time to gain a tiny improvement, and that leaves less for real-life education. There is more value in experimenting in the real world than in studying all night for 5 or 10% more on an exam.
15. Having money doesn’t make you a better person
Money just solves some of the problems. When you picture rich kids you may see arrogant ones who think money makes them better than everyone. That is not usually the case unless the money was inherited, it says.
On the road to riches, humility is valuable, and most rich people stay humble because they never forget where they came from. Humility and respect for others are among the first lessons rich parents teach, because they know what the other side feels like.
You should never be ashamed of having money or being successful. But you cannot buy a clear conscience, however much you throw at it. Money pays for comforts of the body, not of the mind and soul.
Bonus: raise their expectations
Want your kid to live better than you did? Teach them not to put up with nonsense and to raise their expectations. Some say the secret of happiness is lowering expectations so you can meet them, but the secret of financial success, the video says, is to raise them and then hit them.
The majority settle for mediocrity and never take big risks for big wins. The competition at the top is fierce, but there are fewer players. The choice is between low expectations that you meet and the highest expectations that you fall short of, and the video suggests the second beats the first.
Start with the mindset
Taken together, the lessons describe one way of thinking: learn how money works, buy assets, earn more, play the long game and stay humble. None of that requires a rich family, only a decision to start early and keep going.
Pick the lesson that stings most and act on it this week. Then ask what your own parents taught you that served you well.
FAQ
What do rich parents teach their kids about money?
They teach how money works, the difference between assets and liabilities, earning more instead of only cutting costs, and using money as a tool.
What is the difference between an asset and a liability?
An asset makes you money, while a liability costs you money. The video counts the car you drive and the house you live in as liabilities because they bring in no revenue.
What is good debt versus bad debt?
Good debt is borrowed to generate more money, as when people finance a building. Bad debt is borrowed to buy liabilities such as a new car or phone.
Why do family fortunes crumble by the third generation?
According to the video, the first generation is hungry, the second thinks it only has to maintain wealth, and the third has lost the hunger and feels entitled.
What is the 80/20 rule?
Also called the Pareto principle, it says 80% of results come from 20% of the effort, so chasing the last bit of improvement costs a lot of time for little return.
Keep reading
- 15 Lessons Rich Parents Teach Their Kids That the Poor Don’t
- This is How the Rich Kids of Dubai Spend their Money
- 15 Best Books to Teach Kids About Money
