Money Lessons From My Rich Relatives
At a recent family reunion, I asked my rich relatives to share some lessons about money that they’re trying to teach their kids.
From my aunt with rings that could double as paper weights (honestly. I’ve never seen anything quite like it):
“Has anyone said you can either live like a millionaire or be one? No? Well that’s my advice. And if you can’t afford to buy it, don’t buy it. It’s that simple. You know I have money, so this next bit sounds a little silly: obviously you need money to live, it makes life wonderful. But don’t get obsessed. Having money doesn’t equal the ability to make good choices.”
My uncle of the one percent who always has a side project or two (or three) that makes a lot of money, while also in the midst of an excellent career, gave this almost contradictory advice:
“I want my kids to know a lot of things about money. But here are a few:
1. You don’t have any money if you don’t make any money. You have to work. I studied very hard for a long time to specialize in a niche and thus be in demand in my field.
2. You don’t have any money if you spend the money that you have. This should be obvious. Sadly, it’s not always the case.
3. Money shouldn’t be that important to you. It shouldn’t be your reason for existence.”
From my cousin who wrote and sold her own cookbook and also sells things monthly on Craigslist:
“First, they need to know how to make money. That’s the most important. Making money can be from a lot of things. And once you have it, don’t spend it foolishly! Impulse buys are not your friend, unless you can quickly turn around and sell it on eBay or craigslist. It’s way easier to just avoid spending foolishly.
Lastly, I want them to learn how interest works! Compound interest is your very very best friend, and I want my kids to know that not spending money foolishly means that later, they’ll have more. Seriously.”
From my uncle who proves that it is possible to be a “successful entrepreneur” even if you don’t work in Silicon Valley. He is filthy rich:
“Well, first would be to save your money. Save it, save it, save it. You never know when you’ll need it. Secondly, I would say it’s important to have good negotiating skills. You don’t want to get gipped. That being said, don’t get too hung up on it. Am I allowed a fourth point? Yes? I want my kids to approach money with an abundance mentality, not a scarcity. Don’t fight about money; we can make more.”
[Side note: I told you. Total entrepreneur. Abundance v. scarcity? We can make more? Does anyone else have family like this?]
From my aunt who has taught these lessons to 14 children and grandchildren (so far):
Aunt: “Are you asking what I’ve taught my kids, or what they know, or what I wish they would know? Because this is important, but I don’t know how well they’ve learned all their lessons.”
Me: What you wish they will or do know.
Aunt: “Okay, here are three things.
1. Money is valuable. They call it work for a reason. It isn’t always fun. But working pays off!
2. Don’t flaunt it if you have it. Keep a low profile. There isn’t that much good that comes from others knowing you have money. They resent you or it can be uncomfortable.
3. This is kind of like my second point, but don’t talk like you have more than you have. I call it the ‘Big Hat No Cattle’ model. Don’t be all talk, i.e. hat and no substance, i.e. cattle. It’s MUCH better to be all substance and minimal talk.”
My other aunt thinks about money so much she’s started teaching a class about it to teenagers:
“You have to keep a budget. This is critical because there are two ways of interacting with money: You manage your money, or it manages you. That’s it. You have to know where everything is going. Make an Excel sheet, divide it into categories, and keep track of everything. Even when you have a lot of money. You won’t get a lot of money if you don’t keep track of it—you can live like a millionaire or be one. You’ll lose your money quicker if you don’t know where it’s going.”
Two final pieces of advice from my freelancing cousin:
1. It’s not free.
2. The quickest way to double your money is fold it over and put it back in your pocket.
Rachel S. is going to fold her money over twice and advises you to do the same.