We are all after the real secret to building wealth. There are actually a lot of factors to consider. Your education, money management skills, and even your personal disposition in life. But did you know that your parents play an important role in determining if you will be super rich in the future or not?
There are many articles that mention how our parents help shape who we are when we grow older. They influence our values and mannerisms. They can even influence the major decisions that we have made in life. No matter how we turn out, whether it is good or bad, will depend on the way we were brought up by our parents.
According to Livestrong.com, children are like sponges. This is why the greatest influence comes from their parents – because these are the first people that children encounter in their lives. Babies first love their parents because they get the love and care from them. The article mentioned that this is the reason why parents should be a good role model for their kids.
With all the influence that our parents have on us, did you know that there is one surprising factor that plays a role in our chances of building wealth?
Study reveal that your parents can influence your ability to grow wealth
In 2015, the Pew Charitable Trusts and the Russell Sage Foundation conducted a study that focused on the economic mobility of the Americans. The study published on PewTrusts.org, revealed one surprising quality about our parents that can strongly influence our wealth building opportunities in the future – their income. Here are the different findings of the study.
- Half of the income advantage of parents are passed on to their children.
- The advantage is significantly greater for the children of those in the middle and upper income levels.
- The children of parents with high and low incomes have significantly different economic outcomes. Sometimes, those born of high income parents earn up to three times more than those born of parents in the 10% of the income level percentile.
- The men benefit more from the income advantage brought about by high-earning parents – at least compared to the women.
- The women benefit from their parent’s income when it comes to the chances of getting married to a financially successful man.
Basically, the study revealed that those who are born of high-earning parents have a better chance of becoming rich than those who have low-earning parents. This is an interesting find and it says a lot about how the economic mobility in the country works. Apparently, the influence of our parents extend beyond the values, habits and principles that they show us. Even things like their salary can speak volumes about our own financial future.
The effect of our parent’s income is something that we do not really consider but if you think about it, makes a lot of sense. After all, their income will influence the friends that they hang out with and the social circles that the whole family will be dragged into.
Beyond the connections, the income of your parents can influence your chances of building wealth because they can help you in terms of investments. For instance, they can help finance your college education – or even a part of it. When they can back you us financially, you will have more options to get the education that will help you get a high-paying job.
When you are born of low-earning parents, you can still get a college education but your options will be limited by your academic records, scholarship opportunities and student loan eligibilities. Most of the time, children of low-income households have to rely on themselves to finance their way through college.
As you can see, your parents can teach you about personal finance but their income will also influence your ability to become rich. You need to look into the financial position of your parents to know how much effort you have to put into building wealth.
How to increase your chances of becoming rich
While it is harder to build wealth when you live in a low-income household, that does not mean it is impossible to do so. You still have full control over your life. It is just that there are factors outside your control that will make it easier or harder for you.
When you are really serious about building wealth, there are things that will help you reach your goal regardless of your financial background. Here are some of the tips that you can do.
Know the right financial habits to implement.
Educating yourself about the financial habits that you need to implement is not expensive. You can find a lot of websites that discuss the habits that will help you in building wealth. Select the authority sites that you know has the reputation to sincerely help those who need financial advice. Find more than one site so you can cross reference the information that you are getting.
Find a mentor.
A mentor is one of the most important and influential people that you will encounter in your life. It is so important that even President Barack Obama declared January 2016 as the National Mentoring Month. The article published on GlobeNewswire.com revealed that the President believed in the importance of having a mentor – specifically for young people. These are the people that you admire and trust to give you solid advice about your finances. It can be your boss, a relative, or even a neighbor. A mentor can give you the guidance that will allow you to build your wealth.
Set realistic goals.
Setting realistic goals will help guide you as you reach your targets. Success is hard to achieve if you do not start with a goal. The goals that you will set will help give you direction. It allows you to align your thoughts, decisions and actions towards achieving what you have set out to do. It will give you the motivation to make the sacrifices that are needed to build wealth. As effective as goal setting may be, it is also important to set realistic ones. If you aim too high, the disappointment of not reaching that goal can be frustrating. It can also break your spirit. So be honest about your capabilities and the resources that you have. Base your goals from that.
Focus and believe in your capabilities.
When you have set your goals, you have to focus and believe in your capabilities to turn your dreams into a reality. As long as you are going after realistic goals, you know that you can reach them. Stay determined so you can overcome the trials, sacrifices and various hurdles that you will encounter along the way. Ultimately, it all boils down to what you set your mind to accomplish. Your mindset is powerful enough to give you the will to complete the tasks that will help in building wealth.
These tips should help you achieve all your goals regardless of how difficult it all may be. Although it would have been easier if you were born out of high-earning parents, you have no choice but to accept the cards that you have been dealt with. If you want it badly, you should be able to overcome the odds to rise beyond the statistic of coming from a low-income household.
To help you further, here is a video that discusses the 5 traps that people usually fall for – all of which are hindering the ability to build wealth.