Saving and investing money throughout your life and setting your children up with a nice inheritance does not guarantee they will manage the money responsibly. It’s similar to how many lottery winners end up broke, and real estate investor Grant Cardone revealed why that’s the case.
“70% of wealthy families lose their wealth by the second generation – because it was never taught, only inherited,” he said in an X post.
Cardone shared some ways to approach money that can help you build an inheritance for your children and ensure they responsibly manage the money.
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Trade Money For Freedom
While many people trade time for money, Cardone encourages people to trade money for freedom. Investing more of each paycheck and minimizing your discretionary purchases will make it easier to buy the things you want in the future.
Cardone said that the average American saves less than 5% of their paycheck, but millionaires save and invest 20% of their income. You probably won’t be able to jump from 5% to 20% in a few weeks. However, if you trim your expenses and look for opportunities to boost your income, you might save and invest an additional 1% to 2% of your income.
You don’t have to trade money for freedom forever. Eventually, compounded returns will do their magic. Some people save and invest enough money that they earn more from their portfolios each year than what they receive from their jobs.
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Talk To Your Kids About Money
Cardone regularly talks with his kids about money, and some of those conversations have made it on his YouTube channel. One X user echoed this sentiment and explained the value of talking to your kids about money when responding to Cardone’s post.
“Talk to your kids about money,” one user replied. “A lot of people don’t. Or they only talk about the negative. Teach the value of what you earn and at least [the] basics in personal finance.”
Most children go through the education system without learning about personal finance. It’s a critical skill for navigating the real world, and it’s up to parents to teach it to their children. Sprinkling in a few lessons about personal finance can go a long way in giving your children the knowledge they need to preserve your inheritance.
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Getting Rid Of A Poverty Mindset
Cardone wrapped up the X post by mentioning his book, “Wealth Creation Formula.” While the book covers a lot of ground, one of the key details is about getting rid of a poverty mindset.
This is a key point, since your children will mimic your behavior. If you are bad with money and don’t speak about money with a positive mindset, your children are more likely to follow your habits and have money problems.
There’s always one person who can flip the script across their lineage and get their family on the right track with their money. A poverty mindset involves focusing on how expensive things are and how difficult it is to keep up with inflation. While those challenges are real, a positive mindset around money focuses on opportunities and how you will improve your finances.
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