With the last post yesterday about the 5 Tips to Help Kids Think Like Millionaires, I received the following comment from a Facebook follower:

“Think about some of the millionaires in this country. They don’t pay taxes or pay their employees a fair salary. Personally, I don’t want my kids to think like Donald Trump. Is there another way you can frame this idea?” – Susan W.

You may share Susan’s opinion about millionaires.  So I thought I’d post my response to her question to add perspective on the meaning of “millionaire” in the advice I just finished posting this week:

Nope – not talking about the Donald Trumps of the world – I am talking about the good, solid people in the book “The Millionaire Next Door“, by Thomas Stanley. These people are our neighbors, teachers, fellow congregants – in other words normal, hard-working people that understand that you need to save some, spend wisely, donate and invest for your future.  Go to the library and read this book – and if you still want me to re-frame this – let me know and I will take your suggestions to heart.

Here’s the third installment of the five tips I’ve created that will teach kids how to think like a millionaire – since thinking like a millionaire is the first step toward becoming one.  Here are the links to the first two tips, if you missed them:

Tip #1: Learn how to delay gratification

Tip #2: Work & Earn Money

Both of these tips lead directly to the third tip:  #3 Save Money

Show your kids how to save and invest what they earn.  Explain that they can invest in themselves by investing in their own business.  Maybe that means getting a job to earn the dough to fund the blog they write, launch the website they create, or just to buy the lemons, sugar and cups they use to buy and sell lemonade.  Maybe it means buying a share of stock in a company they believe in.  Whatever makes the most sense for them, just save and invest and as a result, begin to understand the power of compound saving early and often.

When kids start young, time is on their side.  For example, show them how foregoing the daily fruit smoothie and instead investing the $4.60, that money will add up to $1642.50 a year.  At 5% interest, not getting that smoothie will give you $21,000 in your savings account in 10 years.

Thinking like a millionaire is the first step toward becoming one.  Warren Buffet wasn’t a millionaire by age 21.  But by the time he finished college, Buffett had accumulated more than $90,000 in savings measured in 2009 dollars.   That’s a lot, but it’s not a million. (Wikipedia)  How he accumulated that $90,000 leads me to my second of five tips on how to think like a millionaire:

Click here to read the first tip: Learn how to delay gratification. 

#2 –  Work and earn money

Notice I did not say “get a job.”  I said “work”.  Encourage your kids to start working right away.  Work for someone as a start.  It’s a great way to get a paid for education.  But don’t stop there.  Encourage them to take advantage of the opportunity to work for themselves and be an entrepreneur.

As a young kid, “Buffet went door to door selling chewing gum, Coca-Cola, or weekly magazines. For a while, he worked in his grandfather’s grocery store. While still in high school he was successful in making money by delivering newspapers, selling golfballs and stamps, and detailing cars, among other means. Filing his first income tax return in 1944, Buffett took a $35 deduction for the use of his bicycle and watch on his paper route. In 1945, in his sophomore year of high school, Buffett and a friend spent $25 to purchase a used pinball machine, which they placed in the local barber shop. Within months, they owned several machines in different barber shops.” (Wiki)

Kids of any age can work and earn money.  All they need is age-appropriate opportunities. For ideas on how mom and dad can help, see my blog post “Odd-jobs entrepreneur”.

In today’s world of fast-faced communication, tight schedules and even tighter budgets, the thought of making a million dollars now is appealing – especially for kids.  Though your kids may not be able to be a millionaire by age 21, I’ve created five tips that will teach kids how to think like one.  And thinking like a millionaire is the first step toward becoming one.  I’ve broken these tips down and will post one every couple days.

Here’s the first tip on how to think like a millionaire:

#1 Learn how to delay gratification

Self-control is the key to wealth.  The good news for those of us who have kids who were not born with the ability to delay gratification is that self-control can be learned.

In a recent survey by the National Academy of Sciences of more than 1,000 children who were studied from birth to age 32,  researchers found that “the kids who scored the lowest on measures of self-control—those who were more impulsive and easily frustrated and had the most trouble with delaying gratification or waiting their turn in line—were roughly three times as likely by adulthood to report having multiple health problems and addictions, earning less than $20,000 a year, becoming a single parent or committing a crime than kids with the most self-control.” Continue reading