Blog | Entrepreneurship

Why Kids are Losing Wealth

How We Can Fix It

If you’re a parent struggling to make your kids see the value in education, you’re not alone.

It’s our duty as parents to make sure our kids become more successful than our generation and to pass their knowledge on to their kids someday.

However, you’ve probably noticed that kids today don’t have any drive, appreciation or sense of work ethic at all. Why is that?

Our school system is to blame. Right now, the school system is teaching our kids how to be compliant employees, not innovative business owners. But it didn’t use to be that way.

My grandfather’s generation were entrepreneurs. They had limited education (or none) and started businesses to support their families. It took hard work and many long hours to turn that businesses into a mini empire, but it was a legacy that could be passed on the next generations.

Now my parent’s generation, however, were typically pushed to receive a higher education (one that my grandparents couldn’t have). Education was not to be taken for granted and was seen as the key to success. Unfortunately, with that push came an unwillingness to carry on the legacy that my grandparent’s generation built. The school system began to groom students to become good employees rather than continue the entrepreneurial mindset of their parents.

Because of this shift in mindset, we now have a statistic that only 16% of family businesses make it to the third generation.

Third Generation Wealth

This third generation (typically the grandkids), are from a completely different world. With technology advancing every two years, designer clothes and electronics being a necessity for elevated status, they don’t want to run their family businesses. Instead, they want to do their own thing. But they have no real-world experience nor knowledge of what it takes to be a business owner.

I’ve noticed that kids that are handed a family business have no motivation to develop or maintain healthy relationships with people who contribute to their wealth accumulation. It’s typically due to the lack of understanding the values that it took to build that business in the first place.

The educational system is broken. Our kids are programmed to memorize facts instead of becoming independent thinkers. Students are taught to achieve good grades rather than learn valuable skills. The system teaches our kids to be risk averse, yet the business world is the exact opposite.

So, what can we do about it?

We can stop relying on the education system to teach our kids these values.

We can give our children the opportunity to earn their own money through chores, their own small business and our allowing them to help us in our businesses. Teach them how to pay themselves first. Teach them the value of giving back. Educate them about investing and how their money could be used to create more money in the future (cashflow). Allow them to set up a bank account and learn about budgeting their income.

It’s our fault that our kids will have little or nothing left of money received from their grandparents.We haven’t challenged the school system nor questioned what was being taught.

But we can do something about it now.

All our kids need is a little practical experience, which will give them some wisdom and leadership skills. Once they obtain the knowledge needed to understand business, their leadership skills will kick in and allow them to apply the knowledge they’ve learned in the real world.

In the end, we can help steer our kids towards entrepreneurship.

If you think that your kid might be interested in real estate some day, have them check out my book The ABC’s of Real Estate Investing.