I stumbled upon an article today from The Atlantic with the headline, “Millennials Who Are Thriving Financially Have One Thing in Common.” I love learning about what successful people do differently and I eagerly clicked on the article.
I was surprised to see what the answer was: rich parents. Children whose parents pay for college, help them buy a car or give them money for a down payment are more likely to become rich themselves. Instead of paying back student loans or worrying about driving a 20 year-old beater to work, they’re buying their first homes and upgrading their cars.
The article reminded me of another millennial story that made the headlines last week, “22-year-old blows her $90,000 college fund and blames her parents.” It was about a girl who called into a radio show and talked about how her parents gave her enough money for college, but she managed to spend it all before finishing up school. Faced with the real possibility of getting student loans, she complained that her parents never taught her about personal finance.
My parents have always helped me. They gave me my first, second and third car. They let me have a credit card at school to buy groceries with and paid my rent and utilities. They helped me pay for a study abroad trip to London and loaned me the money to pay my security deposit in my first single apartment. I’m so grateful that they’ve been able and willing to support me.
The best thing I can do to repay them (besides actually repaying them) is to be a good steward of my own finances. My parents have shared their financial mistakes with me so that I won’t repeat them. They taught me about Dave Ramsey, about budgeting and about credit card debt. They taught me about time shares and scams and how to ask for what you deserve. They set me up to be successful financially.
I think that’s one of the things that the Atlantic article missed. Many parents who are successful pass on what they’ve learned to their kids. The ones who don’t end up having kids who spend $90,000 in three years. I’m not saying there’s no personal responsibility, but we also don’t spend enough time teaching our kids about money and what to do with it.
I do know how lucky I am. Not only to have parents that earned enough, but that weren’t afraid to share their blunders in the hope that I wouldn’t repeat them. I see my friends whose parents earned the same and who failed to explain how a credit score works or how to save up a down payment for a mortgage.
If you’re a parent and feeling bad that you can’t pay for your kid’s college or their down payment, give them a greater gift. Teach them how to manage their money, tell them how much you earn and share your financial errors. Teach them how compound interest works, why saving young is so important and how to budget their expenses.
Not every rich kid ends up becoming rich themselves. It’s all about what you do with what you have.
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