6 Ways to Teach Your Children About Building Wealth

by | BiggerPockets.com

I normally talk about apartment building investing but I wanted to talk about another topic that I’ve slowly started to work on with my kids as they get a bit older.

I have four kids from 5 to 12, and while all of them are learning about money, I felt the two older ones (9 and 12) are ready for the next phase.

Here are the 6 Ways I’m teaching my kids about building wealth.

Lesson # 1: Practice Delayed Gratification

Sit each of your kids down and put some kind of treat in front of them (I chose a HUGE marshmallow that requires a knife and fork to eat!). Tell them that they can eat the marshmallow now, or, if they wait for 15 minutes while you go off and do something else, they will get another marshmallow.

Then see what they do.

Some of my kids immediately ate their treat. The others sat there, looked out the window, or got a book, and they waited for their second marshmallow.

Use this exercise as a teaching lesson about instant vs. delayed gratification, and then look out for other opportunities to learn this important lesson in life and in business.

Lesson # 2: Learn to Handle Money

We give our kids a small allowance ($10 per month). While chores are expected to be completed and are NOT paid for, we do give the kids opportunities to earn extra money. We set a price for the project and if more than one wants to do it, we do a reverse auction: the lowest bidder wins the project!

We then use the 80-10-10 rule for handling that money: 80% of it they can spend as they wish, 10% is saved and 10% is to be donated. This teaches them the importance of saving and giving back, two lessons that even adults have great difficulty with.

Lesson # 3: Read Rich Dad Poor Dad

I read this book when I was 35 and I was like “where has this book been all my life?” and I vowed not to make that same mistake with my kids.

I made my daughter read this when she was 9 years old, and she wasn’t ready for it (“It’s boring, Daddy!”). But now she’s 12, and I think I’ll try again!

The important messages in this book are the difference between liabilities vs. assets, the importance of minimizing your expenses, and the idea of passive income. Wow, powerful lessons.

Lesson # 4: Live Within Your Means

This is such an important lesson from Rich Dad Poor Dad, but you also hear it from other places like your grandparents and places of worship. Unfortunately, our culture teaches us exactly the opposite, so instilling this value in our kids early on is so important.

You can teach this lesson in so many ways each day, you just have to be on the look out for opportunities. This involves delayed gratification, discipline and saying “no” every once in while. This won’t be easy because most of the other kids get whatever they want.

Lesson # 5: Do a passive income project

This is a more difficult lesson to learn because it’s a little more abstract. It will require time and more maturity for your children to really learn this. Use examples your kids can understand. For instance, one example of a passive income business could be a gum-ball machine. Let’s say you buy it for $100 and put it into a busy grocery store. Ask your child to research the cost of the gum balls. How many gum balls do you think the machine could sell in a week? Have her calculate a profit and loss projection. Then talk about how much time this passive income business will require. Then talk about buying a second and third machine.

Related: What Constitutes Passive Income?

Lesson # 6: Make it Fun!

A lot of these lessons are so abstract and confusing to kids and so you’ll have to look for ways to make it fun. One way to do this is to play games, such as Cashflow for Kids and Monopoly. Or help them start their first business, maybe a lemonade stand, cutting the grass, baby sitting or shoveling snow – or maybe even gum ball machines! All of these projects require planning, investment, marketing and execution. If you already have some real estate investments, begin involving your kids in the business.


Teaching our kids about money and building wealth at an early stage is so critical. Unfortunately, it’s not taught in school (even college!) and so it’s up to us.  Teaching our kids about building wealth is not only an important life lesson but presents us with great opportunities to spend more time with them.

How have you taught your kids about money?

Photo Credit: Low Jianwei

About Author

Michael Blank

Michael Blank is a leading authority on apartment building investing in the United States. He’s passionate about helping others become financially free in 3-5 years by investing in apartment building deals with a special focus on raising money. Through his investment company, he controls over $30MM in performing multifamily assets all over the United States and has raised over $8MM. In addition to his own investing activities, he’s helped students purchase over 2,000 units valued at over $87MM. He’s the author of the best-selling book Financial Freedom With Real Estate Investing and the host of the popular Apartment Building Investing podcast Apartment Building Investing podcast.


  1. Michael:

    Our little guy is just three, but for his third birthday he received “Moolah – The Money Savvy Cow” { http://www.msgen.com/assembled/home.html }. We had given Money Savvy Pigs to my sister’s kids when they were six and three and I work with them to plan their savings.

    My son gets all of the scrap metal pulled from our renovations and all the beverage containers left on-site by the workers. A couple of times a year, we take a trailer full to the redemption centre and he get’s paid.

    At the moment he favours the “Save” and “Invest” slots on Moolah – he wants to buy a particular little yellow house which is next to one of our rental properties {I’m not sure why that house … remember the kid is only three}. The “Save” slot is to buy an 18″ high plastic dinosaur.

  2. Michael,

    Great points and even better to start these conversations with your kids at an early age!

    Unfortunately, our schools do not teach our children about building wealth, which really translates to financial literacy.

    Lesson #4, however, I would like to tweak to: Live BELOW your means. How far below is what you can tolerate.

    Having an emergency fund, the bigger the better, is key, with the hope that you won’t ever have to use it!

    Too many people did not do this and when they lost their jobs, they lost their homes etc., etc. And who is to blame for this?

    They were too busy “Keeping up with the Joneses”.

  3. I think the key is to set the example and talk to your kids about money. Get them involved in fun ways in your business. Set the example.

    How many of us never had money conversations with our folks. It was a taboo subject. Its time to make it a common subject. Either teach them to control money or allow them to be controlled by money.


  4. Some great ideas on a very important topic.
    My little ladies are still very young.
    But we try to instill good thoughts money ideas in them early.
    The big one (5) recently mentioned how she’d like an American Girl doll bit she knew that it was “to many dollars”. 🙂
    I’m doing something right!

  5. Ah, conduct the famous Stanford marshmallow experiment at home! http://en.wikipedia.org/wiki/Stanford_marshmallow_experiment Personally, I’d try something tastier 🙂 Re #3, a good alternative to Rich Dad Poor Dad for younger kids might be The Richest Man in Babylon – my kids related to that pretty easily when young. Re #5, you might try an online T-Shirt (or mugs, etc.) business featuring your kid’s artwork. At minimum, your kid will be able to snag aunts, uncles, grandparents, etc as customers to generate some passive income for a while. That worked well for one of my sons in his pre-teens when he loved to crank out cartoons, so we put some on shirts and he sold them via CafePress.

  6. Great Info Michael!

    Don’t forget that they also have a “Rich Dad Poor Dad for Teens” too. I have 3 kids and I make sure that all of them will have a real financial education before they set out on there own.

  7. Another alternative to Rich Dad Poor Dad is ,Rich Dad Poor Dad for teens. It has same principles with a few additives that the kids can relate to easier. I gave it to my oldest to read.

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