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What the Rich Teach Their Kids About Friendship

Surrounding yourself with the right people is a key to financial success

What do the rich teach their kids about money? I’ve spent most of my life helping people answer that question.

When I was a young boy, I had the privilege to learn from two men about money. My poor dad, my natural father, was a wonderful, hard-working man whom I loved very much. But he didn’t know how money worked, and he struggled financially most of his life even though he had a high-paying government job. If I had followed the advice of my poor dad when it came to money, I would not be rich today.

My rich dad was my best friend’s father. Rich dad was a self-made millionaire who built a hotel empire in Hawaii from nothing. He learned lessons about how money works by working in his family store as a kid, and he applied those lessons to his own businesses to great success. He taught both me and his son, Mike, many things about money. Today, I am rich because of the lessons my rich dad taught me about money.

The power of financial education

I’m passionate about financial education because I know how much it can change a person’s life. And I’ve spent most of my adult life working to teach those who are willing to learn the secrets that the rich teach their kids about money. And the work is never done.

Not too long ago, I shared how most millennials have been grossly under taught about money from their baby boomer parents. As I shared, close to 80% of millennials had not invested in the stock market. The reasons why were telling: 40% said they don’t have enough money. 34% said they don’t know how. 13% blamed student debt.

While I’m not a huge fan of investing in the stock market and prefer things like real estate and commodities, tracking if people do invest in the markets is a good indicator of whether they will invest in anything at all. And as I wrote, the reasons millennials gave for not investing were symptoms of a lack of financial education and old beliefs about money being handed down from generation to generation.

If you don’t have enough money it’s because you have never been taught how to make money outside of getting a good job—old money advice.

If you don’t know how to invest it’s because you weren’t taught how money works and were probably told to save and buy a house—old money advice.

If you have so much student debt you can’t afford to invest, you believed the lie that you needed to go to a good school to be successful—old money advice.

As an antidote to this thinking, I gave three action items for millennials to take: invest in financial education, stop saving for retirement (and start saving for investments), and learn to delay your gratification (millennials love to spend).

Today, however, I want to talk about a foundational element that the rich understand and teach their kids that enables them to do the action items I just listed above.

The rich understand that in order to change your life, you must change who you spend your time with.

If you want to be rich, choose your friends carefully

When Kim and I were at the beginning of our financial journey, we knew that our friends who didn’t have money or who weren’t interested in money couldn’t help us on that journey.

People who we had spent much time with in the past started to spend less time with us. Some of them are still our friends today, but not in the same way they were before we were rich. Some of them were jealous of our success and that caused friction. Those friendships naturally faded.

I have several friends who have made billions of dollars in their lifetime. Three of them have told me the same thing. Their friends who have made no money have never come to them to ask them how they did it. But they do come to them to ask for one of two things, or both: a loan or a job. I’ve found this to be true in my life as well.

As the old saying goes, “Birds of a feather flock together.” If you want to be rich, it’s important to be friends with the right people. Many people will find that, as they get richer, the friendships that they had before also change. If you’re rich, it’s harder to be friends with people who are adverse to money, business, and investing. It’s simply a matter of different focuses in life.

While you can’t control your friends, you can control who you’re friends with. And if you want to be rich, it’s important to choose your friends carefully. The following are a few short tips on how to do so.

Choose friends based on what you can learn

Personally, I don’t choose my friends by their financial statements. I have friends who have taken a vow of poverty as well as friends who earn millions every year. At the end of the day, the way I choose my friends is by what I can learn from them.

There are certain people I’ve become friends with because they had money. I wasn’t after their money. However, I was after their knowledge. My friends who have money like to talk about money. They don’t brag about it, but they do like to discuss the subject of money: how to make it and how to keep it. I learn a lot from these friends.

Other friends, like my sister who is a Buddhist monk, have different lessons to teach me. I learn about spirituality and other things from them. But I never talk with them about money because they have nothing to teach me, and often, they are not teachable about money. Nevertheless, they are my friends because they have knowledge, and that is valuable.

If you want to be rich, be friends with people who have something to teach you.

Don’t be friends with Chicken Littles

I know people who will always try to talk me out of a deal. Many years ago, a man I know told me he was excited because he found a 6 percent certificate of deposit. I told him I earn 16 percent from the state government. The next day he sent me an article about why my investment was dangerous. I have received 16 percent for many years now. He still earns 6 percent. His fear holds him back, and if I listened to him, his fear would hold me back too.

Don’t listen to poor or frightened people. Being rich is as much about mindset as it is about knowledge. Poor and frightened people have a poor mindset and are always complaining about how the sky is falling. They are Chicken Littles who will always tell you what is wrong with your business or investment idea. They are motivation killers.

If you think about it, you can see how the friends you choose directly impact your ability to invest in financial education, start saving for investments, and learn to delay your gratification.

If you hang out with people who prefer to talk about Netflix and sports, you’ll find yourself spending time on those things rather than on learning about money. If your friends are chicken littles, they’ll reinforce that you should save your money in a savings account and that investing is too risky. And if your surrounded by people who love to spend money on experiences, you’ll never learn the discipline to delay your gratification so you can invest later.

If you want to be rich, be friends with people who have the same mindset as you, or who at least won’t try to change your mindset to be more like theirs. Life is too short to spend time with people who don’t help you move forward.

Who are your friends?

Original publish date: February 06, 2018