Increase your Child’s Chances of Becoming a Millionaire


Wouldn’t it be nice indeed if your children end up millionaires? And what we wouldn’t do, as parents, to increase our child’s chances of success of being one. Oddly though, we sometimes think that the best way to increase the odds is by spending a whole lot on their education – starting in their pre-school years, giving them hand-outs, buying them expensive gifts. But this may not be the case.

Some young parents I know are obsessed in enrolling their children in an expensive private Montessori – thinking that this will boost their child’s chances of success in their adult life. While some believe that this may help boost their IQ (Intelligence Quotient), there is another school of thought that IQ is hereditary and that there is a maximum level of intelligence for a given person. While early childhood education helps us reach the maximum potential at a much earlier time – this will not be the determining factor of success in the adult years.

There are more important factors like EQ (Emotional Quotient) that will determine your child’s success. Unlike IQ, a good thing about EQ is that it can be taught and developed. And it’s best to start them young. But that’s another discussion altogether.

Rather than focusing on spending your way to your child’s success, consider the following tips I have learned through the years:


There is really little debate that high school success predicted college success. Nearly 90 percent of those educated are now in professional careers – with 40 percent in the highest tier jobs.

Those who graduate college would have developed the necessary discipline to finish what they have started – which will help them become reliable, consistent and well-adjusted. By all measures, the majority of graduates would have good lives.

But it also doesn’t mean that they will end up millionaires.


Money shouldn’t be the reason for higher education. While it is true that higher education may lead to higher incomes, one should also consider the return on investment.

It can be said that in the long term, a plumber can make as much for a stretch of time than a Harvard graduate. For graduates of Masters and Doctoral degrees, Doctors and Lawyers, it takes a longer time finish studies, longer loss of full-time income, and longer payment on loans to complete a higher education – while a plumber have been making decent enough money a lot earlier, has less student loan, and investing earlier. Read more.

A plumber could have just as many chances to being millionaires as the doctor or lawyer next door because what really matters is how much of the income is invested.


There is nothing much a high-income career can do for your children, if your children are not smart with the money they earn. We have heard of horror stories about celebrities, sport athletes, and lottery winners going bankrupt. Why? That’s because they lack financial literacy needed to manage their money.

Here are a few tips I read on the web:


According to the book by Danko and Stanley, ‘The Millionaire Next Door’, the majority of wealthy people are married and stay married to the same person. According to a study, people who split up experience an average wealth drop of 77 percent. That is how divorce decreases ones chances in becoming millionaires.  More.

So, teach your kids to become loving and faithful. And it’s best to lead by example.

Furthermore, help them set priorities – like finishing school, finding work, and getting married before having kids. Studies clearly show that people who follow the success sequence do better.


Guess who’s driving all those BMWs and Mercedes-es? Not millionaires. Eighty-six percent of “prestige/luxury” cars are bought by non-millionaires. The most popular car maker among millionaires, according to Stop Acting Rich? Toyota.

And why not? The millionaire mindset always think of value. And that’s why the majority of millionaires own their cars, rather than lease. And that is also why only approximately a quarter of millionaires have a current-year model, while another quarter drive a car that is four years old or older. And more than a third of millionaires tend to buy used vehicles.

A study from ‘The Millionaire Next Door’ suggests that actual millionaires tend to drive economical cars, live in middle-income neighborhoods, wear simple watches, and buy suits off the rack. That is why they are wealthy.

On the other hand people who look rich may not actually be rich; they tend to overspend — often on symbols of wealth — but actually have modest net worth and, sometimes, big debts.

And last, but not the least,


The worst thing a parent could do is build propagate a lifestyle of entitlement. Most people who become millionaires have confidence in their own abilities. They do not spend time worrying about whether or not their parents were wealthy and are able to give them handouts.

Consider the following research uncovered about American millionaires in the book ‘The Millionaire Next Door’:

  • Only 19 percent receive any income or wealth of any kind from a trust fund or an estate.
  • Fewer than 20 percent inherited 10 percent or more of their wealth.
  • More than half never received as much as $1 in inheritance.
  • Fewer than 25 percent ever received “an act of kindness” of $10,000 or more from their parents, grandparents, or other relatives.
  • Ninety-one percent never received, as a gift, as much as $1 of the ownership of a family business.
  • Nearly half never received any college tuition from their parents or other relatives.
  • Fewer than 10 percent believe they will ever receive an inheritance in the future.

Children need to grow up making their own decisions, become creative, accountable for their actions, self-reliant and independent. Hand-outs sometimes make them dependent, unable to solve their own problems – because they can always rely on their parents to solve their problems for them.

Encourage them to get part-time jobs as students, work hard, save for their expenses, and invest for their retirement.

The Millionaire Next Door is available on


How We Compare to the Millionaire Next Door

house-car-vintage-oldI recently read an article on the Millionaire Next Door written by Thomas Stanley and William Danko. The article speaks to the general population who thinks that millionaires own expensive clothes, watches, and other status artifacts. What is interesting is that they found out that this is not the case. And in that article, they listed what a prototypical American millionaire would tell about themselves

I thought it would be a fun exercise to see if my wife and I fit in the general profile of what a prototypical millionaire would be like. So, here it is:

I am a fifty-seven-year-old male, married with three children. About 70 percent of us earn 80 percent or more of our household’s income. I am 53. Married with children. Before my wife retired, we were earning almost the same income.
About one in five of us is retired. About two-thirds of us who are working are self-employed. Interestingly, self-employed people make up less than 20 percent of the workers in America but account for two-thirds of the millionaires. Also, three out of four of us who are self-employed consider ourselves to be entrepreneurs. Most of the others are self-employed professionals, such as doctors and accountants. I want to work for 2 more years. I don’t own a business nor am I a highly-paid professional. I used to earn a decent income as an employee in the IT industry.
Many of the types of businesses we are in could be classified as dull normal. We are welding contractors, auctioneers, rice farmers, owners of mobile-home parks, pest controllers, coin and stamp dealers, and paving contractors. I am employed in a non-profit organization. I am a former IT professional.
About half of our wives do not work outside the home. The number-one occupation for those wives who do work is teacher. My wife is retired. She used to work for a retail company as an analyst.
Our household’s total annual realized (taxable) income is $131,000 (median, or 50th percentile), while our average income is $247,000. Note that those of us who have incomes in the $500,000 to $999,999 category (8 percent) and the $1 million or more category (5 percent) skew the average upward. Our current household income is roughly $40K. In the height of our careers, we used to earn $110-$130K per year.
We have an average household net worth of $3.7 million. Of course, some of our cohorts have accumulated much more. Nearly 6 percent have a net worth of over $10 million. Again, these people skew our average upward. The typical (median, or 50th percentile) millionaire household has a net worth of $1.6 million. We have a net worth of roughly $2.1 million.
On average, our total annual realized income is less than 7 percent of our wealth. In other words, we live on less than 7 percent of our wealth. We live on 3% of our wealth.
Most of us (97 percent) are homeowners. We live in homes currently valued at an average of $320,000. About half of us have occupied the same home for more than twenty years. Thus, we have enjoyed significant increases in the value of our homes. We own our own home with a current value of around $1 million. We have our current home for 11 years now.
Most of us have never felt at a disadvantage because we did not receive any inheritance. About 80 percent of us are first-generation affluent. We never felt disadvantaged about not having inheritance nor being the middle child. Yes, we are first-generation affluent.
We live well below our means. We wear inexpensive suits and drive American-made cars. Only a minority of us drive the current-model-year automobile. Only a minority ever lease our motor vehicles. I drive second-hand Japanese-made cars. They are well-built and lasts a long time. I never lease cars.
Most of our wives are planners and meticulous budgeters. In fact, only 18 percent of us disagreed with the statement “Charity begins at home.” Most of us will tell you that our wives are a lot more conservative with money than we are. Yes, my wife is a lot tighter on spending than I am.
We have a “go-to-hell fund.” In other words, we have accumulated enough wealth to live without working for ten or more years. Thus, those of us with a net worth of $1.6 million could live comfortably for more than twelve years. Actually, we could live longer than that, since we save at least 15 percent of our earned income. Yes, we have a “go-to-hell fund” of roughly 18 years worth.
As a group, we are fairly well educated. Only about one in five are not college graduates. Many of us hold advanced degrees. Eighteen percent have master’s degrees, 8 percent law degrees, 6 percent medical degrees, and 6 percent Ph.D.s. My wife and I hold bachelor degrees.
Only 17 percent of us or our spouses ever attended a private elementary or private high school. But 55 percent of our children are currently attending or have attended private schools. I attended a private school while my wife attended public school when we were growing up.
As a group, we believe that education is extremely important for ourselves, our children, and our grandchildren. We spend heavily for the educations of our offspring. Yes, education for us is extremely important.
About two-thirds of us work between forty-five and fifty-five hours per week. I work no more than 40 hours a week. We are typical 9-5 people.
We are fastidious investors. On average, we invest nearly 20 percent of our household realized income each year. Most of us invest at least 15 percent. Seventy-nine percent of us have at least one account with a brokerage company. But we make our own investment decisions. We invest 18% of our income annually – to maximize our RRSP room.
We hold nearly 20 percent of our household’s wealth in transaction securities such as publicly traded stocks and mutual funds. But we rarely sell our equity investments. We hold even more in our pension plans. On average, 21 percent of our household’s wealth is in our private businesses. Most of our cash investments are in mutual funds. We own our home and are debt-free. We don’t own a business.
As a group, we feel that our daughters are financially handicapped in comparison to our sons. Men seem to make much more money even within the same occupational categories. That is why most of us would not hesitate to share some of our wealth with our daughters. Our sons, and men in general, have the deck of economic cards stacked in their favor. They should not need subsidies from their parents. We only have one child. A daughter.
Overall, our most trusted financial advisors are our accountants. Our attorneys are also very important. So we recommend accounting and law to our children. Yes, we trust our financial advisor. We have a 20 year-relationship with him. He was instrumental in getting us to where we are today.
I am a tightwad. For sure, my wife and I are tightwads!