When parents begin teaching their children about money, they often focus on the mechanics. Counting coins and cash. Earning money through chores and part-time work. How to open accounts and what different accounts are for. The magic of compounding interest. Budgeting and saving for purchases. 

But understanding how money works will only take your child so far. Kids also need to understand the correlation between the actions they take with money and resulting outcomes. They need to believe that they are in charge of their money, not the government, the markets, or turmoil on the other side of the world. 

Here’s why self-efficacy should be a bigger part of your money conversations with your kids. 

What would it be like to be ultra-wealthy? Would it mean homes in Hawaii and Paris? Do you envision sailing a luxury yacht across the Mediterranean? What about chartering a trip to space? While it’s fun to imagine, this isn’t the reality for most of us. 

You might have heard the term “Ultra High Net Worth” (UHNW) before. It’s a term for those who have north of $30 million in net worth. There are currently 142,990 UHNW individuals in North America1 out of 369 million in total2. That’s less than one-tenth of 1% (.03% to be exact). 

There simply aren’t that many people flying private, sitting front row at sporting events, or buying private islands…contrary to what we see on TV or in social media. So why do we sometimes feel the desire for more, even though we’re doing just fine financially?

The mindset of accumulating wealth is deeply ingrained in most of our psyches. It’s important in the sense that we all have goals and want to retire comfortably, but it can be dangerous in its extremes. Let’s take a moment to understand some of the psychology behind why this happens:

You’ve advanced in your career. You’re earning more and managing the responsibilities that come with success. Yet maybe you’ve maintained some financial habits that you should have left behind.

These habits are often rooted in past visions of security or achievement. But if the conditions have changed, it’s worth asking whether the behavior still fits. You might recognize some of these signals: