What makes a good employee? A good entrepreneur?

Good employees are obedient and willing to work hard at projects given to them by someone else. They accept a cap on their income in exchange for stability, predictability, and routine.

Good entrepreneurs are a different breed altogether. Creativity? Check. Self-discipline and motivation? Check. Independence? Courage to take calculated risks? Ambition to change the world? Check, check, check.

As you raise your children, which character traits do you want to instill in them?

Here’s the thing: Most parents instinctively try to “manage” their children. They try to make them obedient, predictable. They give them an allowance, often tied to chores, and if the kiddos get too “unmanageable,” they give them projects to keep them busy.

In doing so, they raise good employees, who go out into the world ready to be managed by someone else.

Don’t get me wrong—everyone should be an employee at times in their life. Sometimes you need the skills, the network, the money, or the experience that best comes from working for an established employer.

But some parents raise their children with a different mindset, an extra toolkit. These children grow up to be movers and shakers, and while they may work for others at times, it’s part of a greater picture in their life goals.

If you want to raise your kids to be good entrepreneurs, not just good worker bees, here are seven steps to prepare them for great things!

7 Lessons to Raise Your Kids as Good Entrepreneurs—Not Good Employees

1. Start with budgeting. | Ages 6-8

Most adults struggle with budgeting, yet a six-year-old can manage a budget if taught properly.

Why do most adults struggle? Because no one taught them how to do it properly.

Parents mess this up in all kinds of ways, but the most common is that they miss the most important piece: expenses. Budgets come with two columns, revenue and expenses.

And guess what? Revenue is the easy, fun part. Managing expenses and savings, on the other hand, proves a little messier.

Most parents just give their kids an allowance and call it a day. But if you want to teach kids budgeting lessons that are useful in the real world, you need to impose real-world expenses on your children—housing expenses, food expenses, entertainment expenses, and so on.

“What?! You want me to charge my six-year-old rent?! What kind of monster are you?!”

Imagine the following scenario: You start your child with a $20/month allowance, in exchange for X, Y, and Z chores. Of that, they’ll need to pay you $5/month in rent, $3/month for groceries, and a small percentage of entertainment costs that they request, such as dinners at their favorite restaurant, or going out to movies they want to see.

They also must save a bare minimum of 25% of their income. Whatever’s left, they can spend as discretionary income. Reinforce the habit to save early and often!

Don’t just deduct the expenses from their allowance, either. Make them pay you separately and specifically for each expense; perhaps different expenses are due at different times of the month.

Budgets have expenses, not just income. If you want your kids to grow up knowing how to manage their money in the real world, you need to teach them with a budget that resembles the real world as closely as possible.

2. Demonstrate the power of ROI. | Ages 8-10

When your children have mastered the science of budgeting, it’s time to show them that their savings is good for something more than just looking pretty on their bank statement. (And they should have bank statements—show them early that money is not green paper, but an idea.)

At first, you’ll need to rig their returns to demonstrate a point: When they put their money to work for them, they get more money. And the more money they save and invest, the greater their returns.

Suddenly, instead of 50-60% of their income going toward expenses, they’ll discover that returns on their investments can cover a big chunk of their expenses. They magically have more money every month! And they didn’t even have to do chores for it!

To make sure they earn a good return, have them invest their money with you as a private note that pays high returns. (Hopefully they’ll also gain a new appreciation for your real estate investments, since their money is now tied up in them!)

After the initial lesson sinks in, phase down the note returns to be more realistic, and have them start investing in real market investments alongside you. Have them invest in low-cost index funds as an easy—and historically effective—investment. You can watch the fluctuations together and talk about why the market moved the way it did.

Still, as important as it is that they start understanding markets, the most critical lesson remains the power of passive income.

3. Constantly push flexibility & mental agility. | All ages

According to one Canadian study, nearly two-thirds of today’s elementary school children will work in jobs that don’t exist yet.

Likewise, many of today’s jobs will no longer exist in 10-20 years.

Our children need to grow up with excellent soft skills. They need to know how to work well with others, how to influence those around them tactfully but not rudely or aggressively. They need to know how to communicate persuasively, both verbally and in writing.

Teach what you can…