Every so often, a new blogger enters the scene who you just KNOW is going to be a success. My friend “Cubert” over at Abandoned Cubicle is one such blogger. Since I was hanging out at a campground all week with no internet (wow, I LOVE retirement!), Cubert’s jumping in with a guest post this week.
Cubert’s better suited than “Empty-Nester Me” to discuss teaching your children about personal finance, and I’m excited to share his thoughts on money habits we should teach our kids.
Hint: Resilience > Happiness.
Take it away, Cubert!
Should You Teach Your Children How to be Millionaires?
An article on Yahoo! Finance caught my eye this past week: 4 millionaire money habits to teach your kids, by Jeanie Ahn. I thought the advice was pretty good. Boiled down, you simply coach your kids to:
- Understand compounding,
- Avoid frivolous spending, and
- Be charitable.
We can get behind that, right? Take these four pillars of smart personal finance and find ways to engrain them into those little impressionable minds. My question is whether it’s wise to impose a “millionaire mindset” on children.
The answer to the question is “Yes”, but with a strong caveat
Teaching good money habits at a young age is a super smart thing to do. We frankly don’t do enough of that as a society, as evidenced by spendthrifts dominating the landscape, while indebtedness surges and swells to newer heights.
But before we program our young ones to “crush it”, we should first teach them resilience. Why resilience? Well, my perspective is that resilience makes life a meaningful pursuit, whether you’ve got a million, or zero dollars.
There was a time I might’ve pushed “happiness” on you. Not anymore. Happiness is simply too far-fetched a concept to corner. We are by nature, beings of survival and struggle.
Happiness is often fleeting. But a long-standing sense of contentment through purposeful living, girded by resilience is fully achievable.
Some childhood money lessons
Growing up, I had a typical kid’s perspective on money. Back then, I figured more money was a good thing, because it meant more “stuff”, whether it was more toys, more baseball cards, or more video games.
I was also quick to recognize that for my parents, more money meant less stress. Growing up lower-middle class opens your eyes to these things.
As a kid I often heard, “We don’t have the money for that.” I overheard my fair share of squabbles between my folks about money issues. It stresses you out as a kid.
I’d love to have worried more about the Detroit Tigers making the playoffs, than whether my dad would come through with his child support payment. Money was often a point of contention in our home. And I suspect this became a driver for some of my current money habits.
I’ll never forget a “traumatic” experience at age 12. I’d somehow managed to drop $50 out of my pocket while on a long bike ride. I’d never had that much cash on me before. It could’ve been birthday money?
At any rate, I was panic-stricken. I even called a friend of my mom’s to see if she’d want to buy some old video games. I simply couldn’t process losing that much cash so carelessly, so I had to find a way to get it back.
In a sense, I suppose you could analyze that as a healthy relationship with money. If I’d lost the cash and just blown it off as if it were nothing, I can only imagine how that’d translate into poor money habits as an adult.
On the flipside, I was sure a far cry from resilient. I don’t think I ever shared with my parents or anyone else except my mom’s friend about losing my birthday money that day. Maybe a resilient version of Cubert could weather the loss better. He doesn’t seem to mind flushing fifty plus at the blackjack tables on occasion. D’oh.
What I hope to teach my kids
Along with the four pillars I mentioned at the outset, I hope to impart to my kids a little wisdom on “resilience.” If nothing else, I want my kids to emerge as healthy, purpose-driven, and kind adults. Note again, I did not write “happy.”
Happiness will come and go, but again, if our loveable minions can latch on to a meaningful struggle or cause (i.e., “purpose”), they will have found their pot of gold. Will they be millionaires? I don’t really care. I hope they don’t either.
Will they be tough enough to withstand all that life might throw their way? If I can help it, they will be.
You can easily connect the dots between what many of us teach our kids during toddlerhood and how these early lessons benefit kids as adults. You impose a little structure, with a set bedtime, meal times, table manners, and so on, and let them create their own spaces within set guardrails.
I’m pretty sure structure has benefited me in adulthood so far. The 5 AM wake-up call is just one example.
That and other good habits formed out of discipline and structure might’ve been useful for how I manage money these days. So in a way, structure helps build resilience. When things go amiss, we have structure and routine to fall back on.
Are there more than four pillars we can teach our kids about money?
Enough about resilience. We need to crawl out of that rabbit hole FAST. Let’s ask the next question: “As a personal finance and early retirement self-proclaimed guru, what else would I add to Mrs. Ahn’s list of four?”
For starters, I’d add:
- Don’t beat yourself up for bad decisions in your past. Many get discouraged when looking back on 15 working years, with little to show for it. I know I did.
But I made a choice to reverse course. It took time, but I’ve come to a place financially where I have options. Learn from your mistakes. They will happen.
- Work hard. Work with persistence. Work with resilience. You could easily break that out into three separate platitudes. In my view, a good all-around work ethic encompasses these facets by default.
A key observation I’ve made over 4+ decades of life is that people who work hard tend to have their shit together better than most. A great work ethic isn’t a cure-all, but it gives you a leg up for accelerating wealth generation. If you’re working hard, you’re also going to learn more as you produce and “DO.”
Millionaire kids don’t need silver spoons
I’ll leave you with this notion. You don’t need to roll out the “red carpet of privilege” to your kids in the hopes they’ll become wealthy magnates when they grow up.
Avoid the Jones’s well-meaning but ill-informed push to put Sally and Junior through elite private schools. Unless your only desire is to create superior intellectual beings with issues, maybe stick to solid public schools…
Millionaires are sometimes also geniuses, but what sets the millionaire apart isn’t intellect. Rather, it’s discipline and a focus on wealth generation. And oh yes, hard work and resilience play key roles.
Allow your kids to hold part-time jobs to learn the value of a paycheck. Anymore, it seems teenagers avoid part-time work like the plague.
Teens should use their pluck to help them pay for college. Don’t leave it all up to mom and dad. They’re going to help, but our fine students need to have some skin in the game.
It’s not the end of the world to start a career with some student loan debt. And I’m speaking from experience ($20K for myself, and over $100K for Mrs. Cubert.)
What can we conclude?
Teaching kids about good money habits is wise, but teaching them how to operate in a challenging world is wiser. Avoid putting emphasis on the former over the latter. And by all means, avoid coddling.
If it isn’t clear, I subscribe pretty heavily to the stoic approach to life. But I’m a soft stoic at best. No one has to suffer, but we can agree that kids who grow up to be kind, caring, healthy and content is all we could ask for. The millionaire part is trivial.