Embracing the Opportunity to Improve Ourselves (“3 Ideas to Share & Save” 067)

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“Working to help parents raise money-smart kids.”

Hello, friends!

As fans of this newsletter, you’ve likely heard my big announcement: I’m launching the first live course to help parents like you raise money-smart kids. 🎉

If you enjoy each week’s “3 Ideas to Share and Save,” then I think you’ll love this course. Find out more about it by clicking here.

And if you’re interested in participating, then join the waitlist now to save $250.

Without further ado, let’s move on to this week’s “3 Ideas to Share and Save.”

— 1 —

Earned Versus Borrowed:

“Do you think we have better intuition when the knowledge is earned versus borrowed?”

“Absolutely.”

– Luke Burgis and Shane Parrish on The Knowledge Project Podcast

Nobel Prize winner Herbert Simon said that chess masters quickly decide their next moves intuitively and then spend the rest of their turns tossing around those decisions rationally.

They are able to do so because they’ve banked experiential knowledge and internalized the game.

It struck me that we’re helping our kids learn something similar with an allowance.

We give our kids an allowance to afford them opportunities to bank financial experiences, both good and bad, that will help them make intuitively better money choices down the road.

So, for example, talking to our kids or even conducting stock simulations pales in comparison to their putting their own money on the line to experience the ups and downs of the market. 📈

— 2 —

Nothing Borrowed, Nothing Gained: Of course, idea number one above isn’t to say that borrowed experience is useless. Far from it!

As recently as last week, I’ve shared the importance of our being good money models for our kids. In fact, modeling is one of the three key ways they will learn about money.

So we should embrace the opportunity to improve ourselves as models for our kids throughout their money-smart journeys:

“One of the most profound challenges of having kids is that raising them isn’t simply about shaping their financial values and decision-making skills. Teaching them means questioning our own priorities as well, which is a healthy thing to do in any event.”

– Ron Lieber, The Opposite of Spoiled

For example, when my wife and I set up our kids’ Share jars, I realized I needed to amp up my own charitable game. So I began making more regular contributions to individuals or institutions I supported.

And soon enough, the student just might become the master. 😉 When we began discussing needs and wants as a family, I remember dropping and breaking my iPhone. I lamented that I needed to get a new one, to which my four-year-old smiled and retorted, “You don’t need an iPhone, Dad.” Touché!

— 3 —

Useful Versus Accurate: German archaeologist Heinrich Schliemann discovered the lost city of Troy by reading Homer’s epic poems, The Iliad and The Odyssey. At the time, researchers questioned whether Troy was even a real place because all scientific attempts to discover the city had failed.

In the same Knowledge Project Podcast episode I cite above, Luke Burgis notes, “[Schliemann] thought there was truth [in Homer’s works] even if it wasn’t scientific truths.”

Then Shane Parrish clarifies, “I think of that as sort of useful versus accurate. So the idea was totally useful, but we dismiss it because it’s not 100% accurate. So we just ignore it.”

Burgis and Parrish’s conversation reminds me of the topic of budgeting. Budgeting is considered a bedrock concept of financial literacy, something we must teach our kids lest they not become money-smart. Yet most of us don’t budget. 😐

When you think about it, budgeting is an accurate way to take control of your finances.

However, it’s not a useful method if people won’t do it.

I wrote about this problem — and posed a possible solution — in my latest essay, “You Don’t Need a Budget.”

Thanks again for taking the time to read these three ideas. I hope you continue to find this newsletter useful.

And until next week, enjoy the journey!

John, Chief Mammal

P.S. Please consult with a financial or investment professional before engaging in any decisions that might affect your own financial well-being.

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