“Working to help parents raise money-smart kids.”
Hello, friends!
On this Memorial Day, I’d like to take a moment to thank the men and women who sacrificed their lives to preserve our rights. It’s for that reason that I have the privilege of sharing my thoughts with you, including today’s “3 Ideas to Share & Save.” Thank you for taking your valuable time reading them.
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What is The Art of Allowance?: An allowance is a powerful tool. I recorded my latest podcast short, published this morning, for folks who bristle at the word “allowance” to perhaps better understand its benefits.
Truthfully, I get why some folks don’t love the term. We’re on this journey, at least in part, to avoid raising spoiled kids. But an allowance can sound like we’re just doling out money. However, a handout is exactly what we’re trying to avoid.
Clearly, “allowance” is a loaded word. So for that reason, I considered coining a new term when I wrote my book. But in the end, I decided instead to clarify its meaning and to help us all learn the art of using it.
If you’re a consistent reader of this newsletter, then you’ll know that purpose and intention matter. And while the catalyst for recording this episode was to respond to naysayers, folks who employ an allowance will find it useful as well.
As always, I’d love to hear from you.
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Are we there yet?: When my younger daughter would say, “I’m not very good at algebra,” her sixth grade math teacher would quickly quip, “Yet!”
Carol Dweck kicked off this “yet-volution” with the research chronicled in her groundbreaking book, Mindset: The New Psychology of Success. Dweck’s insights are echoed in an adage you may have heard:
“Becoming is better than being.”
Parenting is the ultimate state of becoming. “Are we there yet?” Pretty much never, but we’re always on the journey. When we think deeply about being good parents, we have a sense of what doing so means. We want to instill our values and behave in accordance with those values. So we’re in a constant state of becoming (hopefully) better parents.
A few years ago, my agitated daughter sneered, “Am I an experiment?” Because I was annoyed with her, my knee-jerk reaction was, “No!” But upon reflection, and a good night’s sleep, I fessed up. I had to admit that, of course, she was an experiment.
And honestly, how could child-rearing be anything but an experiment?
An experiment is a procedure we use to test a hypothesis. In this case, the theory is that we can raise halfway-decent kids. However, our experiment is made more difficult because the conditions under which we’re testing this hypothesis are not exactly controlled.
Our kids keep growing, the environment around us evolves constantly and we ourselves are in our own continuous states of change. Also, despite the perfectly curated lives we see on social media, nobody has it all together. We’re all fighting battles others know nothing about.
Our younger daughter just graduated high school, and my wife and I are still in the process of becoming better parents. To that point, I wrote this essay after talking to a friend who had just become an “empty nester.” He was worried he hadn’t taught his kids everything they needed to know. Like that’s even possible!
He’s a parent, and he was just worried his kids weren’t prepared for the real world.
Yet! 😉
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The Paradox of Identity: In his book, Atomic Habits: An Easy & Proven Way to Build Good Habits & Break Bad Ones, James Clear explains how habits help us create meaningful and useful identities. Starting with small changes (Atomic, get it?), we can become better versions of ourselves.
For example, just lacing up your sneakers can help you become a person who exercises regularly. And simply saving a tiny fraction of allowance or work income can help your kid become a person who saves.
Paradoxically, identities can be paralyzing. Particularly when they are designated rather than developed intrinsically. Perhaps, like me, you’ve been guilty of using language like “my daughter the saver” or “my son the spender.” Such assigned identities can be harmful.
Marc Andreessen, creator of the groundbreaking Netscape browser that helped launch the interwebs we now know, is a clear thinker with a useful framework from which we can crib. Now a successful tech investor, Marc likes to say he has “strong opinions loosely held.” His opinions are strong because he’s thought them through. But he holds them loosely because, when better knowledge comes along, he changes his mind.
Perhaps we can think of identities in much the same way. For the children we consider “spenders,” we can incentivize saving by matching money they drop into their Save jars or, for older kids, put into Roth IRAs we help them set up.
On a personal note, our eldest daughter is at college and is having some difficulties with spending now that she’s on her own (albeit not entirely). She has a job, and my wife helps her by reaching out to ask if she wants to transfer tax money she’ll owe next year into our account to remove any temptation to spend. She’s been taking us up on the offer because the tax bill was a pain point last year.
Will she eventually need to learn to set aside this money on her own? Of course, but this is part of the process of becoming an adult. And if we can help her continue to build her identity as someone who is money-smart and thoughtful about the choices she makes around the green stuff, then why not do so?
We’re all in a constant state of becoming, exposed to new, and sometimes better, information. And although we often can’t help but assign labels to our kids, we don’t want them to be anchored to identities that might not be useful.
Since we’re all on this money-smart journey, let’s make sure to enjoy it.
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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