“Working to help parents raise money-smart kids.”
Hello, friends!
Since I just released a new podcast episode, I’m excited to bring you this week’s “3 Ideas to Share & Save.”
So let’s dive right in!
— 1 —
Life, the Metaverse & Everything: My most recent podcast guest, Brett Wooden, is a credit union industry colleague and friend. So I really enjoyed speaking with such a tech enthusiast (and LEGO builder)!
I invited Brett to chat so you and I might better understand the much-touted “metaverse” and how it might be useful to us in raising money-smart kids.
As expected, our conversation was wide-ranging. Here are a few highlights to get you started:
- What should we be excited about in terms of the metaverse? [6:29] 🤩
- Should we be worried about TikTok? [27:49] 🤔
- How Brett embraces tech to teach his kids about money [33:35] 🤑
Admittedly, Facebook’s renaming itself Meta only heightened my skepticism that we should expect the digital world promised in the book Ready Player One. While I loved Ernest Cline’s novel, I have a difficult time believing we’re headed for headset heaven (or hell 👹).
That said, I agree with Brett that we’re already living in some form of the metaverse. Just look around at couples in restaurants, folks wandering through crosswalks and, most disturbingly, drivers glued to their phones to know many of us are inhabiting a virtual realm.
So how can we use this “brave new world” for good? Brett highlights one interesting way:
— 2 —
Delving Deeper into Behavioral Science: In The Art of Allowance, I suggest parents make sure some portion of their kids’ allowances goes into the Share and Save jars. I call these dollar digs “nudges,” using the language of the late Richard Thaler and Cass Sunstein.
In their book, Nudge, Thaler and Sunstein popularize the evidence-based idea that opting an employee into a savings program, like a 401(k), greatly increases the chance that he or she will save for retirement. Clearly, inertia is strong in us humans. So if the default is not to participate, requiring an employee to opt in, then the likelihood that employee will use the program decreases markedly.
And while our brains are a marvel of processing power, they can lead us astray. This quote from E.O. Wilson, which you may have heard on the podcast Your Undivided Attention, sums up this tendency nicely:
“The real problem of humanity is the following: we have paleolithic emotions; medieval institutions; and god-like technology. And it is terrifically dangerous, and it is now approaching a point of crisis overall.”
Recently, I’ve been delving deeper into how our brains work. In particular, I’m interested in how they can be problematic when it comes to money and how we can develop more strategies to help our kids (and, if I’m honest, ourselves) craft the lives they (and, by extension, we) want to live by using money to feed fulfillment.
For example, we would be wise to be wary of the language we use around our kids. Because social proof, the concept that people tend to follow popular actions, is a strong behavioral science concept.
Robert Cialdini, co-author of Yes!, gives an example: “Conveying the fact that many people litter acts as strong social proof for more littering.” He adds, “Using negative social proof as part of a rallying cry, [we] might be inadvertently focusing the audience on the prevalence, rather than the undesirability, of that behavior.”
So perhaps we would be wise to focus less on our kids’ spendthrift friends and more on the frugal ones.
— 3 —
Selectively Following a Titan’s Traits: John D. Rockefeller is often remembered as an antihero who built a monopolistic behemoth, Standard Oil, by establishing holding companies to hide his conglomerate’s true size and hindering competition by colluding with railroad barons and other petroleum producers. So over time, Rockefeller and Standard Oil became synonymous with antitrust legislation.
Still, Rockefeller was a successful entrepreneur in part because he internalized a core concept of money smarts: living beneath your means. (This idea is also part of our “Good Money Habits” video series for tweens and teens). And while we may not want to idealize the austere existence for which he was famous – we can live beneath our means and still have fun – we can take a page from his book and not “move the goalposts.”
Rockefeller understood that “moving the goalposts,” or increasing your cost of living as your earnings go up, was a dangerous game. In fact, Rockefeller’s son recalls how he used to wear dresses (He had three older sisters.) because his dad didn’t want to spend money on extra clothes. And when his employees or partners exhibited spendthrift behaviors, Rockefeller would admonish them. Again, we don’t need to be this extreme to learn from a titan.
Avoiding the dreaded “moving of the goalposts” is one of the reasons my previous podcast guest Bobbi Rebell urges us to stay connected with our adult children. Doing so helps ensure that the lessons we’ve been teaching them from day one, like those “nudges” to save, are behaviors they can continue in adulthood.
Bobbi’s point also underscores the importance of starting money conversations at an early age and continuing those conversations as our kids grow older.
And regardless of the age and stage of your kids, don’t forget to 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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