“Working to help parents raise money-smart kids.”
Hello, friends!
First, I want to thank you for joining me week after week on this money-smart journey we’re taking with our kids.
On some Mondays, my thoughts and words flow easily. But other weeks, I sit at my computer staring blankly, worried that I might not have an idea to share.
Inevitably, though, it’s that process of sitting down that does the trick. For doing so is the easiest way to channel the worry of idle fingers into the work of ideas that I hope will guide you on your journey.
So let me introduce you to this week’s “3 Ideas to Share & Save.”
— 1 —
Let Worry Become Work:
“How much pain have cost us the evils which have never happened.”
-Thomas Jefferson
We’re humans. So we worry.
The author of our Declaration of Independence wrote these words of advice to a friend’s son. It’s useful guidance we can bring to our own work to hopefully free ourselves from the bonds of worry. Instead of an impediment, worry can be a catalyst for action.
Just as a mill converts water’s potential energy into the kinetic energy of grinding or hammering, we can convert the potential energy of worry into the kinetic energy of work.
For example, inflation has us all preoccupied. So perhaps we follow Your Money Vehicle author Jedidiah Collins‘ advice to channel our weighty worries into learning opportunities:
And do the words “estate planning” instantly turn you into a procrastinator desperately searching for something — ANYTHING — to avoid drawing up your durable power of attorney for health care? 😬
Pocketnest founder Jessica Willis has some suggestions that can help:
What’s more, do your past money mistakes keep you from starting an allowance program or answering your kids’ money questions? (Both actions can leave you feeling exposed and embarrassed about your own lack of knowledge.) Troutwood CEO Gene Natali offers some guidance that can help you convert concern to creativity:
Incidentally, Thomas Jefferson’s list of life advice also includes a maxim familiar to our journey:
“Never spend your money before you have it.”
-Thomas Jefferson
— 2 —
Stay the Course: In his Princeton senior thesis from roughly seventy years ago, legendary investor John “Jack” Bogle wrote that reducing fees was essential for investors to maximize growth. Bogle also contended that managed funds perform no better than industry averages (as represented by indexes like the S&P 500).
Both insights, though obvious now, were not so clear-cut at the time. They were subversive seeds that, when finally sprouted, became Vanguard, the first firm to provide the popular and powerful low-cost index funds many of us invest in today. 📈
Bogle, who passed away in 2019, is known for his maxim, “Stay the course.” This fairly simple approach no doubt informs Popcorn Finance host Chris Browning‘s “boring investing” philosophy, which I’ve shared with you in a previous issue:
But even Bogle had to hit rock bottom to learn his own lessons. In the investing fervor of the go-go sixties, Bogle, who ran the previously conservative and successful Wellington Fund, was swept up in the “short-termery” of the era. He let go of the wheel, veering off course. And as often happens, chasing quick bucks caught up with him when he was fired from the fund.
So Bogle soon began Vanguard, this time sticking with his mantra. “Stay the course” advises us to ignore day-to-day market fluctuations and mind insights from Bogle’s original thesis: Fewer fees lead to greater growth, and indexes tend to perform better than managed funds over time.
(Note: If you want to learn more about this fascinating investing maverick, then I highly recommend this episode of Founders.)
— 3 —
Mind the Money Primes: This newsletter exists in large part to help you think about money in ways I hope will inform an ongoing, productive conversation about “the green stuff” with your kids.
Conversation is the delicious, healthy fruit of The Art of Allowance Project. Still, even the juiciest, fiber-rich Pink Lady apple will give you a stomachache when eaten to excess. Similarly, you want to be mindful when conversation reaches its practical limit.
Research has shown that the use of money-themed phrases like “high salary” or “expensive home” can lead to selfish behavior. Even a stack of Monopoly money or a finance-themed book on the coffee table can serve as a “money prime.”
Daniel Kahneman, the Nobel laureate and author of the behavioral psychology guidebook, Thinking, Fast and Slow, explains that in one study, money-primed people were found to be less willing to spend time helping a fellow student. And in another, they picked up fewer pencils when an experimenter dropped a bunch on the floor.
We certainly don’t want our kids to behave selfishly. So while conversation is essential, just like eating an apple, we want to be mindful when too much of a good thing might lead to unintended consequences. 🍎
Don’t worry, though. We’ll figure out the “sweet spot” by working through it with our kids.
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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