“Working to help parents raise money-smart kids.”
Hello, friends!
We talk a lot about money in this newsletter because we aim to help our kids learn to use money as a tool.
“Money plays an important role in life, but it can’t be the only filter for how you decide to spend your time. Nobody will ever pay you to go on a date with your spouse or take your kids to the park or grab coffee with your parents.”
— James Clear, author, Atomic Habits
Of course, James Clear is right. Thinking intentionally about our money discussions here will allow us to think less about the green stuff most of the time.
We’re searching for euthymia, a Greek term that captures the feeling of knowing we’re headed in the right direction. While we each may take a different trail to get there, our general direction is towards money empowerment. (I think it’s useful to pair this with Neil Gaiman’s powerful “Make Good Art” commencement speech. Though Gaiman is speaking to art graduates, the advice is the same: we want to walk “towards the mountain.”)
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Cascade of Consumption: I love running trails in Griffith Park here in Los Angeles. While the uphills are exhausting, the downhills are what can really bite back if you’re not careful. I remember accelerating toward the finish of a trail race in the park. Downhill. I turned right, and my momentum almost took me off trail into a canyon. Luckily, I had time to catch myself and finish the race.
Spending has momentum, too. We buy a nice shirt. Suddenly, our grubby pants aren’t up to snuff. For teens — to whom fitting in is everything — this money momentum can build quickly. Our social media influencer landscape means the trail is even steeper for them. One pair of $200 Air Jordans doesn’t lead to a Marshall’s trip to buy discount sneakers. It can lead them off the trail.
This cascade of consumption is sometimes called “The Diderot Effect.” When Denis Diderot, a French philosopher, donned a newly gifted red robe, all the rest of his modest possessions suddenly paled in comparison to his rich, new garment. He felt compelled to replace his straw chair with one wrapped in Moroccan leather. And it didn’t stop there. Diderot’s spending spiraled out of control. Diderot finally realized the folly of his foray into spending. He realized the new robe he possessed had come to own him.
Fortunately, there are strategies we can use to keep our kids from succumbing to The Diderot Effect. Modeling some level of frugality is one. I describe three more in this short essay.
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Recognizing Retail Therapy: Whenever I feel consumption tugging on my shirt sleeve, pleading with me to purchase a new iPhone when mine functions just fine, I try to pause. This kind of yearning is almost always a sign that I’m missing something in my life, perhaps a semblance of control over its direction, not enough time with friends and family, or maybe I’m not offering enough value through my work. Respectively, these are the three pillars of self-determination theory: autonomy, relatedness and competence. Psychologists Edward Deci and Richard Ryan identify this trio as essential to our well-being in their groundbreaking self-determination theory.
The balance is an ebb and flow into and out of each of these pillars. I’ve found that I’m more likely to think “retail therapy” is a cure when one or more of the pillars is markedly lower than the others. And while it’s true that shopping can give us dopamine pleasure pops, it’s only when we address the real problem — an unfilled pillar — that we’ll feel fewer tugs on our shirt sleeves.
We created this Good Money Habits video to help introduce teens to the idea of thinking through our purchases. Being mindful of our what we buy is a key step towards money empowerment.
I also recommend giving voice to our feelings about money so our kids know we’re in the game with them. There are so many internal decisions that they don’t see. We can help them recognize that it’s okay to think that a shopping trip is the answer, but then to realize that “retail therapy” is only temporary. There are simply no substitutes for autonomy, relatedness and competence.
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The Teacher Is You: I’m skeptical that pouring more money and resources into financial education is the answer to financial illiteracy. There’s a limit to what classroom teaching can do.
“I think, however, that there isn’t any solution to this problem of education other than to realize that the best teaching can be done only when there is a direct individual relationship between a student and a good teacher—a situation in which the student discusses the ideas, thinks about the things, and talks about the things.”
— Richard Feynman
Feynman was part of the team that built the atomic bomb. He’s famous for communicating complex ideas in simple language, often in large lecture settings. If he recognized the limits of one-to-many instruction, I think we should listen.
Learning happens best in as close to a one-on-one teacher/student ratio as possible. We’re fortunate to have something like that with our kids. This newsletter exists for exactly this purpose — to help empower you to be your child’s teacher on his or her money-smart journey.
I recognize there’s value to the fine work teachers and volunteers do to improve financial literacy in the classroom. Exposure to these ideas can spark interest in money-smarts. But we can’t count on classrooms to provide our kids with the experiences that they’ll need to internalize important lessons and develop habits that will serve them as they venture toward adulthood.
We are their guides. Their teachers.
It’s a journey. Let’s remember 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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