“Working to help parents raise money-smart kids.”
Hello, friends!
I think a lot about how we can raise more consumer-conscious kids. For instance, I likened the marketing landscape to a battlefield in a short essay, and I shared my controlled consumption slider concept in last week’s newsletter.
This week, I’d like to take a different approach by piggybacking on the notions of some prominent thinkers across disciplines to help us reflect on money empowerment more constructively.
— 1 —
The Diderot Effect: Before succumbing to depression at any early age, author David Foster Wallace discussed the American consumerism crisis in this 2003 interview. At the 12:40 mark, Wallace warns us about wants becoming needs, using drug addicts as an example.
Buying stuff affects our brains in much the same way as doing drugs. Like a hit or a snort, a purchase at our favorite store creates a “dopamine rush.” And we’re searching for our next fix soon after. Ever forgotten what was in an Amazon package you ordered the day before? This may be a warning sign you’re looking more for the rush than the item.
The Diderot Effect is another way consumption sinks its nasty hooks in us. Before there was anything akin to American consumerism, French philosopher Denis Diderot wrote an essay about what happened to him when he came into some money. Simply buying a new robe led to a cascading series of additional purchases.
As I wrote in this essay, let’s suppose you buy a nice couch. Suddenly, you become a person who owns nice things. Then you start buying items to fit your perceived identity: a new rug, a new painting, a new coffee table. Before you know it, you have a whole different living room. And a hole in your pocket. 🥴
What you don’t have is a whole new you.
Our kids will undoubtedly grapple with the superficial identities that stuff seems to create for us. This is why an allowance is a useful tool. It empowers children from a young age to make money choices and to experience how purchases might affect them. And their own journey is likely a more effective teacher than any lecture from us.
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Creating Identities: Identity theft is a pervasive threat. Of course, we want our kids to be smart about what information they share and with whom. Yet, as idea #1 above illustrates, perhaps the more worrisome identity thieves aren’t hackers. They just might be ourselves. 😳
Again, mindfulness is the compass we can use to find our way. James Clear, author of Atomic Habits, explains that “every action you take is like a vote” for the type of person you want to become.
“So no, doing one push-up doesn’t radically transform your body, but it does cast a vote for ‘I’m the type of person who doesn’t miss workouts.'”
Similarly, having our school-age children put one dollar a week into a Save jar like I describe in this essay isn’t going turn them into millionaires, but it can help them build a useful habit. It’s a vote for the type of person they can become. And, as any personal finance expert will tell you, paying yourself first is a key to financial independence.
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Money Empowerment: Angela Duckworth, the Penn professor best known for her book, Grit, recently appeared on The Knowledge Project Podcast (one of my favorites). She explained to host Shane Parrish that we want to help kids focus on what they can control versus what they cannot. This is an empowering way to live, probably best personified by the Stoics.
Though she wasn’t talking specifically about money, Duckworth was getting at the essence of money empowerment. Money-smart learning begins with increased mindfulness of the choices you’re making and the goals you’re setting. It stands to reason that the more in control you are, the better.
Our children start out fairly mindful of what they want, but moving to mindlessness is easy because it’s all around them. Ads encourage them to buy without thinking, and our own modeling might be less mindful than we’d like. Fortunately, we (and they) can manage how we act and react. 🙌
Though our kids can’t control their friends’ collecting high-priced sneakers, they can control whether such behavior makes sense to them or not. As Ramit Sethi uncovered in this episode of his podcast, there is a strong correlation between accumulating stuff and amassing serious debt. We can help our children navigate our consumer-centric world by encouraging them to hone their abilities to distinguish the difference between purchases made just to fit in and more mindful uses of money.
Our kids will become money-empowered as they gather experiences. And allowance is a tool to help them get there. They’ll slowly figure out what kind of lifestyle they want to lead, how much money they will need to live that lifestyle and the types of purchases that make sense versus ones that are just another hit.
Wherever your child is on his or her journey, know that I am here to help you raise him or her to become money-empowered.
And, remember, enjoy the ride!
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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