Is there no universal money advice for kids? (“3 Ideas to Share & Save” 055)

“Working to help parents raise money-smart kids.”

Hello, friends!

I am enjoying listening to Morgan Housel‘s appearance on The Tim Ferriss Show. Housel is an exceptional storyteller who brings important money lessons to life on his Collaborative Fund blog and in his terrific book, The Psychology of Money. In fact, I loved the latter enough to make it our client gift of choice this year. 🎁

So it should come as no surprise that Housel got me thinking of 3 ideas I want to share with you this week.

— 1 —

No Universal Money Advice?: Housel is as expert as one can get about money mindfulness, a subject I’ve been exploring with you in this newsletter recently.

Given this expertise, Ferriss was curious about how Housel was teaching his now six-year-old son about money. Surprisingly, Housel said he isn’t. Noting the dramatic personality differences between his son and two-year-old daughter, Housel remarked that there isn’t universal money advice for children.

Naturally, my interest was piqued. Housel’s comment reminded me of a profound point made by my podcast guest Brad Klontz: We should take all personal advice with a grain of salt. Both Housel’s and Klontz’s points align with the philosophy of Fred Rogers (aka TV’s “Mr. Rogers” 👔), my newsletter subject from two weeks ago, that each individual is special. This view in turn lines up with my own hesitation about general advice, as every parent and every child is different. What’s more, each child within every family is unique.

Still, I think there are universal abilities to consider, like the three money-smart skills I’ve written about here, in this essay and in my book, The Art of Allowance: distinguishing between needs and wants, setting and saving for goals and making smart money choices.

— 2 —

But Wait, Autonomy!: Upon reflection, though, Housel hedged, explaining that he wanted to talk to his kids about the importance of autonomy and independence. Too often, achieving financial freedom is an overlooked subject in our conversations with our children. After all, it is this independence that is the gateway to a fulfilling life of interests pursued. 🎨🎿🎸

Unfortunately, monetary consumption is practically unavoidable, however strict we are about our kids’ media consumption. And anyone with multiple children knows that there is a certain amount of hardwiring of savings habits. So I agree with Housel that financial independence and autonomy are universally good, especially if we can model and discuss the benefits with our kids from a young age.

Speaking of benefits, Housel reflects on how frugality enabled his father to achieve financial independence early enough to retire from a stressful medical career. As a result, he says his dad’s never been happier. And I can relate, as my dad has made the most of his retirement from banking. He even wrote his first book, Shot Down Over Italy, about his war-hero uncle. He’s a terrific model, just like Housel’s father.

— 3 —

Three’s {Good} Company: If we combine autonomy with competence and relatedness, then we arrive at the three basic human needs outlined by Edward Deci and Richard Ryan in Self-Determination Theory (SDT).

Here’s an excerpt from my book that describes the value of SDT:

If we are in pursuit of or have lives filled with appropriate amounts of each [autonomy, competence and relatedness], then we are much more likely to be happy, fulfilled or, as Krista Tippett of On Being prefers to say, “flourishing.”

Autonomy is essentially freedom. (We drive the car.) Competence refers to our ability to be experts at something. (We fix the car.) Relatedness is genuine human interaction. (We drive our fixed car to a friend’s house to sing karaoke, bake cookies and play Settlers of Catan.)

Did you notice what is missing from Deci and Ryan’s imperatives? Stuff! How many of us recognize the inability of stuff to provide fulfillment as we find ourselves at the mall with shopping bags in hand? I’m from New Jersey. We know malls. We know stuff. If a boy from Jersey can learn that stuff is not fulfilling, then anyone can.

Stuff can provide only momentary jolts of excitement—not happiness in the larger sense. Understanding the power that stuff holds over us is critical as we begin the process of raising money-smart, money-empowered kids.

We don’t need to feel guilty for wanting. We do, however, need to know exactly why we want. Is it a desire planted by marketers? Or is it something that saves us time, our most precious resource? Are we engaging in “retail therapy” to heal emotional wounds? If we’re fulfilling an emotional void with stuff, then we probably want it for the wrong reasons. The rush we receive from stuff is always fleeting.

I like to imagine a world in which our kids are focused on autonomy to control what they can control, competence in their chosen vocation and hobbies and, finally, relatedness through fantastic friendships.

Plus, as an added bonus, these things, just like money, compound! 📈

As always, I invite you 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.

​Like what you just read? You can sign up for the newsletter here.