“Working to help parents raise money-smart kids.”
Hello, friends!
Thank you for joining me on this money-smart journey.
We’re a small, albeit growing, group. But our potential should not be underestimated, for in the words of cultural anthropologist Margaret Mead:
“Never doubt that a small group of thoughtful, committed citizens can change the world; indeed, it’s the only thing that ever has.”
So let’s dive into this week’s “3 Ideas to Share & Save.”
— 1 —
Becoming an Expert: The 1976 “Judgment of Paris” wine tasting event shook up the culinary world. As this Harvard Business Review article details, the stunning result saw a small group of California wines top their French counterparts, upending centuries of belief in the superiority of Gallic grapes. Equally surprising was that so-called wine experts couldn’t distinguish between the two countries’ offerings:
“The tasting suggested that the alleged wine experts were no more accurate in distinguishing wines under blind test conditions than regular wine drinkers—a fact later confirmed by our laboratory tests.”
These findings called into question the value of so-called “experts.” Which begs a question: Will a totally rational approach to teaching our kids about money blind us to how they’re likely to behave (probably somewhat irrationally) when they start using money themselves?
We’re trying to raise money-smart kids in a world awash in consumerism. So how will our suggestion to save 10% of what we earn land when our kids are confronted with an endless flood of opportunities to spend?
Until they begin to practice with real money, the truth is we don’t know. We can guide them and offer up whatever expertise we might have, informed by experts on the subject, including me. However, it’s ultimately their own experience that will help them develop the expertise they’ll need to navigate the world using money as a tool.
— 2 —
Depth Beats Breadth: In his book The Art of Learning, Josh Waitzkin makes the case for deep dives into knowledge. To him, “depth beats breadth.”
For those of you unfamiliar with Waitzkin, he is the chess prodigy featured in the movie Searching for Bobby Fischer. In addition to becoming a chess International Master, Waitzkin won a Taiji Push Hands martial arts world championship. So he goes deep. Very deep.
Centuries before Waitzkin, Leonardo da Vinci was the original “Renaissance Man.” His interests were broad and diverse, and his curiosity was insatiable. Still, his depth of painting expertise is what makes him a notable historical figure. The Mona Lisa only happens with his devotion to his craft. And without his subject’s enigmatic smile, da Vinci’s broad array of interests might have ended up as footnotes in history.
As Waitzkin and da Vinci demonstrate, while there is undeniably value in building a breadth of financial literacy knowledge, a “kitchen sink” approach can blur our focus. As I explain in this short essay, we don’t want to lose sight of the forest for the trees.
Da Vinci’s depth of knowledge came from his wonderful mentors and implementing lessons with practice, practice and more practice. Similarly, we are our kids’ mentors, and practice is why I advocate starting an allowance early.
With practice, our kids can learn the three basic money-smart skills: distinguishing between needs and wants, making smart money choices and setting and saving for goals.
With practice, they can also begin to develop money-smart habits.
And as our kids age, we can add in these concepts from our “Good Money Habits” video series: saving instead of spending, weighing the costs of purchases, setting S.M.A.R.T. financial goals, spending less than we make and using money as a tool.
These habits are fairly simple to learn, but they require lots of practice to internalize.
— 3 —
How We Learn:
“Learning is not memorizing information. Learning is changing our behavior.”
-David Senra, host of Founders Podcast
A quiz is an effective tool. Well-integrated assessments can keep students engaged, providing necessary mental breaks and giving teachers feedback about the effectiveness of their lessons.
On the other hand, rote memorization and quizzes that aren’t strategically implemented aren’t particularly effective ways to help students retain knowledge.
Just yesterday, I couldn’t recall the name of a movie I’d watched a few years ago. And while it’s possible that my forgetfulness is due to something more serious, it’s much more likely due to The Ebbinghaus Forgetting Curve. The whaaaaaat?
The forgetting curve shows us how quickly our recall of a concept drops off. In my case, it had been years since I watched the movie I was trying to remember. So forgetting its name was less likely a sign of oncoming memory issues than it was simply proof that I’m human. Phew!
Ebbinghaus’s curve is another reason why we should be wary of relying on schools and quizzes to teach our kids money smarts. Since our goal is knowledge retention, not acquisition, we would need a longer-term program with some type of spaced repetition, such as in the Anki system I use to remember important concepts and ideas.
Of course, no amount of classroom learning provides the essential practice our kids will need to dive deep into money-smart habits that can lead to money empowerment as they become adults.
So as they make their way, let’s all remember 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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