by Ron Lieber
So what did you stand for as a couple, I asked them, trying to get a bead on their own values and the character traits they cared about most. Blank stares.
How did you pick the town in the first place, the one you ended up leaving? Well, they said, it wasn’t a decision about community so much as it was the best house they could get for the money they were willing to spend. “I don’t remember its being anything more than that,” Mick said.
What about the kids’ allowance? Was it fairly regimented? “I don’t think we really thought about it,” he said. Indeed, they had four kids in six years before adopting two more many years later, so things were kind of busy.
What about the pressure of living in an affluent community and measuring yourself against what all the other families in town had or didn’t have? “I could never even imagine keeping track of all those gadgets and where the kids landed in terms of their peers,” Keely said. “There were no rules. All the kids were different. I’m beginning to sound like we’re winging it here! But when you’re a young couple raising your family, it’s a new process and experience for everyone. Nobody who is raising children has done it before. It’s a blank slate, and we’re also growing and changing as we raise our children.”
That last part is crucial. We know that kids change rapidly, and that each child is different from the last. The airtight method of getting the oldest kid to take the garbage out may fall flat with the youngest. Your child’s best friends may have no urge to blow the contents of the Spend jar or drain their debit cards while you struggle to reprogram your kid to hang on to money for more than a week. And all the while, as we strive to be the ideal authority figures with sensible rules and explicit, illuminating explanations that open windows in our children’s brains, we, too, are changing, trying to figure out what’s most important to us and how to transmit those values to our kids.
Still, there is one crucial question that applies to nearly everything we’ve considered so far. In fact, it’s one of the central questions of human happiness, productivity, and prudent financial planning, whether you’re Bill Gates or down to the last dollar each month: How much is enough?
Defining Enough and Narrating Your Spending Decisions
Kids aren’t born with much self-restraint. From an early age, they’ll take toys from others, eat sweets until they get sick, and stay out in the sun all day until they resemble lobsters. Later, they’ll play video games until their eyes glaze over if we let them and stay up until the sun rises. Many of them seem programmed for risk and rule breaking, and they often drink alcohol years before it’s legal and get drunk repeatedly and purposefully. They do these things because they can, because they’re fun, because they’re testing the limits of satisfaction and pleasure, going overboard fairly often.
But at the same time, as economist and parent Joshua Gans has noted, kids are acutely aware of the fact that the one economic law that most directly governs their lives is one of scarcity: There usually isn’t enough to go around. That’s why they have to fight for the toys or the swings or the cake piece with Thomas’s engine on it. By age 7 or 8, there are only so many spots on the travel soccer team or on a classmate’s slumber party invitation list. Accelerated math class has just 15 kids in it, and many schools discourage more than a certain number of seniors to apply to Ivy League schools, so as not to lower the school’s overall acceptance rate in admissions.
So kids are used to limits. In our homes, we want to set them within reason and do so consistently. This can be enormously challenging when many of the limits we set are completely artificial. Lots of us can afford to buy our kids more toys, treats, clothes, and gear than we actually do. Plenty of children want much more than we are willing to give them. Those of us who grew up with less than we have now may not be able to suppress the desire that our kids should want for nothing. Won’t, as a Denver financial planner named Jonathan Duong puts it, requires much greater conviction than can’t. And of course we want our kids to have the very best of what we do get them.
At the same time, we fear raising children who will think they have it all coming to them. So we end up imposing limits willy-nilly, ones that can sometimes be comedic. A favorite story of mine in this regard comes from a woman in Greenwich, Connecticut, whose family lives in a very substantial house. Despite their means, however, her husband refused to get a generator to keep the lights and air-conditioning on during long-lasting power outages. The kids, he explained to her, should know what it is to suffer. The idea of suffering in a mansion seems crazy, but plenty of parents create such internalized scoreboards with their own definitions of enough and then issue rulings without ever explaining their logic. Maybe that’s because there isn’t much of it.
One of the most profound challenges of having kids is that raising them isn’t simply about shaping their financial values and decision-making skills. Teaching them means questioning our own priorities as well, which is a healthy thing to do in any event. So defining enough for us grown-ups has to happen as early as possible in the parenting process. One good place to start is with a credit or debit card statement. For people who use cards often enough, the spending there can stand in for a large part of the household budget. So what does our budget say about our values? This question is a favorite of Carl Richards, who contributes sketches each week to The New York Times that illustrate how our feelings influence the way we handle money. After all, the list of things we spend money on is living proof of what we find valuable. Otherwise, why would we be spending money on it?
Try to identify categories where you spend the most discretionary money and consider which of the objects and outings brought you the most joy. Some of the cheapest meals create the most lasting memories. The line item for the deposit on last summer’s lake house may make your head explode with memories of sunsets and smallmouth bass. Perhaps there is cable television that you don’t watch anymore or subscriptions you don’t read. Inevitably, there will be things you want to consume twice as much of next year and half as much of next month.
What themes do all these individual transactions add up to? Perhaps the thread running through the bill is that you value experiences over things, or collector’s items more than clothes. Maybe incredible food is your highest priority, and you offset the cost with cheap furniture from IKEA. Or perhaps art is one of the biggest passions in your life and you spend heavily on that while economizing at home with lots of pasta. There are no wrong answers here as long as you’re not spending more than you’re making—but there may be themes that emerge that feel wrong to you when you look at it this way. And if your kids were to read the bills—and they’ll eventually see them lying around or find one on a screen—what would they say is important to you? Would you feel good about their assessment?
If not, imagine how you’d want the conversation to go about your own financial choices and how your kids might relate to them at different ages. Say you’re moving to another city for a new job. It may be for a higher salary, a lower cost of living, more satisfaction, or to be closer to family. Why wasn’t the old wage sufficient? Were the housing prices in the last town too high? Just how important is it to be happy at work or live near grandparents or uncles and aunts? These are, at their essence, questions about how much is enough. So is the baseline you set for needs and wants when it comes to kids’ athletic gear or clothing, as you decide whether you’ll pay for new clothes at Target, Old Navy, Lands’ End, Nike, Patagonia, or someplace even more expensive.
If your budget allows for growing opportunities to spend money on every child’s favorite activities, you’ll have ever more opportunities to narrate your spending decisions in these areas. At a certain point, we have to decide when every child has had enough lessons, coaching, tutoring, and summer camp. When you reach that point, talk with your kids about what you’ve spent so far and explain why it may be time to stop. It isn’t always easy to articulate these issues, but we need the practice. After all, college is on the horizon, and many families face
choices between private and public colleges that involve total price differences of more than $100,000. Many of us will ultimately need to be able to figure out how much education is enough and explain it to children who have their hearts set on the most expensive one of all.
A Word to Make Kids Wiser: Trade-Offs
We can’t have or do everything we want, and it’s a lesson we need to remind our kids of often. Even if there is enough money, there’s not enough time. At its root, the question of how much is enough is reflected in choices we make nearly every day. And many of these choices are trade-offs.
Yoni Engelhart, who lives in Brookline, Massachusetts, with his wife and four children, has spent much of his adult life considering them. Like many business school students, examining case studies of businesses and nonprofit organizations was a major part of his two years of study toward an MBA. Managing trade-offs, he discovered, was at the core of organizational success. One example that stuck with him was that of a successful bank that decided to do just three things well: checking accounts, savings accounts, and customer service. It traded off higher potential profits in loans or serving business customers in exchange for the money it could make serving more consumers better than other banks. Another such model is Apple, a company that’s chosen to compete in just a handful of product areas when consumers would no doubt try whatever other electronics it chose to manufacture.
Good living, he soon realized, is also about making good trade-offs. One of the most basic and yet emotionally complex trade-offs for adults is spending less now in order to have more money later. He wanted his kids to be considering that trade-off at the earliest possible age. So to create what he hoped would be an exciting alternative to consumption, he started a bank at his house (and on a Google spreadsheet) that pays about 20 percent in annual interest. That’s enough so that when he credits it to the accounts each Sunday, even the kids with the smallest balances can see the number go up. Word got out in the neighborhood, and about 20 children now have money on deposit at the First Kids Bank of Brookline. One boy brings the change he finds in the street to Engelhart’s house, where the money sits in plastic bags in a safe.
Engelhart has no problem with his children, the oldest of whom is 7, buying the things they want. His desire is simply that it be a considered choice. “It’s changed the conversation around spending,” he said. “Buying stuff is great but not buying stuff is also great, because you have the benefit of growing the money. So when they get a birthday check, their first instinct now isn’t necessarily to go out and buy something. They may decide to put the money in the bank as quickly as possible so they definitely don’t miss a Sunday.”
The Engelharts have introduced trade-offs into other aspects of their children’s lives as well. The family has established a toy equilibrium where any time a new one arrives on a birthday or through a purchase, an older one goes to the children’s hospital where their mother, Talia, works. The Engelhart children understand that they have enough toys and that overall growth in their collection probably won’t improve their lives all that much. So they think each time about which ones are most valuable, and whether a toy for playing outside that only gets used six or eight months out of the year is worth keeping.
The conversations extend to charity, and the two oldest children already get to decide where some of the family giving budget goes. Donations to a local food bank feed people directly and quickly, but donating an animal via an organization like Oxfam can help someone have milk and other dairy products for a long period of time, and meat later on. The kids decide how to split the funds among the two options.
Even seemingly unrelated matters can become part of the trade-off conversation. When the fourth Engelhart child was about to arrive, Yoni engaged the older children in a discussion about whether the family should replace a six-year-old stroller that was ratty but still functional or use the money to spend a few nights away in New Hampshire. This was a tough one: an experience they would enjoy versus a stroller that they would derive no benefit from. But his 7-year-old daughter informed him that the wheels don’t lock the way they are supposed to and that their babysitter has a lot of trouble with turning as well. She was thinking about how she could make her sitter’s life easier, and the inconvenience mattered to her. “I look for excuses to have these conversations because I think they’re so rich,” Yoni said. “It develops brain muscles that will serve them well in life, not just financially but certainly financially.”
We should look for these opportunities, too. How much is enough, and what should we trade off so that we have all the things we need and enough of what we want to make us as happy as possible? It’s a savings question when it comes to allowance. It’s a spending question when it comes to helping kids learn to buy things that will give them the most utility and joy. It’s a question of impact when giving money away and trying to maximize the good it does. When kids start earning, we want them to figure out how much they need and to what end. And when we reflect on what we have, we want our kids to grow into young adults with perspective—people with a healthy definition of enough that is unique to them and isn’t based on what everyone else has or does.
That doesn’t mean we have to talk about money all the time. Smarts, kindness, loyalty, health—these things come first. “I want them to be interested, but not obsessed,” Engelhart explained. “I would be disappointed if this were the first thing they thought of each day.”
So over the 20 years or so that our children live with us, we should try to have just enough conversations about money and the values behind our financial decisions. Only then will they have a complete picture of where we stand, what we stand for, and how we make financial decisions. Given how much we invest in them, talking about what we spend and save and give away, and why, is one of the important legacies we can leave them.
And so it is with my family. We have no idea whether our daughter will grow up to be a dancer or a banker. We have no control over how much money she will make. But we can influence how she will think about whatever she has by being honest about what we do with our own money now. She should know how to save but also how and when to splurge. She should know how to protect herself, too, from her own feelings about money and those of others who might manipulate her. It is an essential part of parenting, even more so than getting her ready for standardized tests or her driver’s license exam.
We haven’t got very long, and the years go by so quickly. Still, we have these conversations because they endure. They’re an essential part of making successful adults—and contented ones too.
Acknowledgments
As I’ve gone about my reporting these last few years, friends and strangers have often asked me about the single most important thing I’ve learned. Turns out it wasn’t a parenting tip per se. Instead, it’s the enduring power of gratitude to give us perspective on our lives and make us happier overall. And I have so much to be grateful for.
This book was born of a couple of talks I gave to parents at the Abraham Joshua Heschel School in Manhattan and Berkeley Carroll School in Brooklyn. Thanks to Judith Shulevitz and Sophia Romero for inviting me and to the parents there for realizing that my work was adding up to something bigger before I did myself.
Because I subscribe to the newsletter of nonfiction book marketing guru Tim Grahl, who has taught me a ton and built me a very nice website, I knew to start creating a community around these topics on the day I sold the book. Thanks to Tim and Ken Kurson for helping me gather the tribe. Since then, thousands of people on my Facebook page have weighed in on matters large and small. It was yet another lesson in the fact that none of us is as smart as all of us; the distilled wisdom of the Opposite of Spoiled Facebook community is on almost every page of this book, and I’m so much wiser for having read every one of your comments.
To the members of the Invisible Institute, thank you for your unending generosity and collegiality. To the members of the Highly Visible Institute, thank you for the inspiration to bu
st through walls.
My editors at The New York Times have given me more freedom than I deserve to stretch the definition of personal finance about as far as it can go. Thanks to Larry Ingrassia and Bill Keller for bringing me in; Dean Murphy, Jill Abramson, and Dean Baquet for keeping me; and Phyllis Messinger, Jane Bornemeier, Cass Peterson, and her crew of copy aces for keeping me from embarrassing myself too often. Throughout my time there, Kevin McKenna has done more than nearly anyone to help me make an impact, and I’m also grateful to have had Adam Bryant, Kelly Couturier, Kevin Granville, Jose Lopez, Winnie O’Kelley, Claudia Payne, Jim Schachter, Lon Teter, and Vera Titunik in my corner. As this project was taking shape, KJ Dell’Antonia let me hang around the Motherlode blog, which allowed me to test ideas and get hammered when they weren’t quite good enough. And thanks, as always, to the Sulzbergers and their descendants for making our work at the Times possible.
I’m doing what I do today thanks to Edward Felsenthal, Dave Kansas, Jesse Pesta, and Eben Shapiro, who took me in at The Wall Street Journal 13 years ago. In the very best tradition of behind-the-scenes editors, Edward and Eben saw something in me that I never noticed in myself and nudged me toward the most fulfilling work of my career so far.
My fellow travelers and co-conspirators in personal finance in recent years have taught me so much about how to be more pointed, funny, skeptical, and humane. Praise be to Irina Aleksander, Ann Carrns, Sam Grobart, Mary Pilon, Carl Richards, Jennifer Saranow Schultz, Paul Sullivan, Nadia Taha, and Tanzina Vega. I’m proud of this book, but I’m not sure if anything can top the feeling of satisfaction I’ve gotten from working with Tara Siegel Bernard over the years to expose the unequal financial treatment of gay families.
