Project Description

Main Takeaways

  1. This book examines the difficulty of parenting in a modern world of luxury and instant access, and suggests that parents use money as a teaching tool to impart important values to their children.
  2. It is argued that by teaching children about money, parents can help to instill a sense of patience, perseverance, and generosity.
  3. Book provides advice on how to effectively communicate with children when discussing money, and emphasizes the importance of allowing children to make their own spending decisions.
  4. By following these suggestions, parents can help to ensure their children are well-equipped to make informed financial decisions in the future.
  5. Encourages parents to set a good example by practicing responsible spending and saving habits. It is also suggested that parents use age-appropriate language when talking to their children about money, and to strive to build a trusting relationship in which children feel comfortable asking questions and expressing their opinions.

Book Notes

  1. Every new generation of parents finds it difficult to stomach the range of goods and experiences accessible to their children; but always-on, instant-access, no-waiting nature of modern life does feel fundamentally different. Everyday luxury has become the new normal during our lives – it is just hard to notice it.
  2. The Stanford expert on adolescence, William Damon, writes matter-of-factly of the many children “have privileges that were once reserved for royalty.”
  3. Kids should learn to wait for at least some things, to consider carefully the things they crave, and savor them once they arrive – question is how?
  4. Author observes an “epidemic of silence” around money that persists within families.
  5. We as parents may be under-saving or overspending or may have made many judgements of error in regards to money, so talking about money at all, let alone to inquisitive children for whom we are supposed to be setting an example, is just too uncomfortable.
  6. Parents even feel like “protecting” children from all this money stuff for “just a bit longer” – author believes this approach is naïve.
  7. Fears: talking about money too much will
    1. “produce” children who run after money.
    2. subvert kids values (implicit: money is dirty)
  8. Something that many parents fear : to have raised a spoiled child.
  9. Spoiled children tend to have four things in common: (note 3 of the 4 factors don’t cost a thing)
    1. They have few chores or other responsibilities,
    2. there aren’t many rules that govern their behavior or schedules,
    3. parents and others lavish them with time and assistance,
    4. and they have a lot of material possessions.
  10. Author makes the case that every value or character trait that helped define the opposite of spoiled (ex: generosity, curiosity, patience & perseverance) – could be taught using money.
  11. Every conversation about money is also about values. Allowance is also about patience. Giving is about generosity. Work is about perseverance.
  12. Negotiating their (children’s) wants and needs and the difference between the two has a lot to do with thrift and prudence.
  13. Author reviewed several studies on allowances, materialism and affluence and how they relate to kids’ curiosity, patience & character education.
  14. Book deals with the mundane, but crucial topics such as clothing, “chores”, saving, giving, spending during vacations, buying things & allowances.
  15. Parents want kids to have perspective –
    1. to know why they have more than most people in the world but never more than every one of their peers
    2. that there’s no shame in having more or having less, as long as you’re grateful for what you have, share it generously with others, and spend it wisely.
  16. If children are curious about money, and parents turn them away, they’ll turn to their equally clueless friends or worse, get their “truth” from what Google or Youtube thinks about money. Worse, they may stop coming to us with questions about many other important things that they’re curious about too.
  17. Encourage more questions; parents, instead of asking after school “so, did you learn anything today?” could ask “did you ask a good question today?”
  18. Our homes should be places of intrigue, where questions beget questions. Better than responding to a question with the “obvious” answer, respond with another question “why do you ask?” – in the most encouraging way possible.
  19. When they do, parents tend to talk more about money with boys than girls. Investing for boys, giving away for girls.
  20. Are we poor? “People who are poor don’t have everything they need, like food and clothing and medicine. We have those things, so we’re not poor.”
  21. Are we rich? What does it mean to be rich? Adults can’t seem to agree, ask open-ended questions.
    1. Does being rich matter? In what way?
    2. What traits do we look for in “good” friends?
    3. Living grandparents? good health?
    4. friends within walking distance?
    5. a park nearby?
    6. blessings from the divine?
  22. Many parents avoid talking to their kids about socioeconomic status because they believe that children don’t notice class differences until they’re teenagers.
  23. When kids challenge our spending decisions a) its never personal b) they’re trying to understand our priorities and values.
  24. Before answering questions such as “what is your annual or monthly salary?”, kids need to learn about what it actually costs the family to pay for the things that the family has and does. Income number (and saving number) needs to be understood in some context.
  25. Parents have to figure out when kids are ready to see what their monthly expenses look like – electricity, rent, phones, groceries etc.
  26. Author feels children should be involved with participating in some household chores – basic stuff, at a min what boarding students learn to do.
    1. It’s all too easy to default to the assumption that it’s more trouble to teach kids how to perform more complicated household tasks than it is to just do them ourselves, indefinitely. In doing so, however, we send a clear, strong message, according to Damon: We expect little of you, and you’re living mostly for yourself.
  27. Helpful to think of an allowance as a teaching tool – that gets sharper and more potent over a decade or so of annual raises and increasing responsibility.
  28. Primary virtue of receiving an allowance is learning patience – in a world that conspires against (and even disdains) the act of waiting.
  29. Learning to delay gratification is a key aspect of handling money (and life) well.
  30. A 2011 New Zealand study that followed 1,000 people from birth till age of 32 showed that those who had poor self-control as children were less likely to save money, have a retirement account or own homes or stocks as adults than those who had more.
  31. How much money should a child receive every week? For children under 10, $1 a week per year of age is a good start. [What might be an appropriate number for our child? Discuss]
  32. Think about the previous question in this context: We want them to watch the money grow and strive for a goal, so they should have just enough to buy some of what they want but not so much that they don’t have to make plenty of tough choices.
  33. Suggests dividing the allowance into three clear plastic containers: one each for saving, spending and giving.
    1. Spend: holds money for occasional impulse purchases. If we’re out, we front her the money & she gives us when we get home. [There are things that we won’t let our children buy, even if they’re using Spend money from their allowance]
    2. Give: In the same way we share our toys with our friends, we also share some of our money with people who need it. Waiting until the container is full before giving the money away will give them a real sense of accomplishment.
  34. Kids as young as 5 are able to distinguish wants from needs – and this is the starting point on how they make their spending decisions. Before giving out the first allowance, have them write down their own list of wants and needs.
  35. Things that parents bought but are lost or broken by the child – set some ground rules by reinforcing responsibility, no free lunch even if honest mistake, split the cost of replacement so kids start to have the opportunity to appreciate the value of things.
  36. Phones (later) : basic phone = need, smartphone = want. American context: they need to pay for these from their own savings (part-time work etc).
  37. UVA Prof Allison Pugh – our children are (in social settings) navigating an “economy of dignity” – their feelings of self-worth rise / fall based on their possessions & experiences that matter to them – this was true in poor and affluent communities.
    1. Research has shown that 6-year-olds keep score of which kids have what sorts of possessions and begin to make judgments accordingly.
  38. On Giving and Generosity: Parents have an essential role to play in modeling generosity, and researchers have shown that if parents give, kids tend to as well.
    1. Think of it is as a sort of duty; families who have more than they need ought to give something so that families who have very little can have more of the things that they need but can’t afford.
    2. research on happiness shows that the amount we give away is a great predictor of how happy we are.
    3. The give container’s presence reminds younger children to think about causes they might want to support, particularly if you empty it out on a regular basis, say every six months, and ask your kids to pick an organization to support right then.
  39. Found this bit interesting, particularly for our Indian context where children aren’t expected to work at all – until they’re past their Masters :
    1. Our reluctance to recognize and cultivate the work ethic in children is rooted in a transformation that occurred relatively recently. We’ve gone, as Princeton sociologist Viviana A. Zelizer wrote, from celebrating the birth of a child as the “arrival of a future laborer” to a society where “a child is simply not expected to be useful.”
    2. One of the more thorough studies on the topic noted that parents often forget that there isn’t a zero-sum trade-off between working and studying. Teenagers spend plenty of time watching stuff on their phones or laptops and hanging out with their friends, so working may not reduce studying time one bit.
    3. What our kids can learn from paid employment is a work ethic, that loose phrase that captures the ability to listen, exert ourselves, cooperate with others, do our best, and stick to a task until we’ve done it, and done it right.
  40. On Gratitude
    1. A number of scholars who are part of a boom in happiness studies have measured gratitude levels in children and found strong correlations between gratitude and higher grades, levels of life satisfaction, and social integration. There’s also a link between gratitude and lower levels of envy and depression.
  41. We live in the safest communities we can and send our kids to the best possible schools, but these places often come with social pressure to buy and to have things. That environment can give children a warped sense of what they really need in order to thrive and be happy.
  42. We can’t have or do everything we want, and it’s a lesson we need to remind our kids of often. 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.
  43. One of the most basic and yet emotionally complex trade-offs for adults is spending less now in order to have more money later.
  44. 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.
  45. Concept of toy equilibrium: 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.