Alright, so here's the thing about today's episode.
If you don't have kids, and even if you never want kids, I think today's episode will be important to you.
I hope so at least. Because here's what this is about.
I have two kids. They are four and eight years old.
And when both of them were born, let's just say just a day or two before they were born, I wrote both of them what I wanted to teach them about money.
Now that's a weird thing to do for an infant for a newborn to be thinking about that, but hey, I'm a financial writer.
And B, I think it was a great exercise to take a step back and ask and say if there were 10 pieces of financial advice that were so important to you that you really wanted to make sure that you instilled these lessons in your children.
What would they be? And also when you form this as a letter to your children, you make sure that those lessons are very easy to understand, succinct, not confusing, no jargon, no formulas.
So I did this with both of my kids.
And I loved it. It was such a fun exercise to go through it.
And so my daughter will be five in a couple weeks.
So I was just thinking about this the other day.
And I want to go through with you today, the letter that I wrote her about financial advice that I wanted to teach my children.
And maybe this will be useful hopefully for your own children.
But again, even if you don't have any, hopefully you will enjoy these as much as I did for myself when I wrote them.
All right, so let me just start going through some of these.
The first one was it is easy to assume that wealth and poverty are caused by the choices that we make.
But it is even easier to underestimate the role of chance in life.
Everyone's life is a reflection of the experiences that they've had and the people who they've met.
A lot of which are out of your control and driven by chance.
Being born into different families with different values in different countries, in different generations, and the luck of who you happen to meet along the way plays a bigger role in outcomes than most people want to admit.
I want you to believe in the values and rewards of hard work.
But realize that not all success is due to hard work and not all poverty is due to laziness.
Keep that in mind when judging people, including yourself.
All right, second one. The highest dividend that money pays is providing the ability to control your time.
Being able to do what you want, when you want, where you want, with whom you want, for as long as you want, offers a level of happiness greater than any amount of fancy stuff, material stuff can ever offer.
The thrill of having fancy stuff wears off quickly.
But a career with flexible hours and a short commute will never get old.
Anything enough savings to give you time and options during an emergency will never get old.
Being able to retire when you're ready will never get old.
The ultimate financial goal is independence.
But independence is not black or white.
It's not all or nothing.
Every dollar you save is like owning a slice of your future that might otherwise be managed by someone else and whatever their priorities might be.
All right, next one. Your parents, I'm talking about, my wife and I, will work hard to support you and open the doors of opportunity.
But we are never going to spoil you.
We're not trying to be mean, but nobody can learn the value of a dollar without experiencing its scarcity.
Learning that you can't have everything you want is the only way to understand the difference between a need and a desire.
It will teach you how to budget and how to save and how to value what you already have.
Learning to be frugal without it or hurting is an essential life skill that will come in handy during life's inevitable ups and downs.
Now, as I read that in hindsight, have I done that for my children?
Maybe it's easier for my son, but I think my daughter knows that if she flutters her eyes in certain ways, I will buy her anything that she wants.
Easier said than done. All right, next one.
Napoleon's definition of a military genius was the person who can do the average thing when everyone else around him is losing his mind.
Managing money is the same.
You don't need to do amazing things to end up okay over time.
You just have to consistently not screw up for long periods of time.
Avoiding catastrophic mistakes, the biggest of which is maybe bearing yourself in debt is more powerful than any fancy finance tip.
All right, next one. Being how to live with less is one of the most powerful financial levers because you have more control over it than things like your income or your investing returns.
The person who makes $50,000 but only needs $40,000 to be happy is richer than the person who makes $150,000 but needs $151,000 to be happy.
And the investor who earns a 5% return but has low expenses may be better off than the investor who earns 7% a year but needs every penny of it.
How much you make doesn't determine how much you have and how much you have doesn't determine how much you need.
All right, next one. It's okay to change your mind.
Just nobody has their life figured out at age 18.
So it's fine if you pick a college major you end up not enjoying or even end up getting a degree in a field that isn't your passion.
It's fine if you work in a career and then decide that you want to do something else.
And it's fine to admit that your values and your goals have evolved.
Giving yourself and changing your mind is a superpower, especially when you're young.
It's interesting to read that for me in hindsight because I think some of my values and beliefs have changed over time.
I think the extreme adherence and almost worship of frugality may have been for a lot of people including myself in artifact of the 2008 financial crisis and the ensuing years where frugality was so important during a tough job market.
I still believe in it and savings and all of that.
But when I look at back at things I wrote a decade ago, I think I'm probably more passionate about it back then than I might be today.
It's an interesting thing for me to look back and think about.
All right, next one. Everything has a price and I'm not just talking about price tags.
The price of a busy career is time away from friends and family.
The price of long-term stock market returns is uncertainty and volatility.
The price of spoiling your kids is their own sheltered life.
Everything worthwhile has a price and most of those prices are hidden.
They're often worth paying but never ignore that they are true costs.
And when you accept this, you'll view things like time and relationships and autonomy and creativity as currencies all their own that can be just as valuable as cash.
All right, next one. True success is when the people who you want to love you do love you.
I stole that line from Warren Buffett.
And that love comes overwhelmingly from how you treat people rather than whatever your net worth might be.
The most important financial advice I can give you is that money won't provide the thing that you and almost everyone else wants.
No amount of money can compensate for a lack of character, honesty, and genuine empathy towards others, which are the things that will actually cause those other people to love you.
All right, last one here.
Your world will be different than mine, just as mine is different from my own parents.
So it's okay to reject any of this advice.
Everyone's different and no one has all the right answers.
Never take anyone's advice without contextualizing it within your own values, and goals, and circumstances.
And then I ended this letter by saying, your parents love you, please let us sleep.
She did not follow that rules but that's okay.
That's how children work.
So again, I think even if you don't have kids or you never do, I hope you can take some of that to heart because a lot of these things I didn't necessarily write for my kids.
I write them for myself as a way to think about money.
That's it for this episode.
This episode was brought to you by my friends at public.com and their new podcast The Run Down.
The Run Down is a very short and great podcast that talks about everything that's happening in the financial world.
From crypto, to the stock market, to the economy, check it out to get a good rundown of what's been happening in the financial markets this week.
