"We may not realize it, but children are hyperaware of money,” wrote Ron Lieber in his New York Times bestseller The Opposite of Spoiled: Raising Kids Who Are Grounded, Generous, and Smart about Money. That means money should be an important discussion point in every household, and Lieber, who also writes the “Your Money” column for the New York Times, can tell you that talking to kids about money goes beyond ensuring they understand basic financial behaviors. It is an opportunity to discuss and model generosity, perseverance, and other values that are important to the family and, ultimately, to a well-lived life.
Why, in a nutshell, is money so hard to talk about?
There are a whole bunch of reasons, but what people fail to acknowledge up front is that every money conversation is also a conversation about values — not just about what we’re willing to pay for experiences in our lives, but because every bit of spending, giving, or saving speaks volumes about our priorities. Every conversation is about feelings, values, and strong-held beliefs. It can be difficult for people to articulate it. It can become even more difficult to articulate with a child. Parents can become defensive; they feel they’re being challenged by their child’s questions. Sometimes that’s the case, but more often than not, the questions come from a place of burning curiosity. Money is an incredibly strong force in the world, whether we like it or not.
In your book, you discuss that there has been a shift in the world that means a 22-year-old now needs to know how to save money and have the habits to follow through with it. Can you explain what you mean by that?
The thing that is dramatically different now is the fact that the cost of an undergraduate education has gone up at two or three times the rate of normal inflation over the last generation. It’s incredible how high the numbers have gotten and how fast the cost has gone up. The cost of an undergrad education including room and board is now over $100,000 at flagship state schools. If students aren’t getting any financial aid, they’re looking at over $300,000 at many private colleges by the time it’s all over with. The numbers are just staggering. All of a sudden we find ourselves in a situation where 18-year-old kids are making the most consequential financial decision of their lives while they’re still teenagers. It’s not fair to have them make that decision if we have not readied them for it. The conversation needs to start years in advance so they have a reasonable set of expectations, so they’re coming into their senior year with their eyes wide open.
You call money a teaching tool that uses the value of a dollar to instill in children the values we want them to embrace — those traits being curiosity, patience, thrift, modesty, generosity, perseverance, and perspective — and say that every conversation about money is also about values. Can you elaborate on that?
The three-jar approach to allowance is a great illustration of this and gives kids the ability to practice week in and week out. The save jar is about patience and delayed gratification in a world that conspires against waiting.
The spend jar is about modesty, prudence, and thrift, which is not to say we ought to be cheap (thrift and cheapness are not the same). It’s about identifying what sort of spending makes you the happiest. Doing stuff on average is better than having stuff. We want to give our kids as many opportunities as we can so they’ll be thrifty — spend more money on things they love the most and little on the things that don’t matter.
The give jar is generosity, and from there it’s just one step further to gratitude and perspective, thinking about the best way to connect it to your community and the world with whatever you have left to spare.
What advice would you give on defining needs versus wants?
Every family has to have that conversation on their own, and the definition of those terms will change over time. It’s a calibration. In every category of spending where are you going to plant your budget flag? When I speak on these topics I use underwear and outerwear as an example. Parents don’t think their kids need expensive underwear. Outerwear is different. If you live in Seattle and walk to school every day, investing in a decent raincoat might be worth it. Parents might say, “We’re not going to give you money for Victoria’s Secret underwear at 14 so we can save for the family vacation.” If we don’t have those conversations, how are our kids going to learn to make those decisions for themselves? If those decisions are random or thoughtless in your household, maybe that’s a good sign that the grownups in the house need to think a little bit more about what’s important to them.
Camps today struggle with the prevalence of cell phones and at-your-fingertips technology. You make the case that while children today may need basic cell phones, smartphones are a want. Can you further explain that?
What do they actually need to accomplish with this device? When all of us were growing up there was no such thing as a cell phone. In some respects, it was not a need then and it’s not a need now, as long as you can find access to someone else’s phone. On a base level, we don’t want our kids to be left out today, so they should be able to text to be involved with texts among their group of friends, but they don’t need access to apps 24/7. They don’t need to have that on their very first phone.
When it comes to cell phones at camp, I never understood why this ought to be a close call. Camp directors should think about what the parents hope they’re buying. They often want camp to be the pause that refreshes. For better or worse, we try to buy our way into the very best community with the very best schools. That often means our children are surrounded by technology, and we don’t always do a good job of turning off. Part of what is so attractive about camps is they offer a spiritual delousing. You separate yourself from all of that. You get to return to a time and place where living comes from the interaction you have with other people. In 2018, that’s actually an experience worth paying good money for.
You say that kids like to work, and our job is to stoke that instinct to work and to earn and see just how far their natural-born industriousness takes them. That encouragement is something not all of us are very good at, partly, you say, because children today are not expected to be useful. Why is that?
For people who maybe grew up with less than they have now, they might want to shield their kids from all the things they had to do when they were growing up. And in the average two-parent household, the number of hours available to supervise has gone down. Parents sort of wrongfully believe it’s just better to do everything themselves because the time and effort needed to teach a kid to clean the floors is just not worth it. It’s easy to forget, too, that kids are capable of more than we give them credit for. One of the best ways for them to learn is by burning dinner and ruining the laundry. There’s value in failing and learning lessons that way.
You talk about how overnight camp can actually help kids with perspective. Can you elaborate on that and explain the concept of symbolic deprivation?
Having gone to sleepaway camp in Wisconsin when I was growing up, it was on the brain. My sense of it was that some camps are not what they used to be. Thirty years ago, there weren’t many camps with air conditioning and dance studios with spring-loaded floor mats. I thought, there’s real value in sending kids to camp where everything they have during the school year is stripped away. I started hunting for camps that were really low to the ground, like Pine Island, a little camp for boys on a lake with no amenities. It’s amazing! You go out there and it’s almost like grownups don’t exist; it’s the boys who show you around. At the end of the tour they walk you ceremoniously up to this perch and show you the largest compostable toilet I’ve ever seen, just three holes in a board and no partitions, but magazines and a beautiful view of the lake. I asked the camp director, “What’s this bathroom with no doors about?” He said, “We have a bunch of boys from New Canaan, Connecticut.” (Insert the name of your favorite upper-middle-class town.) The problem with New Canaan is that nobody needs you there. I recognized what he meant by that immediately. It’s much harder to form and forge a real community, but if you can put those boys on a self-contained island, it becomes clear that they need each other and everyone is needed. You can’t get that at school. It requires certain limits.
This term of forced deprivation is something that anthropologists of the upper middle class have created. They saw parents deciding that it would not be a good decision to provide their kids with the best of everything. At a camp like Pine Island, all those lines are drawn for you and they’re pretty hardcore. The kids learn to live like that, and parents have the inevitable experience of discovering their kids don’t want to return from that. They gain a better perspective on what they need, and that’s really valuable.
In general, camps work hard to nurture in their campers and counselors the life skills and values that will help them succeed in the real world. How can they work in tandem with parents? In your opinion, what can they best apply from your philosophy about money?
Is there a way for the kids at camp to take on some sort of philanthropic activity on their own? There’s a school in the San Francisco Bay area that encourages this. In lieu of giving Bar and Bat Mitzvah presents and things like that, kids contribute to a fund. Then, together, the kids think of ways to give that money away. Maybe kids at camp could raise money amongst themselves or forego buying candy to save and then talk about how best to give that money to a good cause. There are certainly ways to incorporate money lessons into camp.