Money, one of the hardest things to talk about in families. Eighty percent of children, eight
zero, get to college having never had a conversation with their parents about money. Where it comes
from. How it’s earned. How it’s spent. What debt is. You can’t just give your kids
– launch them into their lives without giving them the tools. So I went to what I thought
would be the smartest people to talk to about this. Warren Buffett’s bankers. They advise
the wealthiest families in the country and I thought they must know more, they can help
my family. Turns out that these wealthy families are making even more mistakes. And I walked
away from this conversation with a number of takeaways. Takeaway number one, show them
the money. It’s incredibly important to talk to children about money at an age appropriate
level but you need to talk. As Buffett’s bankers said to me, “I spoke to the richest
woman in America and she said it’s a burden if I tell my children how much money they
have.” And he said, “It’s much more of a burden to burden them with ignorance
than to burden them with the truth.”
Number two, actually try to limit the influence of money. After doing all this research – in
our home we have chores, we have allowance. We do not overlap the two. Because if you
do it turns out the kids will do the chores just for the money. You get an allowance as
part of being a member of our family. But, sorry, someone’s gotta put the dishes in
the dishwasher. Someone’s gotta make their bed. You’re part of the team, you have to
take care of yourself. And the last thing is let them make mistakes. Buffett’s banker
chided me when I told him we were kind of forcing our kids to put their money into different
pots – spend, save, give away, et cetera. He said, “Let them decide for themselves.”
And I said, “But what if they make a mistake? What if they wanted to buy something and they’ve
spent all their money on candy? What if they drive into a ditch?” And his answer was
one of my favorite quotes in The Secrets of Happy Families. He said, “It’s much better
to make a mistake with a six dollar allowance than a 60,000 dollar a year salary or a six
million dollar inheritance.
The point is when the kids are young, when the stakes are lower, let them make their
own mistakes. Then you’re there to pick them up. You don’t want to get that call
when they’re 24 and suddenly they’re in debt and they’ve made bad decisions and
they’re really in a hole. Let your kids take more responsibility from a younger age.
The most common pitfalls, I think, that parents make on the topic of money is thinking that
they’re afraid to talk about it. That they don’t want to be honest. And they also think
that they’re not passing along their values. Guess what? You are. If you’re worried and
you have anxiety about money, you’re gonna pass that anxiety on to your children. If
you show them, by contrast, that you do have worries but this is how you’re working it
out. That you’re sitting down with your spouse, maybe with other family members, on
a regular basis to talk about money. That’s the lesson you want to convey.
Because if you’re showing those values then your kids will pick up those values also.
Because if you’re showing those values the kids will pick them up also. To me it’s
part of the larger takeaway I emerged from with this project. I occasionally lose my
temper. I occasionally yell at my children. And I always thought I’m just a bad dad
when that happens. I’m just an awful parent because I’m showing them that I’m not
always in control. What I’ve learned is losing control is actually natural and something
kids need to see. But show them that when you do lose control that you also regain it
and solve the problem in real time. Solve the problem in front of them – that’s
the message you want to give them. And the same applies to money. If you’re having
a hard time, we’re gonna buy a car next year. And so already we’re not gonna buy
this thing this year or we’re gonna go on a less expensive vacation so we can save money
for a car. Be open with your kids about it. The actual reason? You’ll pass on good money values.