Review – The Blue Bottle Craft Of Coffee

The Blue Bottle Craft of Coffee: Growing, Roasting, and Drinking, with Recipes

by James Freeman, Caitlin Freeman, published 2012

It seems that coffee might best be appreciated by a mathematician when one considers how many various ways the factors of coffee production can be manipulated prior to it being poured into one’s cup. For example:

  1. Arabica or robusta species? Which varietal?
  2. Where was it grown? (Ethiopia, Kenya, Brazil, Hawai’i…) At what altitude? What were the weather and soil conditions during that crop?
  3. How was it processed? Dry or wet? Organic?
  4. Is it single-origin or a blend?
  5. How was it roasted? What temperature? How long? Starting and stopping moisture? Time to first crack? Second crack?
  6. How were the beans ground? Coarse? Fine? Hand grind or motorized?
  7. How was the coffee brewed? Pour-over? Espresso? French press? Cold brew?
  8. Black or with condiments? Whole milk or heavy cream? Butter? Sugar? Spices?

It may be that only true professionals can discern meaningful differences between one cup and the next when it comes to certain degrees of some of these variables, but nonetheless they’re there and on a gross basis they’re meaningful. Coffee from Ethiopia is different from coffee from Costa Rica. Pour-overs have different profiles than coffee that has been French pressed. Even the temperature of the water and the time of extraction matter within each brewing method.

Coffee is a global commodity, but the Freemans’ book makes it clear that coffee nonetheless defies commoditization for those looking for an individualized, craft experience. One can endlessly explore the world of coffee by twisting these knobs and pulling these levers.

Something about coffee seems delicate after reading this book. One grower profiled had 6,000 trees on their plantation which each yield only a pound of green coffee. A talented human harvester can clear about 2 pounds worth of finished coffee per hour from the trees. We’re not talking about shaking pounds of fruit with one bump like an orange tree here. And coffee goes stale quickly after roasting and even more speedily after grinding. With all the time and intermediate steps between planting and drinking, one could easily ruin the essential qualities of their coffee with simple mistiming or lack of coordination. Brew a minute too long, swirl the water in your pour over a little too fast, and something sublime is lost forever, replaced with tasteless mediocrity.

It is surely an art to do it well!

The discussion around organic certification on coffee also caused me to pause. Organic is not a perfect measure of quality or nutrition by any means when it comes to food, and organic farming practices have some of their own problems. But all else equal, we’d rather not ingest the pesticides if we can avoid it. Yet when it comes to coffee (and wine, “biodynamic”), I haven’t thought twice about insisting on organic sources. This is an odd oversight on my part because it’s probably even more important given that the act of extraction in coffee making virtually guarantees that residual chemicals end up fully dissolved in a readily-digestible concoction, but even more so because for most people coffee is a daily habit so you are being exposed constantly rather than periodically. Unfortunately, this is one place where the market isn’t keeping up. I think on average at my local coffee shop there is one organic offering for every ten or twelve types of beans presented.

James Freeman, the founder of Blue Bottle Coffee and author of the coffee sections, makes it clear that most people in America drink bad coffee each morning. Their sins are many and born of ignorance mostly, convenience secondly. They use automatic drip brewers, pre-ground (stale) coffee, unfiltered water, incorrect temperatures for brewing, unkindly ratios of water to coffee grounds and, worst of all cases, “pod coffee” (K-cups, Nespresso, and so on).

To take back the pride of good coffee, to create one’s own coffee ritual and to further develop the art of the craft, he recommends a basic setup for the novice:

  • electronic gram scale
  • thermocouple thermometer
  • conical burr grinder
  • swan-neck kettle
  • single-cup pour-over dripper + filters

There are many preparation methods detailed in the book but I was surprised to learn that he recommended the simple pour-over as the first and best technique to master. He also recommends making coffee one cup at a time– a difficult task for a family man trying to mass-produce breakfast! Most interestingly, while he believes you can have a delicious cup of coffee with any kind of bean and roast that has been properly farmed and processed, he recommends single-origin light roasts, black, for the cleanest presentation in the pour-over method.

It’s easy for me when reading a book like this to focus on the “recipe” and ignore the “principles”. Freeman offers a number of rules of thumb and general guidelines but the key idea is personal experimentation and discovery within extreme bounds. Water that is too cold or too hot is just never going to produce good coffee, but water between 205F and 190F, to personal preference, will produce personally-satisfying coffee. It is not about what is objectively best but what is subjectively delicious to you.

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Tidying Up Our Library

Today I tried to sort through a number of reading lists I keep on Amazon.com in order to find a few new things to read.

I failed. Quickly.

A minute amount of arithmetic can show us why. If I dropped everything else of interest to me and developed greater discipline than I’ve exhibited in the last several years and devoted all of my free time each day to reading, I might, possibly, get through all of the titles I’ve accumulated in my lists in about… five years.

Five years straight of regimented reading. And of course these titles were accumulated over a period of about five years, so by the time I finished, I’d have my reading for the next five years ready to go. An endless fight, I could make my way through the stacks until life itself exceeds me and I succumb to my war wounds, surrounded by loved ones and my unread materiel.

Trying to sort these potential odysseys, I became overwhelmed and soon the books sorted me. How did I get here? What am I really trying to do? What is the point?

Every book I’ve encountered and subscribed to my lists (there are 22, by the way, starting with “American History”, ranging through “Farming & Ecology” and ending with “Social Science”) represents a hope for mastery and wisdom. Each represents one human being’s life work, in many cases, or at least a component piece of a corpus representing everything they’ve learned about a specific area of human inquiry they’ve devoted their energies and attentions to understanding.

So I grabbed them by the bushel, the box, the bundle, and stuffed them into 22 unique intellectual genuses for my future edification. Are you seeing the problem here?

This is intellectual hoarding on an epic scale. And each hope hides a dying regret, that I didn’t learn all of this sooner or at some other time in my life.

There may have been many opportunities to learn everything there is to know about Ancient Roman social and political and philosophical history; of EO Wilson’s sociobiology and studies of ants; of comparative studies in global religious traditions and the historical implications for host societies; of the supreme importance of mycelia (read: mushrooms) for soil health in one’s home garden or the world at large; of what the Founding Fathers really meant by the words they wrote in the Constitution and why the US really is a unique and special polity on the world stage.

But I didn’t. And I have to learn to accept that fact and let all these possible, potential, unrealized versions of me go. I know 80% more about philosophy than the average yokel, but I will never truly know Nietzsche. I made it this far without such arcane wisdom and I’ll have to see if I can make it a bit further.

It’s hard for me to let go of all the time I spent finding this stuff, though. In some weird combination of the sunk cost fallacy and the labor theory of value, it seems like because I spent all this time and had all these dreams it’d be a shame to just, hit the delete key, and watch these lists get disappeared out of some internet memory bank.

Instead of wholesale, scorched earth reset, I am considering utilizing Marie Kondo’s “spark joy” principle. I will scan my list and imagine, briefly, pulling each of these titles out of a freshly delivered Amazon.com box and holding it in my hands, feeling its weight and staring at the cover in person for the first time. How do I imagine myself feeling in that moment?

If I am ready to forget whatever it was I was doing the split second before the package arrived because I am too eager to sit down and begin reading, this title is capable of “sparking joy” for me. It touches something of my true essence, my actionable values, and a case can be made for keeping it on a shortlist for purchase if not ordering it immediately.

Everything else is getting torched. If it doesn’t spark joy for me now, it might spark joy for me never. It would be wasteful to maintain the delusion that I’m going to get to it one day and worse still to make the mistake of actually buying it. Then, Amazon’s inventory investment problems become my own. And I have no retail platform!

Some might suggest that there is value in maintaining a personal library. Here’s a recent picture of mine:

This is not every book I’ve ever owned nor every book I currently own. Sadly, I have more books than this and in more places than this. Many have been read. Some never will be. If the idea that I’ll eventually read all of these books is insane, the notion that some are worth keeping for re-reading or reference is marginally less connected to reality. Who has time for this? I don’t.

One of my greatest joys in reading has been discovering books and chasing down my own rabbit holes. Maintaining a library says something like, “One day, someone in my family or one of my friends or someone who cares about me is going to be really excited to chase down all my old rabbit holes like I did.” That day isn’t coming, but one in which your loved ones, a friend or someone who cared about you (maybe because they’re being paid to haul away your garbage and remains) tosses your books in the dump, is. It’s vanity to collect books as if it represents some important intellectual legacy you’re preserving for others.

That being said, maybe as part of family governance there are a select few titles that the patriarch (or matriarch) insists family members become familiar with as part of a shared family intellectual culture. That seems reasonable. But in the photo above, such selections would probably be able to fit on an individual division of one shelf at maximum.

Besides losing some nice wall art, you would gain some space if you stopped having a library and copious lists of books you’ll never actually read. You might also gain some freedom and satisfaction. What does it do to your soul to carry all that stuff you’ll never do and all the knowledge you’ll never have stuck in books you’ll never read, to carry it around in the back of your mind, day after day? What limitations do you set on yourself here and now when you spend any amount of time punishing yourself for what you aren’t yet but might be one day?

So, just let it go. If it’s important, if it’s you, it’ll come back to you one day when you go looking for it.

Review – Corporate Strategy

Corporate Strategy: Tools for Analysis and Decision-Making

by Phanish Puranam, Bart Vanneste, published 2016

What is corporate strategy and how is it any different from business strategy? That was actually a distinction I hadn’t made in my own mind when I picked this title up. I was generally interested in exploring “strategy” in an economic or business competition sense and this book was one of many I selected for further research. It was a happy accident then to realize there is a difference and this book is all about explaining what it is and why it’s different.

Business strategy aims at creating competitive advantage in a firm-against-firm struggle within a given industry. It flows outward from customer behavior through organizational structure and management practice to policies and processes surrounding marketing, sales, production, distribution and customer service.

Corporate strategy aims at realizing synergies from the joint ownership of different businesses. Synergies can be realized between businesses competing in the same industry but with common ownership (and perhaps diverse geographic territories), the case of a “corporate HQ” utilizing economies of scale in back-end or administrative functions to lower their cost or raise their quality across the individual customer-facing businesses. Synergies can also be realized between businesses operating in distinct industries but where coordination between actors in these industries allows for new products or services to be bundled, consider a bank and an insurance company owned by one corporate parent which can then offer a full range of financial services to customers.

One interesting takeaway from the book is that all public equity investors who do not have 100% of their investments in a single company (ie, they own a portfolio of stocks) are engaged in corporate strategy. However, as the book advises, passive investors are not able to realize synergies which those in control of these businesses can through exerting influence over their management. So, a passive equity investor could have an insight about the unique value of owning a complimentary basket of businesses representing corporate advantage, but they do not have the means to act upon it unless they are able to successfully agitate for M&A activity or have enough resources to get voting control over the companies in which they can sway management to extract the synergies they’ve spotted.

Another concept that was interesting to me was the irony that by bringing businesses under common ownership, a corporation destroys its own best benchmark for valuation (ie, the individual market prices of each business) and thus it is trapped in a perpetual game of trying to evaluate whether it’s coordination of economic activity within the corporation is synergistic and creating value, or wasteful and destroying it.

Warren Buffett as a conglomerator par excellence is an interesting case because, at least nominally, he does not provide managerial oversight to operations of the businesses he owns and has never claimed he has purchased a business for synergistic reasons for corporate strategy. Rather, he purchases businesses ONLY because he considers them to be available on a bargain basis, that is, he thinks they are available for less than their intrinsic value.

The entire point of corporate strategy, according to the book, is to be able to pay market or “fair” prices for assets and businesses, but still realize a profit from owning them, because of the ability to manage or exploit them differently under a joint ownership structure. So, Buffett is NOT a corporate strategist, although he is a really great investor.

And if you can realize synergies AND buy at bargain prices (AND apply leverage safely…) then you are really cooking with gas!

One of the great ironies of the (public) business world is that many managers (they are hardly ever significant shareholders themselves) think they can spot synergies all over the place, which either they or their investment bankers use to rationalize their acquisition activity. But the data demonstrate that few synergies ever appear to be realized– acquiring companies usually overpay, their stock falls on the announcement of an acquisition and the target company’s stock rises. Further, these acquisitions are often followed years later by goodwill writeoffs or divestitures of the previously acquired business or assets.

On average, a corporate parent that divests a business increases shareholder value.

In fact, one of the strategic suggestions of the authors is the always be on the look out for someone who is a better owner of a business or asset than you (ie, willing to pay you more than it’s worth to you to continue owning it) and selling things seems to be one of the most reliable ways for corporate strategists to create corporate advantage. It’s a pity, then, that most corporate strategists are buyers, not sellers!

If some other corporate parent has even stronger synergies with a business than you do, you should consider divesting.

Divesting when you can, and not when you have to is usually preferable.

Imagine that, starting today, the two businesses would be moved into separate ownership and would be operated completely independently, with no communication or exchange of any kind between the two. How would the value of the businesses be effected?

If one thinks one is smart enough to beat the odds, the authors suggest four places to look for synergies from joint ownership and operations for corporate strategists:

  1. Consolidation, creating value by rationalization across similar resources from similar value chain activities by eliminating redundancies, affects mostly costs and invested capital
  2. Combination, creating value by pooling similar resources from similar value chain activities, such as combining purchasing to obtain volume discounts or acquiring a competitor then raising prices for customers, impacts either costs or revenues
  3. Customization, creating value by co-specializing dissimilar resources in order to create greater joint value, results in improved value in production or consumption and involves modification of resources, the transfer of best practices can create unique value
  4. Connection, generates value by simply pooling the output of dissimilar value chain activities, for example customers may value being able to buy a bundle of different products and services together, the product development of one business is being connected to the distribution channel of another

Here are some other major strategy risks that are common:

One common negative synergy is brand dilution, ie, does the brand apply? Another is complexity. Another is market rivalry, this is a significant concern in the advertising industry, where when two firms who serve rivals merge, the chances of keeping both their clients is low.

Governance costs act as taxes that eat into the potential benefits from synergies when they are attempted to be extracted. [ie, the price you pay to operate an acquired business effectively.]

When an autonomous business becomes a division within another, the incentives of the owner and managers are necessarily diluted.

Synergies likely to generate significant transaction costs are less likely to be successfully realized in arms length relationships between independent firms than under common ownership.

I particularly appreciated the discussion about the corporate advantage that can be achieved through thoughtful design of the organization and its management.

One should be able to read the corporate strategy of a company in its organization chart: what kinds of activities does the top management feel are essential to integrate?

While all organizational structures represent a unique combination, there are three “pure form” ways to structure the corporation and its management structure: by activity, by output, by user/customer.

The authors recommend that corporate strategists “Think about the multi-business corporation as a collection of value chain activities” and look for synergies accordingly. But, being economic entities, there are necessary tradeoffs to beware of with each choice:

Grouping similar activities together emphasizes economies of scale at the expense of economies of scope, whereas grouping different activities together does exactly the opposite.

Every grouping arrangement emphasizes certain interactions but excludes others, which show up as opportunity costs and bottlenecks.

Further, if the innovation literature and hundreds of years of business history haven’t beat it into your head yet, things change. That means that the “right” structure (the synergistic one) is likely to change over time. “No structure is permanent.” Corporate strategists should always be considering the possibility that the ideal economic structure for managing the company has changed in reflection of new competitive dynamics, customer tastes and habits or advancements in technology, culture and society. A good rule of thumb might be that the appropriateness of the corporate structure needs to be reconsidered every time a major acquisition or divestiture occurs.

There were two other nuggets of corporate strategy wisdom that stood out to me. One was that most multi-business firms have capital allocation decision-making on auto-pilot. Either every request gets granted, or every request gets denied, or every business gets to keep whatever it generates. The corporate strategist can grab some low-hanging fruit by being thoughtful about capital allocation decisions within the portfolio and providing a critical voice about whether capital should be redistributed amongst divisions or even outside the company (ie, dividend or acquisition activity).

The other was in the author’s description of the typical M&A process (which includes not just execution of the acquisition transaction but also successful completion of the post-merger integration process). The most overlooked, and final, step in the process is Evaluation, which “refers to a post-transaction review of what went right and wrong” and analyzes the economic impact of the transaction on the entire firm. Were synergies realized? In the amounts predicted? Did costs materialize that were surprising? Did any other kind of disruption or distraction that was not anticipated earlier occur during the course of the merger? From my personal experience, it is difficult for management teams to take the time to look into the rear-view mirror like this, and even harder for them to be honest about what they see!!

Notes – Corporate Strategy

The following are my unedited notes from my reading of Corporate Strategy:

Corporate strategy versus business strategy

Corporate advantage versus competitive advantage

Two ways of increasing competitive advantage:

1.) raise the price customers are willing to pay

2.) lower the price suppliers are willing to sell for

Maximizing corporate advantage may or may not be consistent with maximizing the competitive advantage of each individual business

Some businesses could give up competitive advantage in their business in order to enhance the competitive advantage of other businesses in the portfolio

Corporate strategy matters at least as much as the analysis of industry competition (implication for passive investment analysis)

A natural, minimal benchmark for a corporate strategist is a passive investor

Synergy is therefore the means through which corporate advantage is created relative to a typical investor who can select the same portfolio of investments

Portfolio assembly can be a corporate advantage in cases of private/restricted capital markets

By coming into existence, the multi-business firm in effect destroys its own best benchmark

The super-rich may treat their business group as their own mutual fund

Corporate advantage is defined in terms of jointly owning businesses and synergies in terms of jointly operating them.

While an investor could create corporate advantage, an investor cannot extract synergies.

For a corporate strategist to create corporate advantage over what an investor can achieve in efficient capital markets, there must at least be some form of synergy between two businesses in the portfolio

To find synergies, construct a value chain for each business/division and look for opportunities to coordinate or economize activity

Forms of synergy

  1. Consolidation, creating value by rationalization across similar resources from similar value chain activities by eliminating redundancies, affects mostly costs and invested capital
  2. Combination, creating value by pooling similar resources from similar value chain activities, such as combining purchasing to obtain volume discounts or acquiring a competitor then raising prices for customers, impacts either costs or revenues
  3. Customization, creating value by co-specializing dissimilar resources in order to create greater joint value, results in improved value in production or consumption and involves modification of resources, the transfer of best practices can create unique value
  4. Connection, generates value by simply pooling the output of dissimilar value chain activities, for example customers may value being able to buy a bundle of different products and services together, the product development of one business is being connected to the distribution channel of another

One common negative synergy is brand dilution, ie, does the brand apply? Another is complexity. Another is market rivalry, this is a significant concern in the advertising industry, where when two firms who serve rivals merge, the chances of keeping both their clients is low

Governance costs act as taxes that eat into the potential benefits from synergies when they are attempted to be extracted

When an autonomous business becomes a division within another, the incentives of the owner and managers are necessarily diluted

Synergies are likely to generate significant transaction costs are less likely to be successfully realized in arms length relationships between independent firms than under common ownership

A management services firm is a kind of non-equity alliance

The more mature and efficient the capital markets in which a company operates, the greater the pressure on the company to engage in diversification primarily on the basis of potential synergies between existing and new businesses

The CEO should be spending the shareholders’ money on entry into new businesses only to extract value that the shareholder could not by investing directly in such a business on her own

In the absence of bargains, passing the synergy test is necessary but not sufficient to pass the diversification test

If some other corporate parent has even stronger synergies with a business than you do, you should consider divesting

An active policy of looking for divestiture opportunities is sensible

On average, a corporate parent that divests a business increases shareholder value

Imagine that, starting today, the two businesses would be moved into separate ownership and would be operated completely independently, with no communication or exchange of any kind between the two. How would the value of the businesses be effected?

Divesting when you can, and not when you have to is usually preferable

Outsourcing often carries significant transaction costs

Think about the multi-business corporation as a collection of value chain activities

One should be able to read the corporate strategy of a company in its organization chart: what kinds of activities does the top management feel are essential to integrate?

Pure forms of organization: by activity, by output, by user/customer

Grouping similar activities together emphasizes economies of scale at the expense of economies of scope, whereas grouping different activities together does exactly the opposite

Every grouping arrangement emphasizes certain interactions but excludes others, which show up as opportunity costs and bottlenecks

No structure is permanent

Don’t forget about how to integrate activities while you’re thinking about ways to partition them up

Corporate management functions:

  • Treasury
  • Risk management
  • Taxation
  • Financial reporting
  • Company secretary
  • Legal counsel
  • Government relations
  • Investor relations

The goal of resource allocation in the portfolio is thus to push businesses further away from the origin toward the top and right, away from the investment threshold (pg 212)

One low hanging fruit for multi-business firms in terms of corporate strategy is to actually give thoughtful consideration to capital allocation decisions within the portfolio

In the M&A and Post-merger Integration process, Evaluation refers to a post-transaction review of what went right and wrong

On average, acquirers do not benefit (in terms of market cap) from an acquisition; most target shareholders benefit from an acquisition

The ICSA Company Secretary’s Handbook, resource for corporate management

More Thoughts On Silver Spoon Kids

The following are more thoughts and notes from our reading of Silver Spoon Kids.

When you die, you will leave behind your money but most importantly your values; which will be most important to your children and their quality of life? It seems a major mistake many financially successful families make is they spend all their time and energy trying to provide the first resource and give little if any attention to the latter. As the parent of one friend quipped about the inheritance he planned to leave behind, “I’ve done my part.” And as my friend observed, “What does that mean, and what are we supposed to do about it?”

According to the authors, there are five primary ingredients to consider if one endeavors to raise responsible, emotionally healthy affluent children:

  1. demystify money
  2. understand fundamental psychological principles of human development
  3. clarify concept of personal values (parent)
  4. parents’ relationship with money
  5. money messages that are modeled for children

Money itself is not “the problem”, but rather the problem is money unaccompanied by values.

A generational problem that faces families whether they are financially successful or not, but which is especially easy to overlook as important for the affluent, is that all parents face different sets of challenges; strategies that may have been appropriate (with money) in one set of circumstances may be damaging when affluence is a factor. So it isn’t enough for parents who struggled to make money to leave their kids with the same attitudes and perspectives they had before they had money, and it also isn’t enough to assume that just doing the opposite, or worse, scolding, terrifying or otherwise being neglectful towards children with regards to money, is going to address the issue.

Passing on values from parent to child requires repeated interactions over many years and some families don’t have (or make) time for this repetition. If the getting of money is demonstrated to be a more important value for a family than the coming together to talk about its meaning, guess what the children learn from that? Guess what children learn from any parent who is not present? Answer: whatever the hell they want, and nothing good. You can not parent from a distance.

Engaging in real conversations with real people (like their parents) is how kids mature emotionally and become socialized. It isn’t realistic to expect children to become reasonable and responsible about money without an example of reasonable, responsible attitudes about money being modeled for them that they can interact with. Affluent or otherwise, kids need their parents to be their for them to grow up right. This is a fundamental principle of child development.

Consistency of routines and experiences is a big part of transmitting values and socializing children effectively, ie, taking the same family vacation to the same place each summer (depth rather than breadth). So it’s less important WHERE you vacation or HOW you vacation but rather THAT you vacation, and that you do that over and over again so children can count on it and grow through the experience.

One goofy example from the book that stood out to me as a mistake not to make in terms of prioritizing values: a well-to-do family found their “dream house” early on in the family formation process. In order to afford this “dream house”, mom had to go back to work and earn an income outside the home. Somehow she was able to make enough to help make the mortgage AND to hire an au pair to help look after the kids. The result: a beautiful home empty of a real family to live inside of it. This is putting the cart before the horse. The author’s didn’t say this but that is my read on the situation.

Another point raised in the book is that lecturing kids about money isn’t effective. Besides the fact that no one likes being lectured to and few tune-in for such treatment, the simple fact is that the transmission of values requires repeated interactions with multiple nuances on the same subject for the knowledge of the observer to become intuitive. Kids take their cues from thousands of interactions with you, from listening to what you say and observing what you do in a wide variety of situations. It is the furthest thing from a “one and done” Birds & Bees-type conversation to get habits, disciplines and attitudes about money across.

In terms of understanding child development, one of the truly crucial discoveries has been the importance of children forming a secure attachment with attachment figures while they’re young. Without this bond, children tend to experience all sorts of emotional difficulties as they go through different developmental stages. Dysfunctional relationships about money are just one thing. You can solve all kinds or problems in your family, money and more, simply by consciously creating the conditions for secure attachments to form between children and parents.

Many affluent parents fret about their children being able to navigate the risks of the wider world. The key here is to help children develop the capacity for self-regulation, and self-regulation is rooted in secure attachments to parents. Children who have developed the capacity for self-regulation tend to exhibit increased emotional resilience when dealing with adversity and tend to do well in social relationships as they grow older.

Secure attachments require empathic communication– helping children to feel seen, heard and understood. Affluent parents should be investing in RIE classes with their infants and young children and NVC seminars with their adolescents and teenagers, they have the means and time to do so and it will pay dividends throughout their life.

An interesting developmental concept shared in the book was Erik Erikson’s Eight Stages of Child Development, which suggests there are key developmental goals for each major stage of a person’s life:

  1. Birth to 1yr; trust
  2. 2-3yrs; autonomy
  3. 4-5yrs; initiative
  4. 6yrs-puberty; industry
  5. adolescence; identity
  6. early adulthood; intimacy
  7. middle adulthood; generativity
  8. later adulthood; integrity

The first stage, trust, is about developing secure attachment with caregivers. The second stage, autonomy, is the process through which the child comes to understand their existence and capability for survival independent of their parents, primarily the mother. The third stage, initiative, is where the child becomes increasingly self-directed in their learning and play, making their own decisions about how they want to spend their time and what experiences they want to have. The fourth stage, industry, is a time where the child becomes conscious of their ability to be productive and to make a helpful contribution to their social circle (their family). The fifth stage, identity, is when the child is entering personhood and begins to contemplate who they are, what their values are and what meaning they want their life to have. The sixth stage, intimacy, is the necessary precursor to repeating the genetic cycle through pair bonding and family formation as the person learns to grow close enough to another person to form the intimacy necessary for procreation, but also to develop tight enough bonds with others in general that they can become secure within society. The seventh stage, generativity, represents not only procreation and the populating of a new generation but also the peaking productive energies of adults at home in terms of their creativity, work output and intellectual and social contributions to others. The eighth and final stage, integrity, is a reflective period in which most of us will hopefully be able to look back on our lives and feel content that we lived our life according to our most cherished and esteemed values. For some who realize they have been living a lie or not living up to their own expectations, this can be a very painful time indeed, and it is particularly so when surrounded by younger family members who are attempting to form secure bonds, discover their identity, attain initiative and engage in industry or sort out their own identity, when the model before them is a big, fat hypocrite or pathetic loser! Think ahead and don’t become a person filled with remorse by the eighth stage, life catches up to you.

Thinking back to the example of the family that prioritized their home ownership dream over having mom home with the kids, this quote stood out to me:

In the best of all possible worlds, at least one parent is financially able to be a full-time mother or father during the first year.

Of course, the authors were quick to qualify this right afterwards by assuring the reader that, while ideal, you can still raise a good family without this (yeah… but it’s not ideal, which is the whole point). But what I think is most important about this concept is that the ability of family to actually be together is itself a huge Standard of Living value that most people overlook, especially people seeking or experiencing affluence. It’s like they’ve got the fancy house, the nice car, the swanky clothes, the expensive eateries and the ‘gram-able vacays, but they don’t think to spend their affluence escaping that trap of impoverished families mentioned earlier in the book: the inability to afford the time to be together. What would the world look like if more affluent families put that value first and foremost in their family planning strategy?

Why affluent parents should avoid protecting their children from life’s miseries:

Frustration is inherent in any learning process, affluent families should not try to shield their children from this; avoid using affluence to take away the child’s struggle. Children who are not permitted to struggle and succeed often develop a sense of inferiority.

Another key piece of advice I have almost never heard any affluent family engage in purposefully (although all kinds of families will get here in an unintended shouting match or something like that!):

Tell your child about some of your mistakes and some of your failures.

Why? Because it’s valuable for affluent children to know that even their parents, who mostly succeeded in life, screwed some stuff up along the way and still arrived where they did. It takes the pressure off and makes it more realistic to consider “being human” as an option.

In describing personal attitudes about money, the authors described our money relationships existing along three dimensions: acquisition, use and management. Every person has a unique combination of attitudes regarding these three factors, and each person can be either overly conservative or overly risky in regard to each (or skewing toward one of the extremes).

When thinking about the second dimension, use, an important question to consider is:

Does your family have a sense of what is “enough” and why?

For people who think they never have enough money to be happy, maybe what they really are experiencing is a deficit of values, or a failure to align with them in terms of their choices:

People who live in accordance with their values enjoy happy lives; children who live in accordance with their values enjoy an identity.

The authors describe the phenomenon of children who are fully absorbed with their own kind of “Keeping Up With The Joneses” competition for material possessions and status. I refer to this as “social metaphysics” and it seems from the author’s experience that it occurs when children do not have their own values to anchor their observations and experiences in. As a result, they end up referencing other people rather than themselves when trying to arrive at judgments.

And back to the modeling idea:

Our behavior around money tells our children more about our money values than anything we say. Our children may accept our money values or they may reject them, but we guarantee you that they won’t ignore them.

Besides being a hypocrite, you can also make the mistake of saying NOTHING about money with your kids. But that’s a big mistake, too:

Giving money the silent treatment not only robs your kids of the skills needed to manage it, but it can also result in emotionally unhealthy attitudes toward it.

As one estate planner put it “no device that I can draft will make up for lessons that weren’t learned as a child”.

To help your children develop their own consciousness about money, employ reflective discussions with your child which involve asking questions about what, when, why and how to help them form an opinion and reflect on their own wishes and ideas, the foundation of abstract thinking.

Age-appropriate discussions about money

Here are some specific strategies the authors recommend for discussing money with children at various ages/developmental stages:

Ages five and under; we strongly believe you should limit your preschool child’s exposure to television advertising because of her natural “wanting” tendency; what preschoolers can and should learn is the concept of saving, around age three, use the exercise of depositing a fixed sum in a jar each day before allowing it to be spent at a future time, establishes the connection between giving money and getting something return after waiting for money to accumulate; also can discuss the difference between “need” and “want” and illustrate through concrete examples such as food for dinner versus ice cream for dessert

Six to twelve years old; it’s good to start kids on allowances earlier rather than later, let the kids make budgeting mistakes when they’re less likely to engage in emotional battles over insufficient funds; kids as young as eight can be taught to budget and select from among alternatives if you take the time to explain the process; when talking about money, talk in terms of choices and consequences (tradeoffs, also, basic economic concepts?); open a savings account at a local bank and include the child in the process, discussing how it works and what it’s for

Thirteen to eighteen years old; address issues such as the cost of a given item versus its value to the individual, what constitutes an “overpriced” product or service and the idea of setting and adhering to a reasonable budget; giving a teenager and unrestricted credit card simply teaches them to spend; they should be encouraged to budget for longer periods of time, for the entire month or even a school quarter or semester; involve your children in the research process behind a major purchase, let the teenager evaluate product quality and price via internet research and make a recommendation

And here is a list of helpful “Money Dos” for those not inclined toward negativity and things to avoid:

  • do be honest
  • do connect the concept of money with that of responsibility
  • do help them understand that there are limits on spending
  • do acknowledge your child’s negative feelings about money and wealth
  • do treat their questions with respect

Allowance is a hot topic amongst the affluent and some are skeptical because it seems like “socialism” or a “handout”, but an allowance only has a negative effect if parents refrain from dispensing values along with the money according to the author’s research. Instead, view an allowance as the child’s rightful opportunity to share an appropriate portion of the family’s resources. As a more global concept, perhaps families should have a Family Bill of Rights as a family governance tool, and allowance and other money/wealth rights and responsibilities should be outlined in this document. Ie, “As a member of the X clan, you have the RIGHT to Y, but also the RESPONSIBILITY to provide/do Z.” This helps build a distinct family culture around money and other important family values and norms. If your child is going to become a responsible adult, he needs to know that privileges and responsibilities will be inextricably linked throughout his life. As a member of the family, your child should share in both the privileges and responsibilities that go with his membership.

Determining what’s appropriate (as far as size of allowance and what it can be spent on) is a process you should share with your child; by communicating allowance parameters you are communicating a rationale that contains your values. You’re also treating your child as a responsible, serious person regarding money, which is how you want them to think of themselves as they deal with it.

If you establish an allowance or some other means of financial support, stick to it. Rescuing sends the worst money message possible; the link between hard work and additional pay is a good one, as it demonstrates that you are the one who can save yourself. If your kids get stuck in a money hole, offer them ways they can go above and beyond to earn additional resources to bail themselves out. Create a list of special chores with a specific dollar amount attached to each; don’t keep this list a secret. But don’t turn money into a game. If you use money to control your child’s behavior, you will raise an adult who is controlled by money.

Later in the book, the authors spend some time talking about the importance of diversity and learning to appreciate and accept (it is implied) people without affluence. They say, “we must learn to help our children value people for their character, who they are, the obstacles they have surmounted and what they have accomplished with their lives”. I think the intent was sincere here but I can imagine your average progressive becoming enraged with this reasoning– what about people who don’t have much character, who haven’t managed to surmount their obstacles because they’re too big, onerous or unfair, or who otherwise have simply been stomped into the ground in life and can’t keep up? How is this not a recipe for failing to value those who have failed?

However, I really liked their take on the importance of inculcating the value of philanthropy, because I think they did a good job of connecting the developmental values of philanthropic activity to the patterns mentioned earlier in the book. Instead of just making some lame moral argument that you’re a bad or incomplete affluent person without having a conscience that goes beyond yourself (smuggled premise), they made the logical, self-interested argument that the thought processes and actions required in philanthropic activity are conducive to building genuine identity, self-esteem and concrete and realistic notions about wealth. Here are some quotes:

We are deliberately not using the word charity, but philanthropy, a desire to help mankind, encompasses all forms of activity and endeavors that help make the world a better place in which to live.

Philanthropy helps build a sense of accomplishment — “I’m helping others” — while counteracting the sense of superiority or privilege that can inhibit industry.

Assisting others confers a sense of mastery over life, by giving of themselves and their time, children find a satisfying answer to the question “Who am I without my family’s money?” Equally important, philanthropy provides teenagers with an activity that can be shared with the entire family.

Philanthropy demonstrates that they are not just the recipient of giving but have the capacity for giving as well

Philanthropic endeavors contradict this notion of a meaningless existence.

That really got me re-thinking the subject and considering how to weave it into our own family tapestry on this topic.

And they suggest philanthropic behavior can begin young, and should:

Writing a check to charity is too abstract a concept for a four or five-year-old. Young children have difficulty dealing with abstractions and need concrete experiences.

Speaking of philanthropy, what can make the world a better place than screwing over lenders, divorcees and their grasping lawyers? That is one reason I hadn’t fully considered for setting up a trust to protect family assets even if your affluence isn’t “substantial”:

One valuable aspect of putting money for children in a trust that is often overlooked is that it doesn’t just help protect the child from the money, but it protects the money from creditors, bankruptcy court and ex spouses in divorce proceedings.

No idea how timely this advice is as the book was written in 2002 and things may have changed, but one thing I’ve noticed about estate planning is that by nature, tax rates change but the rules and structures of long-term oriented tax avoidance vehicles like this rarely seem to do so in tandem.

Questions to ask yourself when forming a trust:

  • for what purposes would you be distributing money to your kids if you were doing it yourself?
  • what would you like to see your children and grandchildren do?
  • what are you afraid might happen to you?
  • what might they do with the money that would disappoint you?

Like the comments about an allowance, the authors have a word of warning about thinking that a “trust fund kid” must necessarily be spoiled:

Affluence, if handled properly, allow your child the opportunity to become anything they want. if you raise a child with a strong work ethic and a sense of responsibility, she will want to do the best she can do no matter what career path is taken or how much is in the trust fund.

Trust funds actually seem to serve as an incentive for children who are entrepreneurial but might be a disincentive for children who work as employees

And the final parting shot in the book as the authors look forward toward the social horizon:

It is going to become increasingly vital for us to find money heroes and communicate their stories to our children.

…because our kids are increasingly surrounded by easy access to impressions of bad actors. Facebook was 2 years away when this book was published but they saw the trend nonetheless through the insipid example of TV and movies.

Our Money Narratives

As described in our review of Silver Spoon Kids, the following are the individual “Money Narratives” for the Wolf and I, as well as our thoughts on a new “Money Narrative” for our own immediate family. The book recommends constructing these stories based upon reflections from asking the following types of questions:

  • What is your earliest money memory (ie, the first important purchase you made)?
  • What did you learn from your father/mother about money?
  • What are some of your family stories about money (ie, the time grandpa was really cheap, or your aunt made a ridiculous purchase)?
  • What kind of financial education did you receive growing up?
  • What were the big emotional issues around money in your family?

The Lion’s Money Narrative

Looking back on my childhood, I find myself puzzled by my family’s simultaneous desires to acquire money and wealth while desiring that it not change them in any meaningful way. What good is striving after money if you’ll live your life essentially the same way with it as you would without it (maybe plus a bigger, nicer house, a fancier car and a more comfortable vacation experience)? We didn’t spend a lot of time openly talking about money in our family, and when others noticed our wealth, it was an uncomfortable and sore subject. I remember being bullied for being “rich” in grade school which confused me at the time because I wore the same clothes and ate the same lunch and rode the same kinds of bikes that other kids at school did. And it hurt because I didn’t think it was true (we never used that word to describe ourselves inside the family) and I didn’t think I had any control over it– why persecute me for something my parents did?

It’s all the more confusing to think of where those kids came up with it. They must have heard it from their parents. And their parents must’ve interacted with my parents and somehow, despite my parents trying not to let their success change them noticeably, it did. When I shared the fact that I was being bullied, I remember being told, “We’re not rich, we’re just well off. And it’s none of their business.” Not very helpful advice for a young child dealing with these social issues! I learned a few things from that experience: that money could be dangerous even if you weren’t “rich”, and that even if I or my family were “rich”, I didn’t deserve it and was a worse person for having it. As an adult, that lesson has lingered and I’ve struggled at times with a sense of being happy with what I have, whether that’s been a lot or a little or something in between!

A positive aspect of wealth that I learned from observing my parents is that it can be used to help others. We’ve helped out friends and family members when they’ve found themselves in a tight place. And while we’ve enjoyed many nice vacations, a good fraction of those included friends or relatives joining us at family expense. It has informed my own sense as an adult that if I have the capability to provide for others with less in some situation, I can do that without either party making “a thing” of it and instead just focusing on the opportunity for mutual enjoyment.

Sadly, I did not get much financial instruction growing up. I observed my parents being budget-conscious and balancing a checkbook back when that was something you had to do (they still do this although I’ve encouraged them to set up an electronic account management system many times) as well as reviewing utility and credit card bills to ensure there were no erroneous charges. But aside from having my own bank account to collect gift monies and being encouraged to operate lemonade-and-cookie stands or hold summer jobs as a youngster, I wasn’t taught much about how to make money or how to manage investments. Looking back on it, I don’t think my parents had anything to teach. My dad got swept up in the excitement of the Tech Boom in the late 90’s and I remember him coming home one day crowing about the wild price action in his AOL stock, and then coming home dejected the following week when it had just as unexpectedly crashed. I would watch Wall Street Week with Louis Rukeyser on PBS on Friday nights with my dad, but we never talked about it and I didn’t fully understand what they were discussing on the show or what the stock market was. I didn’t realize I could invest in stocks on my own until well into college when I discovered the works of Benjamin Graham, somehow without ever hearing about Warren Buffett! Certainly no one ever sat me down and taught me the wonders of compound interest and the importance of getting an early start for a lifetime of successful investing.

And the greatest single source of wealth in our family, our privately owned business, was considered a taboo subject for dinner table discussion because my mom didn’t want her children to feel pressured to be a part of it. Conflicted is definitely a polite way of putting our family’s relationship with money, although on the whole I seem to have picked up a few healthy attitudes and habits because I’m a big saver, abhor the use of debt and credit and have no misgivings about money growing on trees or magically replenishing itself with use.

The Wolf’s Money Narrative (as transcribed by the Lion)

Part of my family’s culture involves exchanging red envelopes full of money on special holidays or in recognition of significant life events. My earliest memories of money are receiving lots and lots of these envelopes, so much so that they filled up an old Swiss milk chocolate candy jug I used to contain them and overflowed the brim! I didn’t understand why I was getting this money or what it was for but I wasn’t going to complain. I mostly just saved the money because I received so much more than I had wants or needs despite growing up humbly.

I learned from my mother that money is not for spending. You work really hard, you earn a lot of money, save it all, don’t spend it, don’t enjoy life. Money is hard to come by. I learned from my father you work really hard, you don’t earn a lot of money, you don’t spend it, and you don’t enjoy life. And that’s not what he told me, that’s what I gathered from observing him. And you let your wife or the smarter person of the couple manage it for you.

Everyone in my family worked really hard, but none of them made enough to feel satisfied. They never explained how much they’d have to make to feel satisfied. And they didn’t seem to have time to enjoy their money anyway because they were always working too hard trying to get more of it!

Money was not a numerical, quantitative thing, it was just some abstract concept.

I spent all of my red envelope money on totally inconsequential things once I realized I had the ability to spend money as a teenager. I didn’t think about what I needed, I just thought “I have money, I guess I’ll spend it”. I wasn’t a conscious spender. My parents never taught me anything, so I just followed my impulses. I didn’t know what we were hoarding money for so I figured I’d just spend it. I wish someone had told me what money could be used for so I could’ve been more thoughtful about the way I decided to spend it back then!

Some things I admired about my family’s attitude toward money is that they saved it. It takes a lot of discipline to save money and not to take vacations or be tempted by material things. The only unethical thing about money I remember is that my uncle gambled a lot of money and this was embarrassing for the family. It was considered wasteful. It was taking risks but not on a sure thing. Tempting fate. Casinos are not seen as having honor and integrity, so it’s frowned upon to be seen there.

I had an accounting class in middle school, but I didn’t learn budgeting until I got married and the Lion taught me. He was also the one who taught me about retirement savings, IRAs and investing.

One big emotional issue about money growing up was that I learned my extended family helped pay for my college education so I wouldn’t have debt. It was very touching and as a result I feel obligated to return the favor by treating elder family members to meals and travel.

When I think about my own affluence, I think “What affluence?” It’s hard to view our position as actually mine, that it doesn’t really belong to me because my husband is the breadwinner and I am the homemaker. That being said,  I feel good about it, I feel lucky. I feel like I’ve come a long way. It’s a privilege to not have to worry about money and feel taken care of. That is not the way I remember growing up in terms of money.

Our New Money Narrative

We want to demystify money in our family and treat it with transparency. We also don’t want to fool ourselves or others about what money means to us, how we acquire it, how much we have and what we plan to do with it. Our plan is to talk about money early and often with our children and as much as possible find age appropriate ways to include them in family money management.

Just as we find activities for our Little Lion to contribute to the household well being, often tasks he himself comes up with after observing us, such as sorting laundry piles, sweeping the floors, assisting with meal prep and clean up, etc., we will look for ways he can be part of our money economy in the family.

At the present stage, when we buy something we let him hand over the means of payment and sign any receipts as necessary, so he understands that to get goods and services from others we have to pay for them. As our children grow, we will include them in dinner conversations about how work is going and where we stand on our budgeting. When it’s appropriate to provide them with an allowance, we’ll introduce them to the concept of budgeting and help them to develop ideas about how they can generate their own income beyond their allowance. We’ll also talk about savings and delayed gratification and the power of compound interest over time to help them conceptualize the tradeoff between some now or more later.

As a family that plans to homeschool, we’re particularly interested in the ways we can integrate math and financial literacy into real life activities. Grandma Wolf has a seasonal baked good distribution business and we look forward to sending the Little Lion to be a (paid) apprentice on her route from time-to-time, learning about marketing and customer service, costing and profit calculation and the value of a hard day’s work. We’ve also thought ahead about stock investing and portfolio management for an enterprising youngster with savings. We see no reason why our children can’t learn about investment selection and management in their adolescence and be in a position by their teenage years to fully research and manage their own portfolio of business interests. This is also appealing because it’s a way for our children to “follow their parents” into an activity and one where we can model the behaviors because we’re doing them ourselves.

We don’t want to give our children the impression there is anything shameful about having money, getting money or talking about money (or even wanting it!) We also don’t want to give our children the impression that simply having money or being able to get it makes a person valuable by itself. Life is complex and money is just one means and one end to be sought in a productive, interdependent life. That being said, we intend to have honest and frank discussions with our children about why some people have a lot more than others and why some people have a lot less– and the answer is not just “luck.” This may seem controversial or a way to invite social problems with children struggling to understand the nuances of life, but we see no way around acknowledging these fundamental realities. Some people are poor for a reason and some people are massively wealthy for a reason.

We are also giving great consideration to the concept of “philanthropy” versus “charity” in our family values surrounding money and wealth. We’re skeptics of “charity” generally and our children will not see us shipping checks to everyone who comes begging or has an emotional story to tell while we pat ourselves on the backs and feel good regardless of impact and outcomes. They also won’t get the impression that we feel guilty or a need to “give back”, or that giving away or gifting money is the only way to make contributions to their community or humanity. If “philanthropy” really does entail any act or service that makes the world a better place to live for everyone, then we will help our children to understand that being the best people they can be, putting their talents to their best use and living lives of principled striving for their conception of the good are all philanthropic endeavors that make the world better off, as also are donating to public and private causes they feel passionate about, serving in leadership roles in public and private life, giving their time and physical presence to various organizations and efforts and so on.

In summary, we want to raise our children with an awareness of money and wealth, a desire to make their own contribution to the family’s stores of value in their various forms, and with confidence that they can make their own contribution through their thinking and efforts. And with this stable foundation and sense of themselves, we want to see them go out boldly into the world around them, wherever that might be, and help others to build wealth and security of their own.

Review – Silver Spoon Kids

Silver Spoon Kids: How Successful Parents Raise Responsible Children

by Eileen Gallo, Jon Gallo, published 2002

Growing up, I’ve personally witnessed conflicted family dynamics surrounding money. My parents are “successful” as the term connotes in this book, and their goal for their children (myself and siblings) was to create plans and structure for sharing their success with them while trying to avoid the risk of ruining our motivation, realism and personal attitudes. To summarize it in a pithy way, it is the quest to find a way for family wealth to “Have an impact, without an impact.” Somehow, we were to all benefit from family wealth while living as if it didn’t exist.

I’d say it’s been hit or miss, so far. All of their kids turned out morally in such a way that the average friend, neighbor or community member would think to refer to them as “good people” (if I may be so bold as a member of the sect!) But struggles or lack thereof with personal identity, sense of purpose, motivation, etc. vary from person to person and area to area. And at present, a minority of the children are in any position to know what to do with their parents’ wealth in the event of their demise. We might just chalk this up to genes and the randomness of life, but Silver Spoon Kids offers some child development background and family socialization dynamics that provide evidence these outcomes are anything but purely random.

While the authors (a husband and wife duo in the fields of estate planning and family therapy, definitely toll collectors on the highway of family misery built by poor planning) offer a summary of 4 major family money practices they consider essential for parents to master to inculcate responsibility in the second generation, I’d summarize my biggest takeaway from the book in a single sentence as follows:

When it comes to transmitting family values to children, especially concerning money, there is no substitute for parents investing their own time and attention in the relationship and modeling the values themselves for their children.

Most of the cringeworthy examples of “what not to do with kids and money” cited in the book are a result of some kind of avoidance of this elementary wisdom. Either the parents think they can get away with not being there for their kids, or they think the kids won’t notice when they say one thing and do another. It seems that good parenting on the topic of money is identical to good parenting on any other topic. That stands to good reason because child development is not rooted in “things” but in human evolutionary social biology!

So that’s my one-sentence elevator pitch on what this book is about. But here is the 4 point summary of essential practices the authors share at the end of the book:

  1. Understand the theoretical underpinnings; learn about normal stages and behaviors in child development and let this awareness inform your approach to discussing money with your children
  2. Live your values; to live your values, you must first know them, so take time to articulate what is important to you about money and why and make sure it doesn’t remain a secret to your offspring
  3. Teach your child about money through word and deed; don’t be a hypocrite, don’t be silent and don’t expect your kids to just magically arrive at the same conclusions and habits about money (if you think they’re good!) that you have without actively engaging them in the topic in age-appropriate ways
  4. Raise a giver rather than a getter; help your children understand that money comes and goes and there are important aspects to where it goes beyond just where it comes from; emphasize the ways in which money can make all people better off and give your children opportunities to find meaning in being a resource for others

Is this book of interest even if you don’t expect to be wealthy? Yes, because you can still spoil your kids without affluence. Again, the reason is because child development and human social dynamics are a constant of human nature rooted in evolutionary biology, rather than dependent upon material “things” coloring each person’s individual circumstances. Here’s an instructive quote I underlined in the book that describes what’s going on:

Can your children develop a secure attachment if you are with them for only limited periods of time? Interestingly, this same problem is faced by many low-income families, especially those with a single parent.

Yes, interesting indeed. Most of the symptomatic ills of the lower-classes are connected to the notion of parents who are over-taxed versus their available resources (time, money, health, etc.) But affluent families can create the same symptoms in their children by behaving the same way struggling lower class families behave– spending more time at work than at home, expecting children to raise themselves, neglecting to share values (or healthy values) with their kids and so on.

One helpful exercise in the book for getting a grip on family culture surrounding wealth is the development of a “Money Narrative”. It involves creating a short story about one’s early and personal family experiences surrounding money after reflecting on questions such as:

  • What is your earliest money memory (ie, the first important purchase you made)?
  • What did you learn from your father/mother about money?
  • What are some of your family stories about money (ie, the time grandpa was really cheap, or your aunt made a ridiculous purchase)?
  • What kind of financial education did you receive growing up?
  • What were the big emotional issues around money in your family?

The Wolf and I have been discussing this and we’re going to share our Money Narratives in a separate, follow-up post.

An interesting theme from the book is the way in which money is not special or unique in offering parenting challenges, but is simply another vector for making poor parenting choices in general. For example, the authors talk about the importance for children in experiencing struggle in the process of mastery, both because it is inherent in learning experiences and necessary for an individual to learn that they can not achieve mastery without a period of struggle as an amateur, but also because children who do not struggle do not achieve mastery, they are simply rescued by the adults around them. You can rescue someone by doing their homework for them or you can rescue them by paying off their credit card bill. It isn’t money that is “spoiling”, it is the rescuing.

Another item the authors placed emphasis on was the need for including philanthropy in the family culture surrounding wealth and money. I am a skeptic on the mainstream practice of charity. I was pleased to see the authors discount “charity” specifically in favor of “philanthropy” as a broader term encompassing any activity aimed at making the world a better place for mankind to live in. I also appreciated that they disclaimed simply writing checks or disbursing financial resources to organizations and instead talked about the importance of physically serving, in person and with one’s time and skills, and of making this a family activity. The discussion overall was thought-provoking and has given myself and the Wolf some homework to do in thinking about how we want to more closely integrate philanthropy in the core of our family values.

There’s more of value in this book, even if it is, to me anyway, mostly just Good Parenting Common Sense at this point. I’ll organize my remaining notes in a separate follow-up post for easier perusal by those interested in going deep.