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.

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Supporting Causes With Integrity (#charity, #philanthropy)

Introduction

I am a skeptic when it comes to charity– I believe most charity efforts are inefficient ways to make the desired impact, misunderstand the nature of the problem they seek to address and are doomed to treat symptoms rather than causes or, at worst, create more problems than they solve. I believe that this is partly due to the incentivizes and mechanisms of philanthropic activities versus monetary/commercial exchange activities, and partly (mostly) due to the fact that most people interested in charity do not spend much time thinking philosophically about what they’re doing, how they’re doing it and why they’re doing it.

As I do intend to contribute to (or even create) some philanthropic entities over the course of my life and I do not wish to be a hypocrite, I have attempted to identify and outline some important tradeoffs which must be considered before engaging in charitable activities.

Spectra of tradeoffs

Short-term vision vs. Long-term vision

This tradeoff involves the consideration of looking at problems which are immediate, present or developed in nature versus looking at problems which are distant, in the future and developing or potentially could develop based on a particular trend playing out. This tradeoff also has implications for questions of fund-raising and financing methodology and the construction of a strategy to meet the problem (ie, building a strategy which is active in the coming year versus a strategy which may only become active many years from now). This tradeoff has a generational component– looking at one’s own generation or the immediately following generation, the generation of one’s grandchildren or even more distant successors, or looking at the general inheritance of mankind for all time.

Physical issues vs. World of ideas

This tradeoff involves considering problems related to things that affect the material well-being versus predominant ideas, values, culture, etc. An example would be providing books to schools, versus influencing what is in the books in schools.

Treat symptoms vs. Prevent problems

This tradeoff is one of both urgency and quantity. It implies a certain metaphysical reality for the tradeoff to exist, that is, that a smaller good can be had now at the expense of a larger good later. The tradeoff demands that we consider which is more important: ending present suffering or ending the the cause of suffering. An example is providing malaria medication, versus providing mosquito nets.

Act locally vs. Act globally

This tradeoff involves the radius of impact and the desire to improve one’s own community versus the potential to affect a more desperate community further afield. An example would be trying to end homelessness in your own city, versus trying to provide clean drinking water to everyone on the planet.

General application vs. Specific application

This tradeoff is similar to the impact radius consideration but the question asked is more precise: “Given that resources are limited, do you seek to relieve the problem as it affects one specific group, or as it affects all groups?” A person may choose a specific group far away or a specific group they know familiarly, that is why this is not a question of acting locally or globally. An example might be seeking cures for childhood cancer, versus seeking cures for all cancers.

Verifiable impact vs. Difficult to measure

This tradeoff involves considerations of the empirical measurement of philanthropic influence. You may decide only to support a cause which has a clear and objective metric to indicate the influence your contribution is making, or you may decide to support a cause where the impact is subjective, mixed up with other independent variables or is simply on too vast of a scale to easily measure. An example is delivering computers to third world classrooms, versus improving the happiness of a community.

DIY vs. Pay to fund others

This tradeoff is a question of agency and considers whether one will serve as the agent of change himself, or whether he will hire others to do the work for him. It is not just a question of leveraging the efforts of others through the division of labor– it is about whether it is personally desirable to be involved as an agent oneself or whether it is preferable to provide things like ideas, organization and money while leaving others to actually execute on the plan. An example is going on a mission trip and building houses for the poor, versus making a donation to the Bill & Melinda Gates Foundation.

Change the system vs. Work within it

This tradeoff involves an analysis of the contribution the social system (rules, laws, cultural customs, traditions, economy, etc.) makes to the existence of the problem in question. You might see the problem as a necessary outcome of the system itself, necessitating a “revolution” to resolve it, or you might see the system as largely disinterested in or detached from the problem meaning it’s possible to use the system, or channel its energy differently, to resolve the problem. An example is abolishing the tax code, versus seeking a privileged status within it such as 501(c)3 designation.

For-profit vs. Non-profit (Self-sustaining vs. Dependency)

This tradeoff examines the proper method of financing a charitable activity. It signifies an awareness of the way that the existence of a charitable resource might influence the supply or stickiness of a social problem. It also provides consideration for the likelihood of strategically resolving a social problem with a potentially uncertain, inconsistent or mismatched method of finance. It understands that the design of economic systems and the consideration of incentives is often background for the existence of certain social problems. An example is a business that purposefully hires various “at risk” demographics to keep them out of trouble, versus a charity which spends significant time and energy ensuring its continued financing by others; a corrolary example is a charity with a substantial endowment which is intelligently invested over a long-period of time allowing it to grow, versus a charity which comes hat in hand every year asking for new donations to continue its operations.

Individuals vs. Families/communities

This tradeoff involves the philosophy of “If you can change the life of just one person, you’ve made a difference” as opposed to “It takes a village” or “Only together may we truly prosper.” It asks one to focus their consideration on whether the problem is truly being solved if only some are relieved or whether a wholesale solution must be put into affect to feel a sense of accomplishment. An example is a scholarship for a talented student, versus constructing a school for an “underserved” community.

One causes vs. Many causes

This tradeoff considers whether one can do the most good by having many plates spinning and doing a little good in a lot of places, or if it’s better to dig deeply and do a lot of good on just one issue. An example is putting all your effort and resources into diabetes research, versus supporting the local children’s hospital, a charity sports league, providing scholarships to handicapped students and funding a legal defense fund.

One project vs. Many projects

This tradeoff is similar to the one immediately preceding it. The difference is simply that one could have one project at each of many causes, or many projects at one and only one cause, or some other combination of the two. It is partly a question of finishing what you started before going on to something else. An example is just feeding the poor, versus feeding the poor, providing job training for the poor and organizing community awareness seminars about the challenges of the poor.

Mankind vs. Other Organisms

This tradeoff is self-explanatory– do you seek to resolve human issues, or ecological issues (including issues related to the state of the environment, the welfare of non-human animals, the prevalence of plant species, etc.) An example is building a church, versus saving a species of river smelt from extinction.

Conclusion

When it comes to philanthropy, I believe the most important epistemic principle is that you should have a rational, deeply contemplated answer to the question, “How do you know you aren’t making it worse?”