Saturday, August 25, 2012

On the Color of Money


Dear Mackenzie,

If you invest your tuppence wisely in the bank, safe and sound; soon that tuppence safely invested in the bank…will compound.

No, my sweet daughter, these are not my pearls of wisdom. They’re from one of my favorite songs in the 1964 film based on a series of children’s books that featured a magical nanny named Mary Poppins.

In the film, Mary’s employer Mr. Banks sings to his son Michael about the value of money, and of investing his tuppence at the Fidelity Fiduciary bank. For some reason I love that song. But how important is it for a ten year old to save money, or to understand money management?

A couple of years ago we started giving you a weekly allowance.  The truth is that as a practical matter you didn’t need one.  Like most parents who are able, we provide you with all the necessities of life and then some.

Even if we hadn’t, you’ve been blessed at a very young age with a successful acting career that’s allowed us to put away quite a bit of money in your college fund. That said, your mom and I thought that giving you an allowance was a great way for you to start learning how to manage money in a safe environment.  It’s hard to make a catastrophic mistake at $10 a week.

We also debated whether or not to tie your allowance to your doing some chores around the house. We liked the idea of your starting to learn the value of money earned for services rendered. On the other hand, you’ve been working eight-hour days or longer on stage and on screen alongside adult professionals since the age of seven. In that light, it seems rather foolish to offer you a few dollars to clean your room.

Not that you’re aware of your net worth.  A year or so ago you wanted to buy an ipad. One night at dinner you asked how much an ipad cost and we told you it was approximately $500. You immediately started calculating how long you would have to save in order to buy one. When you realized that given your allowance it would take a year or more to buy one even if you saved every penny, you started negotiating with me about matching funds.

I was enjoying the exchange tremendously, but after a while your sister Jamie got fed up with the discussion and suggested that you simply use the money you have in the bank and buy one now.  You looked at her like she was crazy. “What are you talking about?” you answered. “I don’t have any money”.  It took all our will power to maintain a straight face, but the moment was so pure and genuine that I agreed to match your savings dollar for dollar until you reached your goal.

A former colleague of mine used what I thought was a wonderful tool to teach her (then) young children the value of money.  Whenever the family went out to a restaurant, she would have the kids check the math when the bill came.  If the kids found that the restaurant had overcharged them, or had done the math wrong in any way, she would give the difference to the kids.

Her children loved the game, and every so often they got a bit of found money. In the meantime, looking at the bill gave them a sense of the reality of how much things cost (“wow, four dollars for a Coke? That’s half my allowance”) so the concept of what they were spending became less ethereal. It’s genius. I’ve suggested that game to you several times and so far you’ve not been interested.

The problem with the allowance we were giving you was that we didn’t stick to the plan. You rarely did the chores you were supposed to do each week, yet we gave you your allowance anyway.  Half the time we didn’t even remember what chores we had asked you to do.

Then we’d forget to give you your allowance for weeks at a time. You in turn would forget to ask for it because whenever you needed something we’d just buy it for you, so you were never short on cash. In the end, both you and we showed all the fiscal discipline of an Enron executive and the allowance experiment was a bust. Finally all of us forgot about it. I blame myself.

And then two weeks ago you approached us again about getting an allowance.  You suggested you would be willing to do chores around the house in exchange for a weekly allowance. I realize you’re presenting us with an opportunity to do it right this time. And yet I’m conflicted.

Should we just give you an allowance and let you be a kid? And why did you offer up the chores?  Is it because your friends are doing it?  Is it because you are craving responsibility? With you having offered it up, would it scar you if we said you didn’t have to do the chores? My initial idea was to tell you that one of your chores would be to hug your daddy every week. But wait, what would THAT be teaching you?

I’m neither a child psychologist nor an economist, but I’ve come to believe chores for money at age ten is silly.  You’ll have plenty of time for the anxiety of financial pressures your entire adult life. Why start that anxiety now?  I had an allowance as a kid. I think it served to make me less carefree, and I’m still not very good with money management.

Arghh, who the hell knows. I leave the tough decisions to your mother.

All my everlasting love,

Dad
















7 comments:

  1. we provide you with all the necessities of life and then some.

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  2. Beautifully written and I love the idea of checking the restaurant bill. I will have to try that with my kids!

    Deciding how to teach your child about money is such a personal decision. Some families believe wholeheartedly in allowance; others do not. Some pay for chores or good grades; others do not. The key is to find the method that matches the beliefs and ideals of your family. What works for one family may not work for another. I believe the most important thing you can do to get your child on a path of financial literacy is to have open and frequent, age appropriate discussions about money with your children. Find a way to connect a financial topic with something that is meaningful to their life, such as the iPad!

    Keep up the great work with your children. Thanks for sharing your letters.

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  3. Thank you Pam. You are so right. Thanks for commenting.

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  4. I believe the most important thing you can do to get your child on a path of financial literacy is to have open and frequent, age appropriate discussions about money with your children.

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  5. I saw you speak at USC yesterday and decided to do a bit of research on you. I'm glad I did, because I found these amazing and touching letters full of life lessons. You are an inspiration and I hope to be as wise as you are one day.

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    1. Thank you. That's very kind of you to say.

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