We discuss money often in our family. Until recently, I thought this was an unqualified positive.
When we returned from our summer travel to Washington, D.C. and Spain, the entire family reviewed the costs of all three weeks, pinpointing the areas of greatest expense (spoiler alert: the U.S. travel was much more pricey!).
When we went out for ice cream last night, we reviewed how having two of us share a 4 scoop sampler saves money relative to each of us ordering individual double scoops.
I felt good about how the lessons were landing - my son and daughter now both suggest we buy a large and ask for an extra empty cup on our hot chocolate daddy dates.
All seemed good and proper until a few days ago, as my son and I were playing one of the what if games he enjoys so much.
I posed the following question while hiking down from an overlook: "Would you rather be gifted $1 million that you could only spend on yourself or $1 million that you could only spend on those in need?"
He really struggled with it, looking for loopholes that I quickly closed. Finally, he admitted (a little embarrassed, but with characteristic honesty) that he'd prefer to spend it on himself.
He turned the question back to me, and seemed genuinely shocked when I replied that I'd prefer to spend it on others.
He tried to reason with me: "But you could spend all day with our family!" "But we could travel more!" It left him a little confused, since we talk openly how money creates the ability to buy freedom and here I seemed to be rejecting an opportunity.
There's no sitcom-perfect resolution to this misunderstanding - apparently my emphasis on earning and saving towards FI has unwittingly overshadowed the role of charitable contributions as an important component of our family's value system.
I need to lead by example so my son understands we espouse give as you go, not give once you get there.
It's a process I'll be working on for a long time to come: how to raise a couple of Gracious Givers instead of breeding the next generation's Gordon Gekkos.
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I find this perversion common in the FIRE world. The pinnacle is the Donor Advised Fund, which is a kind of tax dodge in sheep’s clothing. Once you made all the money and took all the dodges, eventually you’ll get around to siphoning a dab to the poor. It’s virtue signaling.
In my families life every year we set aside 1/10 in cold hard cash and set about spending 1/10. It was part of the budget not part of some tax dodgey “investment fund”. It helped real people in real time. Sometimes I took a tax deduction but many times not because the situation didn’t lend itself to tax law. An example, I had a friend with 7 kids who lost his job back in 2008. I paid his rent for close to a year till he got it back together. In 2008 I lost over 1M but my investments weren’t the point since the money was 1/10 of the budget, unrelated to my purchase of my portfolio product. I still had a job my friend did not.
One year I had extra money so I built 4 homes for homeless families in Haiti. Each home was about 3K. I found an organization that had such a home building program. When you take a family from living on a garbage dump to having an address the chaos of poverty is replaced with stability. You may be poor but you have an address.
I’ve built several potable wells in villages that had to walk 2 hours with buckets to get their daily water. If you don’t have water and your kid gets dysentery your kid is dead. If you have water and some salt/s there is a chance.
One time a priest came through town filling in for the local pastor when he was out. The guy was from India and had a “parish” that covered several villages miles apart so he got to any one village only periodically. In his area he stayed in a tent. India is full of the most poisonous snakes in the world. If you live in a tent the snakes spend the night dropping out of trees onto your tent. The guy needed a real roof so I built him a church. That little church became the center of the village. It became classroom and meeting center and a place around which village life congregated. It stood against the chaos and it stands today. I think it cost me 15K or something 25 years ago. That’s 25 years of benefit in the lives of that village, a completely different kind of compounding. If you think your are helping by creating a DFA you have no clue.
These examples are clear and point out the point. If you live in parsimony, you give in parsimony. If you live in parsimony money is not the measure, how you live is the measure. I never missed that money and I never figured the compounded reality of how much it cost. I have more than I need and there are some places on this earth and some families on this earth that are better off because I felt duty bound to part with some dough . I taught this to my kids.
My 20 year old is not money driven. Her goal is to be a good person and die a good person. She’s successful.
Author
The virtue signaling is a fascinating interpretation – I only read the term in a New Yorker article a few weeks ago for the first time.
I am guilty of taking the DAF route to 5 years of giving batched all at once, and disbursed by a preset plan, and the unintended consequence was that we spent it faster because it felt more like house money. We can argue whether my relationship to money was perverted for it to have taken a DAF to make me more generous, but the outcome was one I wanted to encourage, so we increased the funds sooner than intended to increase our giving.
Having acknowledged this, obviously I need to make a better effort to help my kids understand the why of wealth generation – to be able to exercise choice in allocating limited resources (time, funds) and to share those with people that need the resources.
The DAF at most is the single leg of a stool, not a stand-alone device, in fixing a broken world. The hype over the tax break all too often becomes the tail wagging the dog.
Be a good person.
Die a good person.
Fix a broken world.
I’ll keep at it so my kids have better odds of turning out like your daughters, but the anecdote suggests I’ve screwed up the messaging at some point and need to course correct.
Your kids will turn out fine. How much free care does Daddy give away? I can remember entire 48 hour weekends where I didn’t make a nickle but yet the peeps got taken care of because I had the skills and they had the need. I’m sure you’ve done the same. Kindness is a funny word it has nothing to do with being nice. Being nice says” do what I want and we won’t have trouble”. Kindness is the free use of ones power to benefit another. Teach kindness. You already live a morality of kindness, so simply be an example.
Both the post and subsequent Gasem’s comment are incredible.
Never heard of the Gordon gecko reference before so I need to look that up
Author
Looks like I mispelled the name, but here‘s a primer from Oliver Stone’s “Wall Street.”
I really struggle with this issue myself, CD.
With the desire and knowledge of how to hit a FIRE number also comes the realization that charitable giving will slow down that journey considerably.
I’ve seen surveys of the FIRE community, and charitable giving is not as common as one would hope.
And with the kids, there is that danger of inadvertently teaching money worship.
I worry about this with my 5 year old boy. When I ask him what he wants to do when he grows up, he answers, “Something that makes a lot of money!” I sort of chuckle with discomfort… unsure of how this will play out when he reaches adulthood.
Personally, my wife and I are becoming more active with charitable giving (both monetarily and with our time), but I know it doesn’t reach 1/10 of our income like Gasem and others.
It’s a balance that will evolve over time, I suppose.
— TDD
Author
TDD,
Thanks for the reassurance that I’m in good company.
A post by Dr. MB on her new and improved Canucks Money blog is the most recent example I’ve found for laying a template for the next generation:
I can no longer be tempted with luxury, status, popularity, power or influence.
I have none and I want none.
So maybe what I need to show my son is less the value of money than the value of not wanting?
Mulling it over,
CD
TDD
Making money and spending money are independent activities. It depends on your goals. If you’re goal is to get rich as hell as quick as possible that precludes any kind of spending beyond subsistence. You can spend 20 years living like a resident, to spend the next retired 50 years living like a resident and have spent 70 years having “lived like a resident” as your legacy, then you die. What a boring history. You can spend some money along the way and create a different history for someone you don’t even know.
10% is just a commitment I made. You can do good at virtually any level of giving. The same organization I used to give potable water also provides breeding pairs of animals as a possibility. The deal is you buy a pair which is gifted to a family. When the first pair is born the family gifts a pair to someone else creating a debt snowball of anti-poverty. Breeding pairs are cheap to give. I also use an organization so support needy children and typically had about 20 kids or old people under my support. It cost about #350/yr. I gave away some kids to my elderly relatives since the kids would send mail sometimes. This means my relatives had grandchildren by proxy. Sine my commitment was multi year I kept the same kids and old people until they finished school or left the program or until the old people passed. The old people typically had no one to help them. A program like this is anti child trafficking since with it parents can more afford to keep their families intact.
So the kids get support and a start, the old people get a meal and some company and I have their story in which to participate to participate. They don’t know who I am but I know who they are, and can enjoy when there is a success, and when I die and when I’m gone there’ll be one child born and a world to carry on. If you want to teach your kids, get them a couple kids to grow with. Cost you a few hundred a year. Have them buy a breeding pair and them sit down and teach them the magic of compounding. It’s the same math as “getting rich”.
Saving money is all about buying a portfolio product. Buying a product is not the same as getting rich. Owning a product serves a purpose and in the retirement case the product serves the purpose of providing income in lieu of a job once you get too old or too sick to work. Personally I’m unimpressed with people who retire too early. They typically are legends in their own minds, basing their existence on some evescent “number” which some how confers magical power. During the accumulation they missed the part about being more (present tense), while becoming wealthy on every front (future tense). They became slaves to a number and sold their freedom in the process. Your history is what happens along the way. If your history is defined by FOMO, you will automatically miss out because you’ll chose an excessive mass of crap over the essential paucity of quality. When you choose what is essential you have what you need, and typically plenty left over, enough to give some away. If you have some to give away, give some away. When you have what you need, it’s what you need. Instead of FOMO it becomes JOMO. You take your joy from missing out. It’s a different philosophy
Author
Gasem,
I was thinking very much of your philosophy of parsimony when I read that Dr. MB took an 8 pound pack on a multi-week trip to SE Asia.
There’s a joy to needing less and sharing more – I need to do a better job of incorporating it into the fabric of our day to day practice.
CD
This was interesting as we were just talking the other day with our kids. They hand in cash at church while we give online. How do we “show” them something we do online while they are at school? I guess the next DAF disbursements should involve them as well. Thanks for talking about this!