Lucky Dad No. 10: "Are We Rich?"

"Dad, are we rich?" This question came up more than once, and eventually I found an answer that served me well.

Our family was in good shape financially throughout our girls’ childhoods. Our income exceeded that of most people in the United States, and it vastly exceeded that of most of the rest of humanity. Compared to virtually everyone living even a few generations ago, our wealth was unimaginable. The challenge was to put this in context when talking to our girls as they grew up.

Kids get curious about money early, and why shouldn’t they? Money is everywhere. They hear about it on television, in the movies, in print, on the radio. Their parents talk about it. Everyone talks about it. From the earliest age, kids pick up that money is very important, and likewise the baggage that comes with money starts early in life. Many adults are uncomfortable talking about it, which makes it even more interesting and mysterious to kids. It’s like sex that way. I remember asking my father, when I was maybe ten or eleven, how much our house cost, and how much our car cost. I genuinely wanted to know, so that I could start decoding the whole money puzzle. My Dad couldn’t go there. “A few pennies,” was his standard response to any question about such matters. God rest his soul, my Dad talked to me as much about money as he did about sex. I had to find other sources of information on both.

Our girls were no exception to the curiosity children have about money. As a general rule, we tried to answer their questions about it truthfully, although I would also try to put the answers in context. If they asked me how much the car cost, for example, I would give them the approximate dollar amount, but I would also explain that most people need to work for more than a year to save enough money to buy a car. (Of course, it takes many people far longer than a year to save the cost of a car, if they are able to save at all. But "a year" is about the longest stretch of time that little kids can fathom, so that's what I said.)

“Are we rich?” is a heavily loaded question. Like many such questions, it’s worth unpacking the question itself before trying to answer it. What does it mean—what should it mean—to be rich? Is it measured in consumption or possessions? Is it measured in income, or is net worth more important? Is a wretched miser with a huge portfolio rich? Is a struggling artist who joyfully pursues her passion rich? Is a monk rich? Is someone young and healthy with nothing in the bank richer than a multi-millionaire with a short life expectancy and chronic health problems? Our girls did not have the patience for such philosophical inquiries. I doubt whether, at the age they asked the question, they even had an opinion as to what it means to be rich. That was our job: as parents, we were supposed to know what it means to be rich, and we were supposed to tell them if we fit the bill.

Like most parents, we tried various ways of teaching our kids about money. We gave them a regular allowance. Much of what we gave them, they saved. They were thrifty little things. But the allowance was a source of interest and satisfaction to them, as it is to so many children. Children—and ours were no exception—will put their money, however little they may have, in a special jar or box, and take it out periodically for counting. I loved doing that as a boy. People fetishize money from an early age.

We also tried to teach our girls about savings, interest, and compound growth. We did this via a local financial institution called The Bank of Dad. The girls could make deposits and withdrawals weekly, which I carefully recorded in a little book. Their money on deposit earned interest which compounded at the rate of 1% per month. (Everyone who heard about the interest rate wanted to open an account. For obvious reasons, The Bank of Dad limited customers to children who shared 50% of the founder’s DNA.) This experiment worked. Once they figured out the basic concept—money in the jar was static, but money with The Bank of Dad increased—they were happy to give me their dough. Soon, The Bank of Dad had a lot more on deposit than it had anticipated. After a year or so, The Bank of Dad folded to avoid insolvency, but it had accomplished its purpose. The girls learned the basic concepts of interest and the time value of money, although compound growth was a bit more elusive. And I had re-learned Polonius’s maxim, “Neither a borrower nor a lender be.”

One thing we didn’t do, though. We didn’t pay our girls for doing chores or schoolwork, or dock their allowance if they didn’t do them. To some degree, this is because we didn’t make our kids do a lot of chores, but in any event the concept of paying kids to do chores struck me as weird. If the child is supposed to do a chore to benefit the household, then paying for the work is beside the point. Put another way, if you are paying the child to do a chore, does that mean the child can choose not to do the chore, and forego the pay? Is this just a commercial transaction? Can your daughter quit her job in the family? Go on strike and demand higher pay?

None of this really helps to define what it means to be “rich”, though, much less what it means to be rich if you are a little girl. In the end, I realized that I already had the makings of an answer from another source. For a couple of years right after we got married, I went through a period of real anxiety about my life. I was dealing with a very challenging situation at work, adjusting to married life, and (after the first year of marriage) learning the basics of fatherhood. In a moment of self-awareness, it occurred to me to seek professional help, and by great good luck I connected with a top notch therapist. We will call him Jim here, because that was his real name.

In one session with Jim, I was expressing my anxiety about earning enough money to support my family, and my fear that the need to earn money might lock me into my current high-paying but unsatisfying job. Jim heard me out, then said something incredibly wise. He said that it would be a terrible mistake to believe that making money was the most important thing when raising children. He said, “When the children are small, they need the basics: food, clothing, and shelter. After that, money and possessions are meaningless. All they know, and all they care about, is: Are Mom and Dad happy, and is the family together?”

My God, that was good advice! Even as he said it I could feel the anxiety draining away. Jim wasn’t saying that money doesn’t matter. Of course it matters. In the classic movie “It’s a Wonderful Life,” Clarence the Angel tells the James Stewart character, George Bailey, “We don’t use money in heaven.” Stewart’s reply says it all: “Well it comes in pretty handy down here, Bub.” But other things matter more than money—as George Bailey soon discovers.

What Jim (the therapist, not James Stewart) said wound up as the foundation of the response that I fashioned to the question, “Are we rich?” The answer I gave was: “We have each other, and we have all we need. That makes us rich.”

I thought that was a pretty good answer. Many years later, one of the girls said that they interpreted this as meaning “No, we are not rich.” So much for good intentions! But I really meant what I said. For a young family, having each other, and having enough, is better than all the material wealth in the world.