Teach the Children Well

I’m not much of a bartender. But when my wife and I hosted an art show in Missoula for a friend, I got the chance to serve wine while meeting some interesting people. Bankers, my usual social circle, tend to be strait-laced analytical types for the most part, so it was entertaining to spend an evening meeting creative people from our thriving arts community.

One young couple with an array of tattoos and piercings had a story that caught my attention. I’ll call them Louise and Leonardo. They had recently moved to Missoula from Asheville, North Carolina, another cool mountain town with a lot of similarities to Missoula.

Not too far into the conversation it became apparent that they’d moved to Montana on a whim, didn’t have jobs, had little money, and held to a philosophy that emphasized living in the moment.  The concept of deferred gratification was not a part of their thinking. They believed that they had many years ahead of them when they could work, but right now they wanted to pursue their passion for travel and new experiences before they got old.

Do you have a Leonardo in your life? He was fascinating to meet, but I’d have a different opinion about him if he were seriously dating my daughter. I bet you would too!

Without being too much of a curmudgeon, I humbly offer a few ideas for discussion with the Leonardo’s in your life.

I don’t want to minimize the challenges of discussing bourgeois values with the 20-somethings infatuated with the pursuit of their passion at all costs. Are there ways to give them some seasoned financial advice without crushing their dreams for a life full of meaning and purpose? Here are five suggestions.

First, introduce them to their future self. Snapchat, as an example, has a photo filter feature called Time Machine that lets you watch yourself age on a time continuum revealing a much older and grayer you. It’s a bit creepy, but you can literally watch yourself age decades at a time.

Some money psychologists tell us there can be great value in this. The theory is if we can visualize our older selves, it will help motivate us to defer our spending to save for the person we will become.

It’s a bit of “shock and awe” to see yourself age. I will confess it startled me to see what I might look like in 20 years. It made me feel good that I bought a long-term care policy!  

But the real opportunity is how face-aging apps can open up a discussion with the Leonardo’s in a fun way. When we’re young, it’s easy to find just about everything interesting and think that it is your life’s passion. But in truth, it can take years to discover what you’re truly passionate about. When Leonardo reaches that point, he’ll want to be in a financial position to do what he loves.

Try using an aging app to open up the discussion of purpose in later life with the Leonardo in your life. Hopefully it will open up a good conversation about purpose in life and the wisdom of doing a little financial preparation today.

Second, show the power of compounding in a way that relates to his reality. There is a reason why personal finance literature shows the power of compounding in graphs. Demonstrating, for example, how saving regularly for a couple decades can reach an inflection point where investment gains equal what is being saved is powerful. The dream of never having to worry again about money can be motivational to those who have high aspirations of what they want to achieve in life.

Third, introduce Leonardo to the concept of ownership. Buy him a few shares of a stock whose products he uses and understands. Many Leonardo’s have no concept of how to think like an owner of a business.

I tried to introduce this concept to my granddaughter by buying her a share of Walt Disney Co. stock because she is a big fan of their shows and movies. Disney will frame a stock certificate for you with Walt’s picture along with many of the Disney characters. They reinvest the dividends automatically.

Whatever creative way we can find to introduce our kids to the idea of being an owner, the more likely they will be able to balance out their consumer instincts.

Fourth, introduce your Leonardo to some good financial books to read while he’s traveling. Jonathan Clements is one of my favorite authors on personal finance. He has several good books, and one I recommend is How to Think about Money because in addition to the mechanics of money, he also gives insight into topics like the relationship of money to happiness and purpose.

Finally, lead by example. Our goal is not to be rich for the sake of having a lot of money. Demonstrate how to save enough money to live generously and lead the life you want in front of your watching mentee. There is nothing more powerful to the younger generation than living out an authentic life with meaning and purpose!

If you have a good success story of someone you’ve worked with in the area of money management, I’d love to hear from you!

Joe Kesler, Founder Smart Money with Purpose