Why does someone start blogging about financial independence? Most people seem to start blogging because they become so immersed in their goal of financial independence that it becomes a big focus of their lives. They constantly think about it and naturally gravitate to writing in the FIRE (financial independence, retire early) community. In some cases, this evolves into a side business based on this passion. In my case, it was a bit different. I didn’t start blogging until my wife and I had already reached FI (financial independence). So why did I decide to start a blog?
As you can probably figure out from the photo, it’s my kids. I have two young boys and I am very passionate about teaching them as much as I can. This includes just about every topic but one of the most important is to teach them about money. Our society in the US does a really, really poor job in teaching our children and citizens about money. For international readers, I don’t have a good understanding of how personal finance is taught in other countries – I’d love to hear from you in the comments on how things are different in other countries.
In the US at least (and likely most places), our relationship with money is very complex. In many ways it’s a taboo topic, particularly given the high degree of income and wealth inequality. It’s simply considered something you don’t talk much about with others. In fact, it’s more common than not that our kids don’t know our incomes, how much our house cost, or even the monthly utility bill. We know they are likely going to tell their friends at school and this makes most people uncomfortable. Money is a sensitive topic. At the heart of it, we humans are extremely social animals and we benchmark ourselves vs others whether we admit it or not. Money is one of the biggest benchmarks many people use to determine where they stand in the social pecking order.
Someone with more money than us makes us envious. On the positive side, it can help motivate us. On the negative side it can make us feel bad about ourselves. On the other hand, if we have more money than someone else, we can feel gratitude. Or we can feel superior or feel pity for someone with less money.
When some people gain money, they feel like they don’t deserve it. This is common with people who were taught money is the cause of many problems in the world. Rich people are bad and money is evil. This is a very common viewpoint and can be very limiting. It’s the scarcity mindset. The “impostor” syndrome at work where you feel like you don’t deserve the amount of money you make comes from this underlying bias.
When others gain money, they feel like they were cheated and should have received more. Even when they have a lot (think Wall Street bonus time). This is also a form of the scarcity mindset.
It seems that we have a hard time finding a healthy balance with money. A place where we feel gratitude and a sense of abundance around what we have. But we also feel like it’s okay that we have it. Where we recognize and appreciate all the help we had along the way but also recognize that we played a key part in any success that we had. It’s where the money we earn through investments or an active wage income, is money we feel we earned. Where the amount we’re charging for our time and effort is related to the value we bring others (and the supply and demand for what we provide) if it’s an active job. And where the value of borrowing our capital is worth the return we earn in the case of passive investing.
It’s interesting that an unhealthy mindset around money seems to be a lot more common than a healthy one.
Money by itself is neither a good or bad thing. But it can help generate good feelings and bad feelings. It all has to do with how we think about it. Money is just money. It’s just a medium of exchange that we use to trade for others things (because direct bartering is very inefficient). But the thoughts and feelings that arise when it comes to money are powerful and complicated so most people simply try to avoid the messiness that comes with talking, or even thinking, about money at more than a superficial level. However, if you truly want to master yourself and have a healthy psychological relationship with money, you need to tackle this topic.
I already write rather long posts (likely much too long for most readers) so I won’t try to tackle this topic in-depth but I can say that because of the sensitivity and complexity around money and human psychology, this topic is not addressed in our schools, or homes, much at all. In school, you will find only the academic or mathematical aspects. Basic economics. Supply and demand. How compound interest works. How inflation works. How to calculate net present value or mortgage interest payments. What 401K accounts are. All matter-of-fact financial aspects. And important to learn. The problem is that personal mastery of money is psychological, not mathematical. The math is easy. The correct thinking (which by the way directly drives your emotions) about money is the hard part. That is harder and messier to teach and so it gets completely neglected.
So back to my inspiration for this blog. I am passionate about teaching my kids all I have learned through my own life and from others about money, as well as happiness and human psychology. Our schools do not teach this effectively so it’s up to us parents to teach our children. So in my case, I started writing things down.
After I had written about 30 pages and realized I had a lot more to write, the idea of starting a blog popped up. This would allow me to capture key ideas in a more succinct format. It would also allow me to share with a much wider audience than my kids and the idea of helping others was very appealing. So I started this blog.
How I’m teaching my kids about money
I talk pretty openly with my kids about money topics (not absolute income and wealth numbers but everything else). Spending. Saving. Investing. How advertising influences you. Even if those topics are over their head at this point, the repeated exposure helps. How money is lost (spent) and grown (investing). How income is based on supply and demand and the value you bring to others. How education is a key enabler for your ability to provide value to others. How much things cost.
My wife and I talk about this in terms of our own jobs, savings, and investing choices. We discuss our spending choices and why we decide some choices are worth spending the money (ranging from small to large spending amounts) and other things, even (especially?) low cost things, are not worth our money. I believe this is having a very positive affect.
We are also trying to balance key lessons of frugality while not creating a scarcity mindset in them. They certainly don’t live a deprived life but it’s still easy to fall into a scarcity mindset with money depending on how you talk and act about money. Instead of focusing on limits we focus our language and actions on value. So we try not to say “we can’t afford that” when they ask why we can’t or don’t buy something. We instead say that we could buy it but that we would rather keep our money because that purchase is worth less to us than keeping the money for something we want more. Conversely, they sometimes ask why we buy something expensive when they see how much it costs and we explain why we feel it’s worth the money even if it’s a large expense. Overall we try to drive spending conversations around personal value for money. This also weaves into discussions of not wasting money (e.g. leaving the door open with the air conditioning on).
They already own investments
I started them investing early (age 4). This is working surprisingly well. They don’t fully understand it but they are picking up more of the details than I would have expected at this age. The way I set this up is a simple spreadsheet where I explained that if they put their money into this investment, their money would then generate more money for them. I gave them a very generous investment return so they can actually see enough financial benefit in a short time. Essentially their investment is their weekly allowance.
On the spreadsheet, they can clearly see the amount their investment earns them per week, and how that amount grows noticeably every week. They also see how spending reduces the amount they will earn per week, or how an addition (e.g. birthday gift) will boost this amount. Every few weeks, they randomly ask me to pull up the spreadsheet so they can “check their investments”. They really like to see the progress their investments are making. Interestingly, when they see the bigger amounts, it doesn’t make them want to spend it. They just want to leave it alone to keep growing.
If they want to spend some of their money, I let them do it but we talk about how much less they will then earn per week and how long it will take their investments to make back that money. I’ve been happy that they often don’t want to waste their investment money but at the same time, if they really want something, they will spend the money without regret (or put it on their wish list for an upcoming birthday or Christmas). I almost always make them wait at least a few days before they can decide to buy something unless it is only a few dollars. If they still want something badly after a few days, we’ll go get it. You can see the Pokemon card purchase in the spreadsheet last month for example. They are learning a number of important lessons here, including delayed gratification (which has been highly correlated to both success in life).
In fact, I expected them to want to spend more of their “investments” than they have. Maybe they understood what a good a return they are getting (it’s a 1% per week return)! I also think not having regular TV and all the advertisements really helps limit their desires as well. Overall, it’s been a great experiment in teaching.
My wife and I will continue to experiment with teaching our kids to supplement what they learn in school. Luckily, with the internet, there is no shortage of content so we can learn about any topic we want pretty easily. I expect the next generation to be a lot smarter about a lot of things, including money, than my generation. I’ve certainly learned a lot, and continue to learn, with the amazing access to knowledge that we have in today’s world.
So that’s the heart of my motivation to start writing and eventually start blogging about financial independence and adjacent topics of happiness and psychology. It was all centered around the desire to give my kids a good foundation of knowledge and life lessons in important areas that are neglected in our formal education system. The blog was a way to reach a broader audience in order to both learn more myself, but also to help out others. I’ve learned a lot in starting a blog and hopefully for those reading, you’ve gained some benefit as well.
So what is your motivation to achieve financial independence? For any bloggers who are reading, what is the reason you started blogging? Did anyone come into this community from a strange path? Anyone from outside the US like to share how personal finance is taught to children in their country? Please share your thoughts!