Regarding Money

It’s fun to stand in the market place of a community far away from your own country and have a translator explain to you the daily conversations between the locals. As an economist, my life is richer for having taken the time to practice the art of intentional listening. I pass on to you, for your consideration, one such bit of local wisdom: 

“If you want to teach your children about money

 . . . it’s better if you don’t have any.”

One fact is agreed upon universally: There are more wants than there is available money. Ultimately, we have to choose where we spend our money. That seems to be the hitch. Cultures characteristically try to teach their offspring something about those choices and that very tradition reveals a lot about the teacher as well as the student. In 1758, philosopher David Hume said: 

“Money is not, properly speaking, one of the subjects of commerce, but only the instrument which men have agreed upon to facilitate the exchange of one commodity for another. It is the oil which renders the motions of the wheels more smooth and easy.”

You only work in order to trade your labor supply for the supply of some other worker. Money, the common currency, is relied upon simply as a convenience and accepted because of confidence. Money is sort of an interim landing spot. You may want to exchange your labor for some currency in order to postpone a current consumption in anticipation of consuming something in the future. It is more convenient to carry around some currency in your pocket than to try to carry in your pocket a month of your labor! Credit cards are an additional convenience, but not truly money in that they have to be paid off with yet another transaction of money. However, when you stop having confidence in any form of money it ceases to be used as money. 

There has nearly always been some type of money in existence, but no one person simply sat down and invented money. And as history reveals, some folks, inside or outside the ruling government, sooner or later start tinkering with the control of the value of the currency for their own express benefit. 

So, if it is so important for a culture to pass on to its offspring the wisest and most prudent practices for handling money, why would someone in the marketplace say: “If you want to teach your children about money . . . it’s better if you don’t have any?”Here are some of my observations to add to your own ideas.

  • The convenience of money is an addiction and tends to sever the rational connection between the product of your labor and the money itself. Money becomes the issue, not labor. Mom and Dad look to the money as the object and usually one person takes on the role of a human ATM machine. If something is desired, money is used to fulfill the need or impulse, even if the interim convenience step of the credit card is needed. But the link between the fruits of labor and the ATM machine becomes lost, especially for the next generation.
  • Convenience for the present generation transforms into entitlement for the next generation. When the connection between the product of your labor and the human ATM machine becomes blurred, the kids are tacitly taught they are entitled to whatever is viewed as necessary.
  • Generally speaking, money and credit cards become so convenient that if they are available, the money will be spent.
  • Frugality demands discipline. If there is money readily available it is almost impossible to effectively teach frugality. The effort just isn’t convenient.
  • When caught up in “ATM thinking,” it is very difficult to teach that over time the value of the money being used almost always shrinks. So, expediency of the present trumps a well planned system for savings and investment for the future. The kids end up without the foggiest idea about savings and investments. “Somebody will always supply an ATM machine.”

Sadly, most lessons about money are caught rather than taught. The next generation, unless there is some form of intervention and transformation, will usually follow an increased trend of expediency and convenience rather than frugality and discipline. It takes real focus and discipline to teach the next generation about issues of money. The good news . . . it can be done!