The Ten Year Old Test

A few years ago, when my oldest had freshly turned ten years old, he began to ask a lot of questions about our family’s financial state. He wanted to know if we saved money, how much we saved, and where we saved it. He wanted to know how we spent our money and where it went and how we kept track of that.

For a two or three month period, he kept asking these questions until, I guess, his curiosity was sated and he moved onto something else.

Unsurprisingly, those conversations gave rise to a lot of articles on The Simple Dollar. I’d start talking about something with him and realize before long that there was something in this conversation that could easily grow into an article for the site. Many articles that I wrote two to three years ago were outgrowths of those conversations.

One thing I found very interesting during those conversations with him is that there were at least a few areas he’d delve into where I would get upset or frustrated with having to talk about that issue. I kept my cool – I didn’t blow up at him or get angry or angsty or anything – but inside, I felt annoyed or frustrated or I simply wanted to avoid talking about that subject.

It took me a while to really put together what was happening, but after some reflection, it became clear: anything that I was doing financially that I couldn’t or didn’t want to explain to a ten year old was probably a bad move.

In short, if I couldn’t justify it to my ten year old son, then it probably didn’t deserve to be justified.

Similarly, if I couldn’t explain it to my ten year old son, then I didn’t understand it myself and shouldn’t be financially involved with it.

As I began to realize this, I also began to realize that the “ten year old test” was actually a pretty simple way to quickly figure out if something was an acceptable move or not. If it was something I could reasonably justify or could easily explain, that idea at least passed a basic sniff test. If I couldn’t justify it or explain it, that idea was almost certainly bad.

Over the last few years, without really thinking about it, I’ve adopted that “ten year old test” to a lot of my financial moves and to a lot of my choices in other areas of life.

It’s actually really easy to use. I just try to imagine, as accurately as possible, how my ten year old would respond if I suggest a course of action. I’d try to explain it to my ten year old as clearly as I could and then, to the best of my ability, try to imagine how he’d respond (I usually visualize my oldest son when doing this, as he was the ten year old that originated the idea).

One of four things typically happens.

One, I have trouble explaining it at all. This either means I’m trying to pitch something that I don’t even really understand myself (because of the complexity) or because I’m considering a course of action that’s really hard to justify.

For example, I’ve often thought about trying out more complex investment arrangements for our retirement, but whenever I sit down and try to explain them in simple terms, it sounds like a mishmashed mess.

Two, I can explain it simply, but it rings hollow as I’m explaining it. This happens quite often when I’m trying to justify unnecessary spending or some kind of unhealthy choice.

For example, if I try to explain why I really need to spend $40 on this game, the explanation usually rings hollow pretty quickly, so I put it back on the shelf. If I try to justify stopping at a drive-thru, the explanation usually sounds comically shortsighted, so I drive on by.

Three, I can explain it simply, but it leads to a really obvious question that I can’t easily answer – either I can’t actually explain the answer to that obvious question or else it rings hollow. In this case, again, it’s a bad idea, but there’s usually a better idea buried somewhere nearby. If I can explain the core idea well but a simple question makes it much less clear or justifiable, the core idea is probably okay, but I just need to think about the implementation of it.

For example, I might suggest that it’s a good idea to stop at a drive-thru because it’s dinner time and everyone in the car is hungry. The obvious question in response would be, “Don’t we have a bunch of good leftovers in the fridge that we could eat as soon as we get home?” The core idea of eating soon because we’re hungry is good, but the course of action is flawed – there’s a cheaper alternative that’s obvious at just a glance.

A similar thing pops up at the grocery store. I know I need some laundry detergent and I’m looking at the options, but that ten year old voice asks, “Why buy that expensive one when that store brand will do the job you want?” If I can’t really answer that sensible follow-up with a good reason, the store brand goes in the cart.

Finally, I can explain it simply and answer any follow-up questions simply. If this happens, then I know the plan is pretty good and at least somewhat sensible, and when I need a quick plan or decision, the first thing that works here is usually what I do.

This usually happens when I’m making good spending choices and focusing on actual needs and keeping costs low. It happens when I’m making good long term choices.

In fact, almost every “bad” decision I might make in any area of my life is silenced by the ten year old test.

It’s pretty hard to justify eating a bunch of junk food when there are grapes in the fridge or an apple in the fruit bowl.

It’s pretty hard to convince myself that wasting time doing something unfulfilling is ever a great idea.

It’s pretty hard to see why I would say bad things about someone else or let a friendship wither or let a friend down.

The question you’re probably asking yourself is, “Great, but I don’t have a ten year old asking these questions!”

Here’s the thing: the ten year old test works just as well when you cultivate that voice of a questioning ten year old in your head rather than relying on an actual curious ten year old. Let it be your conscience. Run your plans through that voice and see whether or not it passes muster.

What you’re really doing here is cultivating a better sense of what makes for a good financial move. If your internal ten year old is balking at a purchase, then you likely shouldn’t be making that purchase. If your internal ten year old doesn’t understand your financial plan, then you don’t understand it, either, and you shouldn’t be doing it.

That ten year old voice can keep you away from unnecessary purchases, network marketing schemes, and bad investment choices. That ten year old voice can nudge you toward saving for retirement, building an emergency fund, and making sensible buying choices.

Listen to it. Use it.

If you can’t explain what you’re about to do with your money to a ten year old, or you can’t do so without feeling angry or ashamed, you probably shouldn’t be doing it. It’s that simple.

As I write this, my nine year old is just starting to ask questions along those same lines. Why are you buying that? What are you doing with the money you make? Why are you saving for retirement? What happens if our house gets hit by a tornado?

Can I answer those questions truthfully in a way he can understand? If so, I’m probably on the right path. If I can’t, maybe I need to rethink things.

When he gets past that phase, I’ll have to go back to relying on my internal ten year old test. It might not be as loud, but it’s certainly good at separating out good ideas and truth from bad ideas and nonsense.

Cultivate your own ten year old voice. You’ll be glad you did.

Trent Hamm

Founder of The Simple Dollar

Trent Hamm founded The Simple Dollar in 2006 after developing innovative financial strategies to get out of debt. Since then, he’s written three books (published by Simon & Schuster and Financial Times Press), contributed to Business Insider, US News & World Report, Yahoo Finance, and Lifehacker, and been featured in The New York Times, TIME, Forbes, The Guardian, and elsewhere.