On Graduation Day

Today, I’m pretty busy with family events. My son is graduating from his preschool today. We take him to a private preschool that has a great blend of academics and constructive play time that we just love, but this is his final day there. In August, he’ll be moving on to kindergarten. Three of his four grandparents are traveling to go to his graduation, and afterwards we’re going to a dinner with the families of several of his classmates. (I’m writing this in the morning after he’s gone to get ready for his graduation ceremony (apparently, a song and a speech will be involved) but before the grandparents will arrive.)

This morning, I wanted to ask him about the things he’s learned so far in his life. He’s a fairly bright five year old, so I expected some interesting answers.

I asked him if he knew what Mom and Dad did all day when he was at preschool, and he told me that Dad writes stuff and Mom teaches.

I asked him why we did those things, and he told me that we like doing most of it and we make money doing some of the stuff we don’t like to do. That’s pretty much spot-on.

I asked him what we did with our money, and he said that we use it to pay for our house and to buy food and to buy books and to give him and his sister allowance.

I asked him what he wanted to do when he grew up. He thought for a long time – fifteen seconds or so – and he said he wanted to be a painter.


I actually tried to make a video of this question and answer session, but he turned really shy and ran away from the camera, as he often does when he realizes the camera is on and filming him.

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When my wife and I first had a child, shortly before I started The Simple Dollar, I thought that raising children mostly involved putting up with problems. You were the parents. You were the providers of discipline and basic instruction on how to behave. You changed diapers and wiped away tears. I viewed it as being almost like a car mechanic, where you did the basic things needed to get the car road worthy and then watched it scream away from you.

Instead, what I’m learning as I go along is that in a parent-child relationship, both people grow.

This site is called The Simple Dollar, right? I’m often seeking ways to break personal finance concepts down into very simple pieces that are easy to apply to life.

My children make that process easier.

I’ll be in the basement, typing away on my laptop, and my oldest child will pop in and ask me what I’m writing about. I realized not too long ago that if I can’t quickly explain it in a way that he understands, the post probably isn’t that good.

For example, if I’m talking about why it’s okay to put your retirement funds into stocks when you’re 25 but not when you’re 65, I’ll say something like, “If I gave you $5 and told you that you had to give it back to me tomorrow, you’d be careful with it, right? But if I gave you $5 and told you that you had to give me $10 back when you were thirty, you’d probably find something else to do with it, right? You’d try to buy something that might be worth more than $10 when you were thirty.” He understands it, and thus I know I’m on the right track for a post.

* * *

So why am I telling you about this? What does it really have to do with personal finance?

Here’s the real deal. Personal finance is simple. There are a lot of people that make this all far more complicated than it ever has to be. Why? They make money doing it. Financial advisors can make a mint if they make you believe that this is all really complicated.

The personal finance that 99% of us will ever deal with in our lifetimes is all really simple stuff. Spend less than you earn. Put the difference somewhere safe if you’re going to need it soon, or invest it if you’re not going to need it for a while. It all more or less boils down to that.

The simplicity of personal finance – and the real simplicity of so much going on in the world – is the most valuable thing I’ve learned as a parent. Most things really are simple when you start breaking them down into their key components. Even things that seem really complicated are actually quite simple when you break them down.

Don’t make money – or life – too complicated. If you’re getting lost in all of the terms, back off. There’s no rush. Learn what you need to know at your own pace.

When you translate some idea you’ve just learned down to the simplicity that a five year old can understand it, and it no longer seems scary. It seems easy, in fact.

The biggest challenge in personal finance is not something complicated. It’s overcoming our own poor choices that we make in the heat of the moment. That’s also the biggest challenge we face in our lives as a whole.

There’s a lesson to take home on graduation day.

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