For Best Results: Try Baking-In Simple Effective Limits!

Our fourth “Financial Writers Who Inspire Us” honoree is Carl Richards. Better known as the “Sketch Guy”, Carl is widely respected for his ability to make financial concepts easy to understand with simple sketch drawings “on the back of a napkin”. He has written two books and has a very popular column in the New York Times, which we provide a link to below. This week’s post is about what we believe are Carl’s most relevant messages for teaching kids about money: 1) Constraints are good; and 2) Simple solutions are often rejected merely because they require changes in behaviour.

In an August 2013 article called “The Beauty of Limits”, Carl explains very succinctly how “constraints can give us structure and help us make the most of what we have”. In his 2012 book The Behaviour Gap (Simple Ways to Stop Doing Dumb Things with Money), Mr. Richards does an equally concise job of explaining how even though the simplest solutions to problems are often the most effective, they are rejected because they require people to change well-exercised behavioural patterns. Read the last Chapter of The Behaviour Gap (“Simple. Not Easy.”), to better understand why we often choose complicated over simple solutions.

At Gifting Sense we turn shopping for birthday and holiday gifts into a tool for parents to teach their children how to spend wisely. Our Gift Surveys are a simple solution that really only requires one change in behavior: Kids have to think about how much they will use and appreciate a gift before they ask someone to buy it.

We live in a culture that celebrates multiple occasions a year with the giving of gifts. Why not turn the frequency of gift giving into a natural opportunity to learn about concepts such as cost-per-wear or the how much larger the total cost of an experience is over just the “price of admission”. (As adults know, experiences can cost many multiples of the ticket price to a concert or sporting event once the safe transportation, snack and souvenir costs are all added up.) There are almost 50 million children in the United States and Canada alone between the ages of 10 and 19. If we can give as many kids as possible money-smarts, with every birthday and holiday gift, it translates into tens of millions of opportunities a year to bring financial literacy to life. We can change the world!

The next time talk of birthday or holiday gifts comes up in your household, consider asking your kids to complete a Gift Survey(s) for whatever it is they might like to receive. They can do it in a flash, on any device, including a smartphone. You’ll experience increased family harmony. You’ll save time and money. You won’t be adding to landfills. And you’ll be giving your children the best gift ever: the habit of thinking before buying.

We could continue to best-guess what our kids might like, and have our extended family members do the same. We could continue to spend time and money purchasing, returning, and discarding under-appreciated gifts. We could let those millions of opportunities a year to bring financial literacy to life slip away. But baking SEL (Simple Effective Limits) into family gift giving traditions seems the better the way forward, at least that’s what we think the “Sketch Guy” would say.

Link to Carl Richard’s “Sketch Guy” Columns in the New York Times

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