When you have a kid, your whole focus in life changes. Before Baby RB40 came along, our priorities were just to have fun and enjoy life (while saving money of course.) However, after RB40 was born, our focus shifted from ourselves to our kid. Now, rather than worrying about achieving more success for myself, I worry more about how to help our kid succeed. But how can we go about doing that?
I’m sure you have heard of the Stanford marshmallow experiment. During the experiment, a marshmallow was offered to a child, and if the child could resist eating it right away, he would get two later. If he ate the marshmallow, he would only get the one. The author followed up with the children as they grew older and found that the ability to wait longer translated to future success. That makes sense to me because the ability to delay gratification will help you succeed in personal finance as well.
There must be a way to teach a child better self control and the ability to delay gratification. I’m not sure if I am doing a very good job here though. I have been trying to teach our little guy how to wait a bit and he just won’t have any of it. Yesterday, I got home from the library and needed to check something on the computer for 5 minutes, but he wanted my attention right away. I kept saying wait and he kept pushing a book in front of my laptop. I finally had enough and tossed the book two feet away and he had a huge meltdown…. I felt like a terrible dad. I should have paid attention to him first, and then got online after he was distracted by something else.
Perhaps it’s wistful thinking to try to teach a 2 year old toddler self control. However, I think it’s good to start building character at an early age. I just read How Children Succeed by Paul Tough and he suggested that character is more important to success than natural ability (like intelligence.)
Here are the 7 character traits that are vital to success:
- Grit – perseverance and passion for long-term goals.
- Curiosity – desire to learn.
- Self-control – having control over one’s emotions and actions i.e. the ability to put off eating the marshmallow.
- Social Intelligence – capacity to effectively navigate and negotiate complex social relationships and environments.
- Zest – living life with a sense of excitement, anticipation, and energy.
- Optimism – good attitude and the belief that things will turn out well.
- Gratitude – being thankful for someone or something and showing appreciation
I like the idea because it means everyone can be successful if they cultivate the right character traits. Your natural ability might be average, but if you work hard and have the right attitude, you’ll do well in life. We will teach Baby RB40 all the basics like reading and math, but we’ll work on his character as well.
Grit is quite interesting to me in particular. Life in America is pretty cushy for the average middle class family. My family immigrated to the US when I was 12 and we had plenty of challenges. Learning a new language, trying to fit in, and even just paying the rent were some of the challenges we faced. I don’t think Baby RB40 will face those kind of challenges so we’ll have to think of something else. I’ll sign him up for sports and other extra curricular challenges so he’ll have some obstacles to overcome as he grows up.
If you are interested, you can take the Grit Test (just 8 questions.) Angela Duckworth, a University of Pennsylvania psychology professor, has been conducting researches this topic and her talk is quite interesting.
Higher grit scores translate to doing better at the Spelling Bee, getting through the Beast Barracks at West Point, higher GPA, and higher education attainment. I think it probably translates to sticking to an investment strategy and asset allocation as well.
My grit score is 4.13, but I’m not sure how accurate that is. I tried to be honest, but that seems high to me. The scale is from 1(not very gritty) to 5 (extremely gritty.) Mrs. RB40 also took the test and her score is 2.88. Did you try the test? What’s your grit score?
For 2018, Joe plans to diversify his passive income by investing in US heartland real estate through RealtyShares. He has 3 rental units in Portland and he believes the local market is getting overpriced.
Joe highly recommends Personal Capital for DIY investors. He logs on to Personal Capital almost daily to check his cash flow and net worth. They have many useful tools that will help every investor analyze their portfolio and plan for retirement.