As parents, Rob and I want to do everything in our power to raise healthy, capable, flourishing adults. Even with young kids, we have to evaluate whether our parenting today will help them as adults 15+ years from now.
We know that part of this means teaching our kids to understand and use money.
We've debated saving money for college or spending it on "educational" opportunities now (or in the relatively near future). We've made minor financial sacrifices to ensure that we have time to spend with our kids. We've tried to teach Kenny about earning, saving, giving and spending money.
But all of this is secondary to the greatest financial gift that we can give our children- the freedom to fail.
What is the freedom to fail?
It's almost impossible for me to overstate the value that I've personally felt in the freedom to fail. The freedom to fail is the ability to take a risk that may not payoff (hence risk), and not live with a lifetime of negative repercussions.
If you've read Sapiens by Yural Harari (recommended second to US Financial Diaries), you'll notice that since the Agricultural revolution humans have faced extremely constrained decision making. You either work communally (under the feudal system) or face starvation. Harari even makes the argument that peasants faced much worse living conditions than their prehistoric ancestors.
Nonetheless, since that time, humans have necessarily been risk-averse.
The rise of capitalism and the industrial age made it possible for some humans to take on risks that led to greater human flourishing (Harari would disagree with my analysis, but I'm not doing a book review, so it doesn't matter).
But not all people can take these risks. The freedom to fail is the freedom to start over when something doesn't work out. To be free to fail, you have to be free to start over.
Despite lenient bankruptcy laws in the United States, I think most people will choose low risk lifestyles unless they have been given the freedom to fail by their parents. I know that my parents gave me the freedom to fail. They allowed me to go to college without debt. They allowed me to move back home when I graduated unemployed. In the back of my mind, I knew that if my career blew up in my face, I could always go home for advice and a bed.
This is a gift I want to give my own kids as well.
In my mind the freedom to fail has two pillars- the ability to fail, and the runway to success.
The ability to fail
My brother-in-law works in higher education. According to him, college students are entering college with higher rates of anxiety and depression than ever before.
Even more concerning, the fastest growing rates of suicide are among children age 10-14.
I'm concerned that my children's generation are not able to cope with failure very well. I hope that my kids buck that trend. I want them to fail at a lot of things, as early as possible.
I hope they set goals that they work really hard to achieve, and then they still fail to achieve them. I failed to achieve tons of goals, but I'm still a relatively successful human. As parents, Rob and I want to help our kids set goals and celebrate when they achieve them, and bounce back when they fail. Both sides are important.
I hope that a string of successes and failures will give my kids the ability to fail as adults. I hop they approach their economic life with this attitude, "Economic failure doesn't mean I'm a failure... it only means I failed this time."
A runway to succeed
But the freedom to fail isn't only about the ability to fail and get back up again. It's about having margin to succeed.
Most successes take a few tries.
I'm surprised by the number of people who muddle through the first decade of their career or business before really figuring things out. I can't give you any statistics, but I would have to guess that most people who achieve a high level of success had something of a financial fall back plan (parents, a high demand career etc.).
You can't create success for someone else, but you can create circumstances that make their success more likely. And I'm not talking about buying your kids a house as a toddler, or making sure your kid gets into Harvard.
Rather, I'm saying you can let your kid move in when their ideas fail. You can be an investor when all other sources of funding fail. You can kick your kid out of the house when they need to get a job.
Giving my kids a financial runway of a few years rather than a few days or months (as most young people have) is a part of giving my kids the freedom to fail. I'm not sure exactly what this will look like, and I'm guessing my kids won't even use it. However, as a parent, I hope they know it's there, and I hope they take bigger risks as a result of it.
I'm a wife, a mom, an employee, and a personal finance nerd who is devoted to spreadsheeting my way through life.