Translator: Araminta Dutta
Reviewer: Queenie Lee
I recently completed an unsanctioned,
unsupervised psychological experiment
on my children,
the premise of which was
$10,000 in cash on the kitchen table
and a sign next to it
that said ‘Don’t touch the money yet!’,
and before I dive into it,
you should know that we
are a game-playing family.
We play ball games, board games,
dice games, card games,
all sorts of games,
but the games that my children love
to play most are games like Monopoly,
and when they play Monopoly,
they play marathon games of Monopoly
that last hours and hours
over days of play.
Each of my kids has a unique strategy
and personality when they play Monopoly.
My daughter, who is 11,
she is always the dog.
She plays entirely for Chance
and Community Chest cards;
you can say that she uses
the ‘luck’ strategy.
My 9-year-old son is always the car –
a very strategic player.
He buys all of the Railroads
and all of the Utilities
and then proceeds to put houses and hotels
on the most expensive properties –
And then his younger brother,
who is seven,
he buys everything that he lands on
with no exception,
which is fitting because he
is the wheelbarrow.
Now, before I tell you
how my experiment unfolded,
I have to share an observation
that led me to the creation of it.
One Monopoly marathon, Saturday morning,
I was playing with my kids
and noticed that they were all playing
just outside of the rules of the game.
So they were doing things
like buying each other out of jail
and lending each other money
to buy properties,
and I found myself going, ‘Guys,
this is not how this game is played!’
to which they’d say, ‘Dad, it’s fine!
We just want her on the board with us’,
or, ‘He can pay me back
at the end of the game,
when he’s flush with cash’,
and I’m thinking again,
‘What am I teaching these kids?’
So, I started watching
how they were playing –
listening to their banter, getting a feel
for how they were making decisions –
and I had this thought:
‘What if they’re playing this way
because the money isn’t real?’
It’s a concept I’ve been reading a lot
about, lately, ‘Financial abstraction’,
the notion that when money
becomes more and more of an idea,
less tangible and therefore more abstract,
it changes the way we interact with it
on a regular basis,
and there’s anecdotal evidence
of abstraction everywhere around us.
All you have to do is listen carefully
to people who say,
‘I loaned my child
or grandchild the phone,
and a month later,
all these errant in-app charges
showed up on my bill.’
In 2014, Apple reimbursed customers
for in-app purchases that were unapproved,
mostly by children,
to the tune of $32.5 million.
This is in a US FTC settlement.
In the documentation,
it said it was just too easy for kids
to make an in-app purchase.
The Imagineers at Disney were charged
with making the parks ‘frictionless’ –
is what they called it –
so they invested a billion dollars
in a MagicBand.
It’s a wearable device that functions
as your room key, your park ticket,
and your ID and wallet
when you’re on park property.
So if your child wants a set of ears
and a dessert in the Magic Kingdom,
your vacation just cost a whole lot more,
Lastly, I had a conversation
with some teenagers
who told me that $100,000 a year
really wasn’t that much money.
I said, ‘Really?
Why do you think that?’
They said, ‘Well, we both have $500,000
in our ATM machines on Grand Theft Auto’,
which is a very popular
and somewhat sketchy video game.
So as I’m playing with my kids
and I’m watching them play,
listening to them talk,
I thought, ‘What if the money
were real on the table?
Would they play differently?’
And so I calculated quickly on the box,
‘How much would it take
in capital, in currency,
to play a physical game
of Monopoly with my kids
so that they actually tangibly
got to feel the money in their hands?’
And I estimated, for four or five players,
it’s about $10,000.
So one Friday, I stopped at the bank,
I got all the denominations of bills
on a Monopoly board
with the exception
of a $500 bill – hard to get –
and on Sunday, I rounded the family up
for a high-stakes game of Monopoly,
where the winner takes all.
All of $20, by the way.
All of $20.
You have never seen kids’ eyes
light up the way mine did
when I handed each of them
$1,500 in starter capital,
and you have never seen
anyone’s eyes light up like my wife’s
when I took it back on Monday.
All of it.
Our marathon game
only lasted two and a half hours –
far shorter and more strategic
than most of the games they normally play.
True to my hypothesis,
two of my three kids
actually played differently;
my daughter still played the ‘luck’ card.
She was the first one bankrupted,
and she happily retired
to the living room to read a book.
My youngest son, the wheelbarrow,
did not buy everything he landed on;
instead, he carefully calculated
how many rolls away he was
from one of his brother’s properties
and how much he would owe his brother
if he landed on said property,
and made his decisions based on that.
In effect, having real money on the table
and a cash prize at the end
made him more conservative.
And my middle son – very strategic –
still bought all of the Railroads,
still bought all of the Utilities,
but did not buy Boardwalk and Park Place
or Mayfair and Park Lane,
but instead, he put hotels immediately
on Oriental and Baltic Avenue,
or Coventry and Leicester Square
on the UK version.
When I asked him why,
in his own words, he said,
‘Dad, they’re just
more affordable properties.’
At which point, I cried a tear of pride.
So he got it!
In the end, my son finished
with 28 properties,
more cash than he’d ever seen
and held in his entire life,
and he now knows the meaning
of the phrase ‘making it rain’.
Look how happy he is,
and how annoyed
his brother and sister are.
In the confines of my experiment,
there is an idea worth spreading,
and it is this:
I believe kids today
are being raised in a world
where money is no longer real;
it’s actually an illusion,
but it has very real consequences.
Peter Drucker, famed leadership guru,
said banking and finance industries today
are less about money
and more about information,
and yet young people today
don’t get that information;
they don’t get the experiences
of money, early on.
Three researchers from
the Centre for Creative Leadership,
in a study done two decades ago
that’s been replicated many, many times,
they interviewed over 200 executives
in a report called
‘Key events in executives’ lives’.
In this report, they found
that of the 200 top-level executives
who were the top of their game,
all of them had similar characteristics.
One of them was
that early on in their career,
they had been thrust
into a leadership role
that required them to make decisions
that had serious consequences.
They also had a mentor in place
that helped them appreciate the lessons
they were supposed to learn
from those experiences.
The study created a leadership framework
that said, in essence,
that someone with potential,
if given the opportunity to engage
in strategically relevant experiences
and given the ability to learn the lessons
from those experiences,
would have a higher likelihood of success
in their career in a leadership capacity.
Now if you took that study framework
and my $10,000 experiment
and looked at it
through the kaleidoscope,
you would get a statement like this:
if kids are given financially-relevant
experiences in their life
and someone is there to help them
learn the lessons from those experiences,
they have a higher likelihood
of achieving financial
success later in life,
and in my humble opinion,
they need to have them early,
and they need to have them often.
We under this not-so-subtle societal shift
in the way that we pay each other, today.
It’s estimated there are trillions
of dollars circling the globe
in our global economy every single day,
yet only four percent of that money
is actually in coin or currency.
The rest is all digital, data packets,
ones and zeroes,
and today’s digital-native youth –
they don’t see people paying
with cash or cheques.
In fact, if ever you’re in a line,
and someone in front
pulls out their chequebook to pay,
you are liable to say to yourself,
‘Really, a chequebook?
This is going to take forever.’
You’re laughing because it’s true.
The currency of today is digital.
Many of these kids equate spending
with credit and debit cards,
with Google Wallet and Paypal and Zap.
All of these are what they
equate spending to,
and by the way,
I am not pooh-poohing
the technological advancements
in payment technology today –
far from it.
I think tokenisation and randomisation
and biometrics are the wave of the future.
The first time that I used Apple Pay,
it was like showing the caveman fire.
It was amazing.
But what snapped me back to reality
was hearing my son behind me say,
‘I sure wish I had a phone
so I could buy stuff.’
You see, money, to a young person,
is somewhat abstract, anyway,
and when we further the abstraction
by waving a MagicBand
or putting our phone over a sensor
and giving the thumbprint,
all it does is further the abstraction.
It’s a recipe for financial disaster
later in life to the uneducated
because, to a young person,
they see money as limitless
because they have no concept
of the backend
until it comes around
to bite them in the back end.
I’ve seen this firsthand
in my work with university students –
young people who borrow
and spend untold amounts of money,
having no concept or understanding
of the increase in payments,
the decrease in lifestyle,
and the challenges they’ll face later on.
In the UK and the US,
student debt is ballooning problem.
In the US, we’re at $1.2 trillion
in student loan debt,
second only to mortgage debt in the US.
One in three students is delinquent.
One in five is in default.
It’s a huge problem,
and the reason that this is concerning
for all of us as a global economy is this:
Dun & Bradstreet found
that people spend 12 to 18 percent more
when using credit cards over cash.
They have yet to do a study
how much more we’ll spend
with a MagicBand or a phone,
but I can imagine
it would be 15 to 20 percent,
or 18 to 25 percent,
and all you need to do
is read the headlines
in the newspapers and magazines
across the world today.
Places like The Guardian,
The Washington Post, Fortune, Forbes –
these are the headlines we’re seeing:
‘New consumer debt reaching
a seven-year high’ in the UK,
‘Consumer debt hitting an all-time high’
in the US, ‘Choking on credit card debt’,
‘The credit card debt crisis:
the next economic domino’.
It’s what happens when people overspend
and get in over their head with money.
Unfortunately, The Money Charity says
that in the UK right now,
one person every five minutes
and three seconds
is either declared insolvent or bankrupt.
To put this into perspective,
since I started speaking today,
two people in this country
have declared bankruptcy.
In the UK, Demos.org says
that Americans aged 25 to 34
have the second highest rate
Everyone’s question should be,
‘Why? Why is this happening?’,
and in my simplistic view, it is this:
because the money they’re spending
isn’t real – it’s an abstraction.
So to stem this tide
with the next generation,
we have to bring them up to understand
that they are living in a world
where they have to make
very real money decisions,
in a world money is largely an illusion
but has very, very real consequences.
Because I want your children and mine
to be super successful financially,
consider any of the following:
If you are going
to spend money on children,
give them a set amount of money
and let them spend it.
Let them tangibly feel the money
go through their hands.
Let them succeed or fail
with minor consequences
so that later in life,
when they’re making the major decisions,
they understand there are
major consequences that go along.
For older kids, it’s this:
set a budgeted amount for school clothes,
supplies and what-have-you,
give them that amount,
and when they are
done spending it, it’s done.
And here’s the key; they get to spend it
with your subtle guidance,
your subtle mentorship,
your subtle supervision,
and whether you call it an allowance,
you call it commission for chores
or you call it a weekly stipend,
every single child,
from the age of five on up,
needs to be given some tangible amount
of money on a weekly basis
so that they understand how to function
in a cashless society someday.
Better to teach the young
the habit of saving
when they have a little bit
of money to save
than try to teach savings
when they have no money
because they’re in over their head.
I met an American named José.
He was a 20-year-old student
at an American university.
He was the child
of two Cuban-born parents.
At the age of 15, his parents told him,
‘José, we will give you food,
we will give you shelter
and we will give you $50 a month,
but the rest is up to you.’
I asked him, ‘What was that like?’
He said, ‘Clothing, toiletries,
school supplies, entertainment, gas –
it was all on me.
I resented my parents for a year.
But you know what?
I realised it was the single best thing
they could have ever done for me.’
When I met José at 20,
he was on a full-ride scholarship
at the university he attended.
He had $20,000 saved in a savings account
from working part-time in high school,
and this kid exuded financial prowess
and unmistakable leadership potential.
At the heart of my message today is this:
it does not take a $10,000 board game
and it doesn’t take cutting kids off
financially to make a difference.
The first step is, honestly, quite easy.
It’s about educating the next generation
to make decisions in a world
where money is largely an illusion
but has very, very real consequences,
and the reason it’s so important for all
of us, as a global society, to do this
is this next generation coming up
will inherit the global economy
that we are handing to them,
and we will precariously place it
on their shoulders.
We owe it to them to set them up
for financial success.