School does a pretty good job neglecting to teach students a lot of what they most need to know. Nowhere is this more true than in the realm of personal finance. Despite claiming to “prepare students for the 21st century workforce,” most schools do very little to prepare students for how to manage their finances once they actually start to make money. I aim to change that with my students. In the spring, after the dust has settled on the college application process, I teach a class on investing and personal finance to our seniors.
One of the core texts I use, and one of the classics of the genre, is Robert Kiyosaki’s Rich Dad, Poor Dad. When I first read this book, I had to do a double take because I seemed to be reading my own story. Kiyosaki’s clever framing is that he grew up with two dads, his actual father (Poor Dad), a highly educated professional who never accumulated significant wealth despite earning a high income, and the father of his best friend (Rich Dad), who dropped out of school but became a shrewd businessman and one of Hawaii’s wealthiest citizens.
Like Kiyosaki, I too grew up with two dads, and their stories map almost identically onto his. My real father was a partner at a prestigious Boston law firm and made a very healthy income. But he has always suffered from an allergy to financial planning. When coupled with his penchant for divorce, he became the classic UAW (Under Accumulator of Wealth), a term taken from another personal finance classic: The Millionaire Next Door. Auctions were my dad’s real Achilles heel, as his basement overflowing with high-end furniture and dusty artwork can attest. When he received a surprise windfall in the form of a $100k painting that was discovered in his father’s attic, my dad had spent the money within days, acquiring that most classic of depreciating assets: a wooden boat. Java was the first Concordia Yawl ever built, but her perpetual leaks drained my dad’s coffers with remarkable alacrity. In a word, despite his high income, my father was the epitome of Poor Dad.
My other dad entered my life when I was 7 and married my mother when I was 10. My stepfather was cut from a different cloth when it came to money. Although he was born just three days after my father in 1937, he internalized the messages given to him by his parents who came of age during the Great Depression very differently. Parsimony was his calling card. Brand name cereals were verboten in our home—why buy Kellogg’s Crispix when Our Family’s Crispy Hexagons cost 15 cents per ounce less? What is the utility of buying a new handkerchief or Bermuda shorts when yours only have 25 years of accumulated stains and holes? Early vacations with my stepfather initiated me into the world of Motel 6 and truck stops.
My stepfather began his career at the Bank of Boston and quickly became an expert in resource investments. He eventually served as a part-time oil and gas analyst for Wellington asset management, but he spent (and continues to spend) most of his time devouring annual reports and balance sheets to shrewdly manage his own investments. He introduced me to the world of investing in a memorable way. Every year at Christmas he would give me $1000 on paper and have me build a portfolio. Any profit I made by the following New Year, I would receive in cash. To keep it interesting, he turned it into a contest between himself, me, and the family dog, who would pick stocks by walking on the Wall Street Journal. The first year we played, I looked at the best-performing securities from the previous year and put all my faux capital into those. Trying to teach me a lesson, my stepfather invested in the five worst-performing stocks. Needless to say, the dog won.
Growing up, the wildly differing financial philosophies of my two dads were at war for my heart. Deep down, I knew that the Dove Bar ideology of my dad was less sensible than the no frills ice cream sandwich creed of my stepfather, but Dove Bars tasted so much better. Over time, it has become clear that the micro level decisions of my two dads led to vastly different financial outcomes. At 85, my stepfather has become a respected philanthropist, creating a foundation to fund causes he is passionate about like the Blue Hill Heritage Trust. He is finally spending some of his money on building a spectacular guest house on his property in Maine, but it is his years of frugality that have allowed him to do so.
I love both of my dads a tremendous amount, but it is the ideals of my rich dad that I seek to impart to my students. Detaching themselves from the hedonic treadmill of conspicuous consumption can allow them to pursue lives of noble purpose and virtue. I tell them that if they pinch pennies even when they don’t need to and put their savings into prudent long-term, high dividend securities, they might just become rich dads themselves.