Obviously, the higher a person’s ratings on questions like these, the more positive their childhood memories of that parent. So what did the researchers find? By correlating these ratings with answers to questions about particular outcomes, the researchers were able to conclude that those adults who had memories of higher parental affection ended up with better health and lower levels of depression. The word “experience” may not evoke images of a child being taught about life, or of simply being given time and attention—but all those are indeed experiences, too, and they’re indispensable, paying off in sometimes surprising ways. I don’t know anybody who wouldn’t want that kind of experience and that kind of memory dividend for their children.

  So how do you quantify such things—what is the value of a positive memory? Your first instinct might be to say that it’s impossible to say, or that memories are priceless. But let me put it another way: What is the value to you of a week at a cabin on a lake? Or of a day with a beloved relative? The price might be extremely high or fairly low, but the fact that you can even propose a ballpark price says that the value of an experience can be quantified. (In fact, you might recall doing that with “experience points” in an earlier chapter.)

  I am making a big deal about quantifying the value of experiences with your children because doing so forces you to pause and think about what’s really best for your kids: Sometimes it is earning more money, and sometimes it is spending more time with them. So many people tell themselves that they are working for their kids—they just blindly assume that earning more money will benefit their kids. But until you stop to think about the numbers, you can’t know whether sacrificing your time to earn more money will result in a net benefit for your children.

  What can thinking about the numbers tell you? Well, take an extreme example. Let’s say you live in the wilderness, and you must “go to work” to cut down trees just to build a basic shelter for your family. When you have to work just to enable your family to survive, of course it makes sense to work instead of hanging out with them. But once you get past the point of just working for basic needs and avoiding negative experiences, you can start to exchange your labor for positive life experiences. As far as your children are concerned, you can either work for more money to buy them experiences or spend your extra free time to give them the experience of time with you.

  At the other extreme is the billionaire who works such long hours and travels so much for work that he spends no time at all with his children. If you’re already a billionaire, it’s safe to assume that your children would be better off if you spent at least a little more time with them, even if it’s to the detriment of your career. The financial cost to your career is small, but the benefit to your children is immense. So it’s a net gain to the family, including to you.

  The value of time with your kids is like the value of water—if you’ve got 50 gallons of water, you wouldn’t pay a dime for an additional gallon of water. But if you’re dying of thirst in the desert, you might be willing to cut off your arm to get even one gallon.

  Most of us, of course, are somewhere between these two extremes. We are neither working all the time just to survive nor completely neglecting our children. As such, we are facing a more difficult trade-off between time and money. But the thought process should be the same as at the extremes, even if the answer isn’t obvious: Is each additional hour of work you do really worth it to you and your children? Does your work add to your legacy—or does it actually serve to deplete it?

  Parents’ employment is a mixed blessing for kids of all income levels. When parents go to work, the income they earn can improve their kids’ lives in many ways, but as the economist Carolyn Heinrich points out, work (especially long hours and night shifts) can take time away from parent-child bonding and can bring real stress into children’s lives. And low-income parents are especially likely to be working stressful jobs with long hours. But, of course, most people have to work to provide for their families, and the optimal balance between time at work and time with your kids isn’t always obvious.

  Where you and your children are in your lives matters, too. Just as you can’t keep delaying ski trips because there is a minimum level of basic health you need in order to go skiing, you can’t keep delaying time with your six-year-old, because eventually your child won’t be six. Or seven. Or a child. The fact that those opportunities gradually disappear should cause you to reevaluate how much money you’d be willing to give up to have those experiences.

  Now look at it from your kids’ point of view, because it’s our kids’ fulfillment that we’re trying to maximize here. What do you suppose is the value to your child of an extra day with you? Or to have you home when she comes home from school? Or to have you attend her soccer game or music recital? I’m well aware that your kids, especially when they’re very young, probably don’t value these experiences when they’re having them. If I were to ask my older daughter how much she values my going to one of her games, she might not even know what I was talking about. But these shared experiences clearly have a value, especially in retrospect. Remember: The purpose of money is to have experiences, and one of those experiences for your kids is time with you. Therefore, if you are earning money but not having experiences with your kids, you are actually depriving your kids. And yourself.

  If you really think through the implications of saying that your legacy consists of experiences with your children, the conclusion you reach might be somewhat radical: That is, once you have enough money to take care of your family’s basic needs, then by going to work to earn more money, you might actually be depleting your kids’ inheritance because you are spending less time with them! And the richer you already are, the more likely this is to be true.

  Charity Can’t Wait

  Guess what! Almost everything I’ve said about giving money to your kids at the right time applies to donations to charity. Whether the money or time you’re giving is to children, to charity, or to yourself, the key concept is the same: There is an optimal time, and it is never when you’re dead.

  Consider this headline, above one of the most emailed New York Times stories in the week it came out: “96-Year-Old Secretary Quietly Amasses Fortune, Then Donates $8.2 Million.” Wow! The story explained how a Brooklyn woman named Sylvia Bloom managed to amass so much wealth on her salary as a legal secretary. Though she’d been married, she had no children, and she worked for the same Wall Street law firm for 67 years, lived in a rent-controlled apartment, took the subway to work even into her nineties—and made her savings grow by replicating on a smaller scale the investments made by the lawyers she worked for.

  Nobody close to Ms. Bloom had any idea of her wealth until after her death. She made a bequest of $6.24 million to a social service organization called the Henry Street Settlement; another $2 million went to Hunter College and a scholarship fund. Everyone at the Settlement was blown away. Bloom’s niece, who was the organization’s treasurer, was especially stunned. It was the largest single gift from an individual in the organization’s 125-year-history. The group’s executive director called the gift “the epitome of selflessness.”

  Now, I understand where he’s coming from—it does seem selfless to leave so much money after living on so little, and a good deed is a good deed—but in all candor, I don’t see Bloom’s actions as the height of selflessness.

  You Can’t Be Generous When You’re Dead

  Before I explain why Bloom’s actions don’t seem all that selfless, let me explain that I can’t say whether someone’s decision is good or bad, rational or irrational, without knowing what the person wants. For example, I personally might prefer to give my time and money to people rather than to animals—but if someone would rather volunteer at an animal rescue than a homeless shelter, who am I to say that’s irrational? As long as what they do is consistent with what they actually want, I have to respect their decision even if it’s not the decision I would have made. There’s just no accounting for taste.

  Therefore, I can’t say that Sylvia Bloom made a mistake in working her whole life and scrimping to eventually have all that money go to someone else. We can only guess whether she was denying herself deliberately to give a larger gift to others (which would indeed be generous) or whether she was just living on autopilot, with her beneficiaries getting whatever was left (which would not be generous). Why? Well, once you’re dead, the transfer of your assets is legally enforced, and the only say you have in the matter (through your will, obviously created before you die) is where those assets get transferred. But your money is taken no matter what—so how can that be generous? The dead don’t pay taxes—only the recipients of their bequests do. So you can be generous only when you’re alive, when you have actual choices and their consequences: That’s when you can choose whether to give your money or your time to one thing or another. If you give generously when you’re alive, then I can consider you selfless. If you’re dead, you just don’t have that choice. So by definition, you cannot be generous when you’re dead.

  A Terrible Inefficiency

  Maybe you think I’m splitting hairs about the meaning of selflessness, generosity, and choice. Bloom did, after all, scrimp and save and put those charities in her will, so she must have had generous intentions, right? Okay. And it’s possible that she also received a lot of joy from saving that money with the knowledge that someday it would go to a cause she cared about—charitable giving, after all, is another way to have an experience.

  So what’s the problem? The problem is terrible inefficiency: People who were needy during her lifetime did not benefit from her largesse. Here was a person who, by her own choice to consume very little of her growing wealth, routinely lived far below her means. She chose to keep taking the subway to work and to keep living in a rent-controlled apartment (which, incidentally, could have gone to a needier person). Let’s assume that she was saving specifically so that her money could go to these charities. So why didn’t she give it to her beloved charities earlier, when she clearly could have?

  Well, maybe part of her motive for saving was precautionary—she might have thought there was a good chance she would need to spend $2 million at 72 to take care of herself. Or maybe she thought of the money growing in her accounts as some sort of score, a measure of how well she was doing, instead of a way to have an impact on the world. Or maybe she didn’t really think it through; after all, large grants at death are a deeply ingrained part of our culture. I don’t know—we can only guess. But I do know that her delay was inefficient, because her charities certainly could have put the money to use earlier, benefiting many more people sooner.

  Think, for example, of the amazing gift Robert F. Smith gave to the class of 2019 of Morehouse College, paying off all their student loans. Whatever his motives were, whatever amount his gift added up to, the point is that Smith didn’t put it in his will—he gave while he was still very much alive, enabling today’s graduates to leave college debt-free.

  Sylvia Bloom, too, gave to educational causes, which is particularly interesting for our purposes, because the benefits of investing in education are so well documented. The benefits accrue not just to individual students (who, as a result of education, can get better jobs and enjoy better health) but also to society as a whole. Lower rates of poverty and lower rates of crime and violence are just the most obvious social benefits of education. Economists have also tried quantifying the return on investment in education, finding that, worldwide, the social returns to schooling at the secondary and higher education levels are above 10 percent (per year). What other investment can yield such a reliably high rate of return? To justify holding on to the money and investing it on your own rather than giving it to your favorite educational charity now, you’d have to know that you can earn more than that rate of return year after year. Charitable organizations certainly prefer to get your money now. But some charities, particularly foundations and endowed nonprofits, don’t use the money they receive right away, either; instead, they aim to grow their endowments by taking in more than they give away each year. For example, in 1999, foundations took in more than $90 billion but distributed less than $25 billion. That is why one analysis concludes that “donors should ask not just how, but how soon, their gifts will be used.” I couldn’t agree more. But no matter how your favorite charity spends your money, the charity always gets more out of having the money sooner.

  Your Legacy Is Now

  You already know my take on timing your spending in general: that it’s important. My number one rule is: Maximize your life experiences. So spend your money while you’re alive—whether it’s on yourself, your loved ones, or charity. And beyond that, find the optimal times to spend money.

  When it comes to giving money to your kids, the optimal time, as I suggested earlier in the chapter, is when they’re between 26 and 35—not too late to make a big impact and not so soon that they might squander the money. But what about giving money to charity? With charity, there’s no such thing as too soon. The sooner you give money to medical research, for example, the sooner that money can help combat disease—as we can see from the research into returns on investments in medical research. Every day, a new technological advancement happens that improves lives, and over time these advances make a huge difference. But you can’t just wait for these things to happen—you have to give what you can based on the resources you have today and the resources you expect to have in the future.

  A friend of mine was telling me he wants to start a business, and if the business succeeds he wants to give the proceeds to charity. His goal with the business is to create a huge charitable impact. You can probably guess what I told him: that his charity needs his money now. If you have the money now to invest in a new business, and your whole point of investing in the business is to earn money for charity, you and the charity would both be better off if you just gave them your money right now—even if it’s less than what you might be able to give later. The suffering is happening now, so the time to start relieving it is now, not at some distant date in the future.

  More and more philanthropists are taking this approach, which billionaire philanthropist Chuck Feeney calls “giving while living.” Feeney, who made his fortune as a founder of Duty Free Shoppers Group (the duty-free stores you see in airports), is a great role model for what I’m advocating: He started giving his money away (anonymously) early, and by the time he was in his eighties he had given away more than $8 billion of his wealth. He had chosen to live frugally, like legal secretary Sylvia Bloom—but unlike Bloom, he didn’t wait until his death for that money to go to charitable causes. He’s now in his eighties, and by choice he and his wife live in a rented apartment. His net worth is now down to about $2 million—still plenty to sustain him for the rest of his life, but a tiny fraction of the money he gave away over the years.

  Feeney has been an inspiration to many wealthy people, including Bill Gates and Warren Buffett. But you don’t have to be rich to give while living. The same principle applies at any scale, whether you have billions, thousands, or hundreds. It doesn’t take much money to make a noticeable impact on people in the developing world: Through organizations like Save the Children and Compassion International, you can sponsor a child for less than $500 per year, helping the child grow up safe, healthy, and better educated—and starting a positive cycle for future generations.

  If you don’t have as much money to give away as you’d like, you still probably have time to give. So remember, when I say “die with zero,” I don’t mean die with the money that you’re going to give to charity. If you plan to give, give while you’re alive, and the earlier the better. Your charity can’t wait.

  Recommendations

  Consider at what ages you want to give money to your children, and how much you want to give. The same goes with giving money to charity. Discuss these issues with your spouse or partner. And do it today!

  Be sure to consult on these matters with an expert such as an estate planner or a lawyer as well.

  6

  Balance Your Life

  Rule No. 6:

  Don’t live your life on autopilot.

  At the beginning of this book, I told you about the time my boss told me I was an idiot. As you might recall, I was a penny-pinching guy in my twenties, proud of myself for managing to save up money on my meager salary. My boss, Joe Farrell, knocked some sense into me by reminding me that I was on a path to earn much more in the coming years, so I was foolish not to spend whatever money I was making now.

  Joe Farrell didn’t just make this advice up. The idea that it’s rational for young people to be freer with their money is shared by many economists, even though it runs counter to the advice most of us grow up hearing. When we’re around eight or nine years old, our parents tell us to save some of our birthday money instead of spending it all. When we’re all grown up, financial advisers tell us it’s never too early to start saving part of our paychecks.

  Many economists, on the other hand, think that thrift among young people is generally a bad idea. When economist Steven Levitt, of Freakonomics fame, landed at the University of Chicago as a first-year professor, a senior colleague named José Scheinkman told him he should spend more and save less—the same advice that Scheinkman himself had gotten from Milton Friedman, the even more famous University of Chicago economist. “Your salary will only go up, your earning power will only go up,” Levitt recalls his older colleague telling him, in almost a perfect echo of what Joe Farrell told me. “And so you shouldn’t be saving now, you should be borrowing. You should be living today in much the way that you’ll be living in 10 or 15 years, and it’s crazy to actually be scrimping and saving, which is what at least someone like me who was brought up in a middle-class family was taught to do.” Levitt says this was one of the best pieces of financial advice he ever got.