No, I don’t have kids. And barring any unforeseen incidents, I won’t be having kids for awhile. I’ve struggled intensely to explain this to some people, who don’t seem to understand. I love kids. It’ll be awesome to be a father. It would be sad to miss out on such a huge and incredibly rewarding part of the human experience.

Sometimes you read something and it perfectly captures why you see the world the way you do, even though you couldn’t articulate it. For me, the revelation about parenting was the book Freakonomics, written by two economists. Many of their conclusions fly in the face of conventional advice, but they are supported by extensive data. I wanted to cut and paste this review on abcnews.go.com of the book as it relates to parenting, but you should probably go read it for yourself. Here’s a little excerpt:

Steven Levitt and Stephen J. Dubner, co-authors of the best-selling “Freakonomics,” pored through a massive government database called the Early Childhood Longitudinal Study. Starting in the late 1990s, it followed 20,000 American children, collecting information on many aspects of their lives. Levitt and Dubner used the ECLS to see what helps young children do well on tests.

“Not only does it measure their scores,” said Dubner. “It also conducts extensive interviews with the families of the kids, so we know a lot about each family and what they do in the family.”

Here are some factors that are strongly correlated with higher test scores:

• The parents are highly educated.
• The parents speak English in the home.
• The parents are involved in the PTA at school.
• The mother was 30 or older when she gave birth to her first child.

Here are some other factors that aren’t:

• The child’s family is intact (no divorces, the parents were married when they conceived).
• The child is regularly spanked.
• The child frequently watches television.
• The mother left work to be with her child between birth and kindergarten.

If you’re thoroughly flummoxed by now, Dubner said that the ECLS data only show correlations between different factors and children’s test scores; they do not necessarily establish cause and effect. But there still are useful hints here about what matters in parenting.

“If you are smart, hard-working, well educated, well-paid and married to someone equally fortunate, then your children are more likely to succeed,” write Levitt and Dubner. “(Nor does it hurt, in all likelihood, to be honest, thoughtful, loving, and curious about the world.) But it isn’t a matter of what you do as a parent; it’s who you are.”

That last line was what jumped out at me: “it isn’t a matter of what you do as a parent; it’s who you are.” The authors of the book assert that by the time most people pick up a parenting book, it’s far too late.

I don’t want to have kids any time soon because I’m not yet who I want to be. I’m not yet someone that I would want my kids to become. And ultimately, kids become their parents in many ways, as described in the book. They follow in their footsteps in a thousand ways. Kids whose parents are educated and value education are more likely to put similar value on education and succeed academically, which is a very good predictor of success in other areas of life.

Now, I know that financial and academic success are not everything. But if I can offer my kids a better shot in those arenas without sacrificing any other area of their lives and future development (and probably enhance those areas as well), as well as be able to enjoy “the wife of my youth” for a little while longer before taking on such a huge responsibility, why wouldn’t I? Where is the downside?

Disclaimer: Everyone’s situation is different. Use the advice above at your own risk, as your mileage may vary.

I have only seen more each day to convince me of how true this is.

“Man, I see in fight club the strongest and smartest men who have ever lived. I see all this potential, and I see it squandered. An entire generation, pumping gas, waiting tables. Slaves with white collars. Advertising has us chasing cars and clothes, working jobs we hate so we can buy shit we don’t need. We’re the middle children of history, man. No purpose or place. We have no great war, no great depression. Our great war is a spiritual war. Our great depression is our lives. We’ve all been raised on television to believe that one day we’d all be millionaires and movie gods and rock stars, but we won’t. We’re slowly realizing that fact. And we are very, very pissed off.”

I’ve been reading “The Richest Man in Babylon”, a series of financial parables set in the Babylonian era. They’ve been around since the mid-1920’s and convey (very simply) some basic principles of finances and money management. They’re the kind of things we all know, but few of us seem to do. The highlights are the following:

1. A portion of all you earn is yours to keep. Save at least 10% of everything you make, no matter what
2. Do the above by controlling your expenses carefully with the use of a budget
3. Put those savings to work for you by investing
4. Don’t be risky in your investments
5. Buy a house
6. Plan for retirement and future generations
7. Increase your earning potential

Again, very basic stuff, but apparently the majority of people just don’t get it. For example, the average savings rate in America is now NEGATIVE. People who make $50k per year spend just over $50k per year and people who make $100k per year spend just over $100k per year. Average household debt goes up every year and the average American only has something like 15k set aside for retirement.

My company (CNET Networks) had a guy come in today from the Social Security Administration and speak to us about how Social Security works. Nothing really new. I was hoping he’d talk about some of the plans to fix SS, but he merely said that it will be bankrupt by 2040 unless we change something. Fantastic. The thing that struck me was, 1) how little money you get, even if you paid a fortune into Social Security, and 2) how jacked up it is to face a retirement of 20+ years knowing that there’s no way you can even come close to living on what you have. What person, at 66, wants to realize that they have to work until they die? How sad. The saddest part was that they actually increase your benefit if you work past 66, because they’re trying to keep people working as long as possible. Isn’t that great? We live in a country where senior citizens are encouraged by their government to work as long as possible, even well into their 70s, or until they die, whichever comes first.

It all kind of clicked for me this evening. I was reading the book again and this part jumped out. The speaker is a slave who fled his city because of debt and fell into the wrong circumstances, eventually ending up as a slave to a very wealthy lady.

“So I was turned over to Sira and that day I led her camel upon a long journey to her sick mother. I took the occasion to thank her for her intercession and also to tell her that I was not a slave by birth, but the son of a free man, an honorable saddle-maker of Babylon. I also told her much of my story. Her comments to me were disconcerting and I pondered much afterword on what she said.

‘How can you call yourself a free man when your weakness has brought you to this? If a man has in himself the soul of a slave, will he not become one no matter what his birth, even as water seeks its level? If a man has within him the soul of a free man, will he not become respected and honored in his own city in spite of his misfortune?’”

Think about it.

From an article in Men’s Health on things you should do but probably haven’t:

“Be debt-free. Compounding interest is like a sorority girl on Ecstasy. She’ll go both ways, but you get a hell of a lot more out of it when she’s going your way.”

Early last month, I started using a service called mvelopes.com. This is a personal finance and budgeting program that you would use instead of MS Money or Quicken. I had tried both Money and Quicken with very mixed results. I found them to be bloated, buggy, and trying to do too much and failing to do it well. So I decided to take the plunge and give mvelopes a try.

Mvelopes is basically an online representation of the envelope budgeting method, where you put cash into envelopes for groceries, spending, medical, gas, etc and then take the cash out when you need to spend it. When it’s gone, it’s gone. This can be a very effective method of budgeting, but it’s 2006, and I don’t want thousands of dollars in cash sitting in my house, not to mention the fact that I only use cash for a tiny percentage of my monthly transaction volume.

Enter Mvelopes.

Basically, Mvelopes works using the exact same concept as cash in envelopes, but online. So you setup a budget and then when your paycheck comes, you divvy it up into the envelopes, which represent budget categories. Mvelopes doesn’t move any money, it just keeps track of how the money in your checking account is allocated. Then, as your transactions come in (automatically downloaded from the 12000 financial institutions they have relationships with), you assign them to the envelopes that they correspond to and they reduce the envelope by that amount.

Perhaps an example will help. Let’s say you get paid $100 and you put that cash in the “Clothing” envelope. The balance of the envelope (assuming it was $0 before) is now $100. You buy a sweater for $25. When that transaction is downloaded from your bank, you just drag it into the clothing envelope and it reduces your balance by $25, to $75.

The service has a ton of other benefits and it takes a little bit to get the hang of everything, but it’s awesome. I highly recommend it.

http://www.mvelopes.com

Great blog post on 9 steps to effective long-term financial management:

http://www.wesabe.com/blog/index.php/2006/10/17/what-hold-you-back/

Of those, my wife and I have accomplished three. We’re hard at work on the rest. I would actually add a few more to the list for us, since we’re relatively aggressive about pursuing long-term wealth:

10. Start a business
11. Buy and hold income real estate and other cash-producing assets
12. Give back to churches, charities, and communities with your money and your time. Don’t wait on this one until you accomplish 1-11. Start today.

10 and 11 may not be for you; they’re not for everyone. I would recommend 12 to everyone, though. Don’t give people less fortunate an excuse to hate you because of what you’ve been blessed with. Share the wealth.