The Battle Hymn of the Tiger Mother

This one comes from my file of unused good stuff. Laura Rowley was one of my favorite personal finance authors. She is now retired from her career as a journalist and author to be a full time mother for her three daughters. In “Character Traits and Behaviors that Make You Rich,” she explores what actually contributes to successful money management skills, particularly in raising children. Laura begins with a exploration of a book by Yale law professor Amy Chua, “Battle Hymn of the Tiger Mother.” This author recommends pushing children so hard that most of us would consider it child abuse. For example on one occasion Amy Chua would not let her daughter go to the bathroom until she had mastered a particular piano passage. The author justifies her extreme methods by pointing to her success. One of her daughters performed at Carnegie Hall when she was only 14 years old. Both of them are clearly going to Ivy League Universities. This kind of mother is not all that unusual in Asian Culture. In Japan they are called Dragon Mothers. Sometimes, at least in literature or movies, successful Japanese businessmen curse their Dragon Mothers when deeply into their sake.

Laura Rowley then examines some of the traits that might or might not lead to ability to accumulate wealth throughout a lifetime. She notes the propensity to plan leads to the ability to accumulate wealth. There is no correlation between the ability to plan and earnings. However, people who have a high net worth relative to their age and income are inevitably planners. In fact the correlation is so strong John Ameriks, a Vanguard economist states, "Planning behavior and wealth accumulation is a chicken-and-egg problem: Did people have a lot of wealth and therefore do a lot of planning, or did they do a lot of planning and that led to the creation of wealth?"

How about math confidence? We are always hearing that math skills are an important factor in financial success. Surprisingly, researchers could find no correlation between math skills and financial success. Now to be fair, they asked their subjects to respond to the statement, “I am highly confident in my mathematical skills.” They did not give them a math test. This might seem odd, but read on.

It turns out math skill doesn’t matter until it is combined with financial literacy. Those two attributes contribute greatly to financial success in life, no matter what the income level. Adding the ability to plan (for things like retirement) to math confidence and financial literacy gives you the kind of child, authors Danko and Stanley term a prodigious accumulator of wealth.

Want to know what kind of behavior to discourage in your children? Cigarette smoking is well up the list. According to Jay Zagorsky, a research scientist at Ohio State University, “A typical non-smoker's net worth is roughly 50 percent higher than that of light smokers and about twice the level of that of heavy smokers.” Unbelievable! But I guess at $5.00 a pack over 50 years smoking adds up to a huge number.

Laura Rowley notes that psychologist have found a high correlation between a sense of powerlessness and low net worth. People who feel powerless are more likely to waste money on high status luxuries. They believe that if they wear the right clothes, drive the right car, or perhaps even smoke the right brand of cigarette they will be perceived as successful and important. I have also noted a strong correlation between a sense of powerlessness and the purchase of lottery tickets. Raise your children to believe in themselves and their ability to control their own destiny through effort and responsible behavior.

In conclusion Laura adds conscientiousness to the stew. It is one of the traits psychologists term the “Big Five” They are extroversion, agreeableness, openness, conscientiousness, and emotional stability. Of the big five, conscientiousness (which includes things like industriousness, dependability, and organizational skills) and emotional stability are most likely to lead to higher lifetime earnings and greater wealth. Obviously, conscientiousness leads to better grades in school and better decision making throughout a lifetime. But where is the balance? Only the Germans could have a single word pfhlichtbewurstrsein that means to be conscious of duty. Too much pfhlichtbewurstrsein in one life can be a heavy load. Just ask an adult child of one of those dragon mothers.