Guy Spier is a Zurich-based value investor, author of “The Education of a Value Investor” and the managing partner and principal of Aquamarine Capital. He is a graduate of both Harvard and Oxford universities where he studied business and economics, respectively. Perhaps his most important role of all, however, is as a father. Spier believes that teaching kids about money is crucial for their success later in life, and his three children are no exception to that rule.
What is the most important money habit you learned as a child?
Growing up, I saw my father never desired something he could not afford. He never hankered (wasted time) over things beyond his financial means. I remember early on, he would enjoy simple experiences, like going to a hotel for a coffee. Later, when he made more money, he bought a sports car. In all cases, these were things my father could afford. I never remember him buying anything on credit or going into debt for things he desired.
That made a big impression on me as a child and throughout my life. It has helped me to realize what a rich life I can live with the things I have, rather than using my time, energy and money craving things I cannot afford.
At around what age did you realize “money was money” or that it had a value?
I lived in Iran when I was very young. To this day, I have a vivid vision of what a five rial coin looks like. I can still clearly see the number five written in Farsi script. It was a time when there were no credit cards. My father would carry cash around in his wallet. Now and then, he would ask me to pay for something.
When I was older, my father opened a brokerage account. He would pick me up from school, give me a newspaper and ask me to check stock prices. For example, I remember checking the stock price of IBM. He would cringe when the price would go down and be happy when the price would rise.
Those experiences were when I began to realize money had value.
If you could only teach a child one money habit, what would it be?
I think not desiring things beyond what you can afford and learning to be genuinely happy with what you can afford. This is an extraordinarily valuable habit to teach children. Arriving at the realization we can be happy with very, very little is a powerful lesson. Problems frequently arise when our desires expand. Specifically, when they expand out past what we can afford, and we live beyond our means.
What was your first job? And what did it teach you?
After I graduated from Oxford University, I worked at a quite prestigious consulting firm. At first, it made me feel good. Then, I started looking at the number of hours I worked and other factors. … My beginning salary was around 25,000 pounds a year. That would have worked out to about $30,000. Soon, I started thinking I was underpaid — at least relative to some of my friends. They had lower salaries [but] did not work as many hours. One of my friends was earning twenty-five percent less, [but] I worked day and night and on weekends [and] he did not. I did not have any time for myself. He did. My friend was in a training program at an accountancy firm. In addition to having more reasonable hours, he also received better training. It had much more structure.
Ultimately, I concluded, he had the better deal.
So, there is more to consider than going for the highest salary and most prestigious job. I think it is far better to go for the job and salary that makes you the best you can possibly be. Just going after prestige and the highest [salary] that does not also make you the best you can be, is not the smartest move.
A variety of surveys indicate it is a challenge for parents to talk to kids about money. Do you have any suggestions for those parents?
I started my son and two daughters’ financial educations at pretty young ages. We talk to our children about the value of giving money away and helping worthy causes.
Another way I have started talking to our children about money is to start all three of them off with a brokerage account. They have some shares. They check the prices periodically. And, I try to add some money from time to time. I have been impressed by how much interest they have in those shares and the brokerage account. I would encourage those parents who have the ability [to] set aside some money and open a brokerage account for their children. It is powerful.
I [had] one fun conversation … with my son.
He asked me, “What if I take some of the money out of the brokerage account?”
I answered him — being almost serious — “[You] cannot take any money out until it reaches at least 50 million dollars!” I told him the goal of that money is to never have to use it and keep adding to it. I advised him, “You want to add to those investments and own a substantial chunk of shares in some great businesses.”
Why do you believe there isn’t more personal finance being taught in schools? Do you believe it should be?
Personal finance should be taught more in schools. I also think we should be teaching more accounting in schools. The basic accounting equations — T-Accounts, double entry bookkeeping, accrual accounting, depreciation of assets. These concepts are extremely powerful. They are not easy to understand. So, the earlier one starts learning them, the better. They are [the] basic language of business.
It is sort of preposterous we do not teach these subjects more in schools, especially basic accounting. If a student who graduates from high school is capable of answering and writing down their personal balance sheet, assets, liabilities, income and cash flow statements, that would be extremely valuable. The world would be a better place.
Teachers tend not to understand accounting, [however]. I think a part of the solution and what we need to do is raise teachers’ salaries. If we raise teachers’ salaries and make them competitive with what accountants can earn in the world of business, I am sure there are people who know accounting really well that would teach it in schools.
Cambridge University research indicates adult money habits are set by age seven. What are your thoughts on that assertion?
The idea that adult money habits are set by age 7 does not surprise me. [It’s believed by many that] Ignatius of Loyola, founder of the Jesuit movement in Catholicism, once said [something to the extent of], “Show me the boy at age 7, and I will you give you the man.” This suggests key traits in an individual’s personality are set very early in their lives. So, I do not find the Cambridge University research at all surprising. I think as early on as possible, one should explain to children, their success in life will largely be determined by their ability to delay gratification.
Where would a parent start with teaching delayed gratification?
In my family, I am not a disciplined parent. I am a pushover for my children. My wife is far more disciplined. She invests quite a bit of time studying books and doing research on being a good parent. She has several of Adele Faber’s books. [Faber] offers lots of great strategies on how to raise great kids — the kind of kids that can delay gratification.
Click through to read about the valuable money lessons one woman learned from her dad.
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This interview has been edited and condensed.