In this blog, I share a conversation I had with my daughters about Expectations vs Reality in terms of spending money and when it comes to business.
More expensive = Better
The strong assumption is that when we pay more money for things, we get something better. Whilst this isn't always the case, it is true most of the time. My daughters remembered our conversation about Fast Fashion being cheap but low quality.
If we assume that more money equals better quality, then we extend this to assume we would be happier if we spend more money on stuff and experiences. This is what most people believe. However, I don't always agree. Especially when it comes to experiences.
Happiness is when reality exceeds expectations
When it comes to spending, it’s really important to teach kids the joy you experience when ‘expectation’ exceeds ‘reality’. For my daughters, I shared my experiences at different restaurants.
I’ve been very fortunate enough to have eaten at a few Michelin starred restaurants. The first time I went to one I was absolutely blown away. I’d never seen or tasted food like it. Also, the ability of the sommelier to match the wine to the food was out of this world. I was excited to tell my friends and family about my experience. My reality far exceeded my expectations. It was expensive but definitely worth it.
A couple of years later I went to another Michelin starred restaurant. This time, my expectations were much higher given my first experience. Whilst I wasn’t disappointed as the food was once again amazing, the reality didn't exceed my now higher expectations. I was more looking at my depleted bank account asking whether it was worth it.
Between the first and second trips to the Michelin starred restaurants, my wife and I went on a holiday to Alvor in Portugal (amazing place, I highly recommend you go there). It was before we had kids so we had the pleasure of a quiet sunset boat trip. The trip ended around 8pm and we were really hungry. We asked someone if there was somewhere close to eat and they recommended a small restaurant close by. We had minimal expectations. If it sold edible food, we would have been happy.
To our surprise, it was amazing. It was honestly one of the best meals I ever had and it was about 20% of the cost of the Michelin restaurants. My wife and I didn't stop talking about it for the rest of the trip and we still mention it when people ask us about our favourite restaurants we've ever been to (sadly the restaurant closed down during COVID).
These experiences really highlighted to me that happiness comes when reality exceeds expectations.
What money lessons does this teach kids?
I would love my kids to take some chances with their spending. If they always go for the 'best', then they might miss out on the hidden gems (the surprises where reality exceeds expectations).
This means going to new places and trying new foods or products. Clearly they might come across a few duds but these duds can make for good stories to share "We went to this one place and it was truly awful, you'll never guess what they served ....".
I appreciate this is a hard lesson for kids in their teens as they will likely default to wanting the 'best' just to be in keeping with their peers. That being said, getting them to ask the question 'did that purchase meet or exceed your expectations?' can lead them to consider how they spend their money in other future scenarios.
Conscious spending
Conscious spending is a skill and one that will take time to develop. As parents, we shouldn't be telling them how to spend e.g. 'don't buy that it's a waste of money' (as kids want control) . We should be guiding and encouraging them by asking them questions about their spending so they do become more conscious at spending over time.
Sadly, in today's world people are unconsciously spending most of their money. They spend to keep up with the Jones', or as there is a good deal on (despite not really wanting what is on offer) or as they believe spending will make them happy. This has led to over 50% of adults not following the first rule of wealth, 'spend less than you receive', and therefore never become wealthy.
Spoiled kids have high expectations
My view is that spoiled kids might not turn out to be the happiest adults as their expectations will be sky high and therefore will be for them to find those experiences where reality beats expectations.
I'm not saying that you shouldn't have nice experiences with your kids, the key is to make sure your kids lower their expectations for when they become adults. They might not have the same access to these experiences as young adults.
Expectations vs Reality in the business world
If you've read my blogs or seen my book, Grandpa's Fortune Fables, you'll know that I'm a fan of getting kids to try starting a mini-business to learn more about entrepreneurship. As part of this, I talked to my daughters about the benefits of businesses exceeding customer expectations.
One of the nicest stories I heard was about a house cleaner. When she first started working for one family, she didn't just turn up and clean their house. Before she arrived, she made a chocolate brownie mixture and put it in a tray. When she arrived at the house, she put the mixture in the oven for cooking. When the family arrived home, they had a beautifully clean house which smelt of amazing chocolate brownies and, of course, they had a plate of brownies waiting for them.
Needless to say, the family were very happily surprised with the service (as reality exceeds expectations) and they let all their friends know. Soon enough the lady had more cleaning job requests that she could take on. All from a small act of going beyond that was expected.
The concept of ‘reality exceeding expectations’ is something I feel many companies don’t try hard enough to do. When we do stumble across companies that do something extra, we generally tell people about it and this is great marketing.
Expectations vs Reality Summary
Whilst there is a default that things that cost more will be better, it doesn’t necessarily mean that more expensive means you will be happier.
Talk to your kids about when reality exceeded your expectations, especially in scenarios when you didn't pay a lot.
We need kids to grow up to be conscious spenders. That means helping them consider what makes them happy when they do spend. This can be a life changing skill. With many adults unhappy as they spend most of their money unconsciously, by helping your kids develop this skill you'll be giving them a real advantage in life.
Thanks for reading!
Will
p.s. I'm sure buying your kids a copy of Grandpa's Fortune Fables will exceed their expectations 😄
