Lesson 12: Defining Rich – QOL vs. SOL
In our last entry, lesson 11, we defined what “Quality of Life” and “Standard of Living” are, and what they mean to you and your children. So, the next question is: Do you have to increase your Standard of Living to enjoy more Quality of Life? Here’s how to explain this concept to your kids, whether they are elementary, middle school, or teenage!
Explain that increasing your Standard of Living usually requires spending more money, on both needs (which we can define as a bigger or better home, more food choices, better schools, etc.) and wants (which we can define as better or more video games, more toys, more or bigger vacations, etc.) Spending more money often means less breathing room. We can define financial breathing room as “margin,” or the difference between income and expenses.
Furthermore, increasing Quality of Life only happens if you feel safer — or have less worry. The concept of defining “rich” through qualify of life, as the true metric, will resonate here for all ages.
What to ask your elementary age kids to demonstrate the principle of financial margin and “breathing room”:
Does having less breathing room with money make you feel safer and less worried? Or less safe and more worried?
Your kids should now understand that having this financial margin A.K.A. breathing room will increase Quality of Life! When they answered previous questions with how they felt, they were responding in terms of QOL.
Start with explaining that increasing Standard of Living usually requires spending more on needs and wants.
Increasing Quality of Life only happens if you feel safer or have less worry. Explain how it’s possible to increase Standard of Living and not increase Quality of Life (i.e. you increase Standard of Living through the use of debt).
What to ask your middle age kids to demonstrate the principle of financial margin and “breathing room:”
With the examples of the lemonade stand and a simple budget from the previous lessons, how did you feel when you had more rather than less margin between income and expenses?
Many times, movies, TV, magazines and music will suggest an increase in Standard of Living will increase Quality of Life. Unfortunately, you can increase Standard of Living beyond income through debt. We believe this is counter to an increase in Quality of Life. Quality of Life only happens through having breathing room in your finances. And we increase Quality of Life through discipline.
Increasing Standard of Living requires spending more of your income to buy the bigger house, fancier car or take the family on a cruise for vacation. Often, people will pursue this increase of Standard of Living thinking it will improve their Quality of Life. But as your teens have been learning, they feel better (more Quality of Life) when there’s margin or breathing room in their finances.
What to ask your teenage kids to demonstrate the principle of financial margin and “breathing room:”
Would you rather have an outward appearance of a high Standard of Living and have no financial margin… or have a lower Standard of Living and have breathing room in your finances?
The bottom line: Quality of life should be the true metric for “rich.”
Bonus Tip for parents: It’s OK to have nice things, but as a benefit
Make sure your kids know that we are not bashing the idea of having nice stuff. It just needs to be an ancillary benefit of having breathing room, rather than the goal or end-state.
The main concept is that Quality of life grows with increased financial margin.
Now that the hard work is done, have the kids draw self-portraits with their non-dominate hand. Let hilarity ensue!