The Dial That Decides Your Kid's Future

Recently, I’ve seen social media posts talking about how much money people need in order to live a good life. In some posts, the amount is millions of dollars.

I believe this type of post is very dangerous, especially for young people. They might feel that they have to work crazy hard to get close to those figures, or potentially be disheartened, believing it will never be possible.

The truth is that there isn't one number for everyone. It all comes down to spending. But here's what nobody tells you: By the time most people realise that, the damage is already done, and undoing it is far harder than they ever imagined. This is what we need to teach our kids.

The Spending Dial

For my daughters, I got them to think of spending like a dial numbered 1 to 10.

At one end are light spenders. They don’t need to accumulate as much, and can potentially reach a place of real freedom sooner. At the other end are heavy spenders, who need a much larger pot to maintain their lifestyle without working. The higher the dial, the more you need to accumulate.

Some people are very happy keeping their spending dial at a low number and living a modest life. Think of Ronald Read, a janitor who died in 2014 and left behind an $8 million fortune. He spent almost nothing, drove a second-hand car, and invested patiently for decades. His discipline was extraordinary. That said, his lifestyle wouldn’t suit most people, and that’s completely fine. The dial is yours to set.

At the other extreme, MC Hammer was reportedly spending $500,000 a month at his peak. When the income slowed, the lifestyle didn’t, and it broke him. (More on his story here.)

Most people sit somewhere in between. And in most cases, the dial creeps up as people earn more. They spend more on new experiences, nicer things, which is completely understandable. The problem is that many people increase their spending dial too quickly, especially as social media makes everyone else’s lifestyle look aspirational.

The challenge is that most people don’t fully appreciate the impact of increasing the spending dial in terms of how much they need to accumulate in order to live their life without working.

To put it simply: if you spend $50,000 a year, you need roughly $1.25 million saved to retire comfortably. Spend $100,000 a year and that figure doubles to $2.5 million, and you’ve had less money available to save along the way. The dial doesn’t just change your lifestyle today. It changes how long you have to work.

When I explained this to my daughters, their immediate response was:

“People can just reduce the spending dial in the future so they don’t need as much.”

Sadly, whilst that sounds like a simple answer, it’s one of the toughest things to do, and a major lesson that all kids should know.

The Dial Is Sticky

Many people don’t fully appreciate that the spending dial becomes very sticky and hard to lower if it is left in one position for too long. This means people get trapped. In many cases, they wish they had never increased it as much as they did.

The dial becomes sticky for two reasons:

1. Reducing the spending dial means having less of the nice things you are used to. It feels like self-punishment.

2. You worry that people will judge you, because you aren’t spending in the same way as before.

For those people in this position, the thought of reducing their lifestyle is too much to bear. So they live with the consequences of wherever their dial is set.

Think of it like the heating dial at home on a cold day. You turn it up and feel the warmth, it feels great. But then summer comes and you want to turn it back down, and somehow you can’t. It becomes very uncomfortable. That’s exactly what happens with people’s spending habits.

The Solution: Increasing the Savings Dial

I want my kids to have the freedom to decide how much they spend as they start earning. But I want them to understand the impact of dialling up their spending, because they might not be able to turn it back down.

My rule for them is simple: only increase your spending dial when you can also increase your savings dial. If you can’t do both, you risk getting trapped.

I explained that their mum and I have increased our spending dial as we’ve earned more, but we always increased our savings dial too. When we got a pay rise, we increased how much we saved and how much we spent, in most cases by a similar amount. This meant we were accumulating more in savings to compensate for the higher lifestyle we’d eventually need to fund. We’re now at a place where we’re genuinely happy with our lifestyle and no longer feel the need to increase the spending dial each year.

Lifestyle Tip: A Quick Flick of the Spending Dial

The spending dial gets sticky when it’s left in the same position for too long. So here’s a simple trick: increase the dial briefly to experience something, then dial it back before it gets stuck.

Get a pay rise? Go to a fancy restaurant to mark it. Enjoy every moment of it. Then go back to your usual spots. You’ve experienced the dial at a higher number without letting it become your new normal.

This way, you get to experience more as you earn more, without it materially changing your baseline lifestyle. The treat stays a treat.

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Side Note: The Rich Kid Dilemma

The spending dial is one of the biggest challenges for children of wealthy parents. They grow up with a high dial as their normal, and naturally set their own adult spending to match. The problem is they don’t yet have the income or savings their parents built over decades.

They either have to reduce their spending dial, which feels like going backwards, or spend their lives financially chasing a lifestyle they can’t actually afford.

👉 Read more: The Art of Raising Rich Kids

Summary

We need our kids to understand the implications of the spending dial. This isn’t about telling them they can’t spend, it’s about helping them understand the trade-off.

Many adults today are trapped because they increased their spending dial too fast and only realised later in life what it would cost them. Reducing it sounds simple, but the lifestyle change required is genuinely one of the hardest things adults face.

The spending dial is one of the most important conversations you’ll ever have with your child. Not because spending is bad — but because an unexamined dial is one of the hardest traps in adult life to escape.

I really hope you talk to your kids about the spending dial to help them avoid being trapped in the future.

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👉 What to read next:

• Why I Feel Sorry for the Rich Kids (Related)

• 14-Year-Old Making Money Using AI (Popular)

• The 3 Rules of Wealth (Essential)

Thanks for reading,

Will

P.S., I really appreciate all the reviews of my book Grandpa’s Fortune Fables. If you have read it, it would mean a lot if you could leave an online review. It really does help the book reach more families.