Mellody Hobson — Co-CEO and President of Ariel Investments and author of Priceless Facts about Money.
The following interview has been edited for length and clarity.
SCOTT NUSSBAUM: Mellody, As Co-CEO and President of Ariel Investments — which has nearly $15 billion in assets under management — and now a New York Times best-selling children’s author, we’re curious how old you were when you first developed an interest in finance?
MELLODY HOBSON: Money was a constant source of consternation and anxiety in my life starting when I was a child — because we didn’t have any. As a result, my life was shaped by scarcity. At times, that took the form of everything from us being evicted to our phone getting disconnected or our car being repossessed or just having a very tough time.. So, I had this burning interest in understanding how money worked, which started when I was very young. I didn’t quite understand it and couldn’t put my finger on it, but it came to be something that shaped my purpose both professionally and personally.
It came into focus when I was first interning at Ariel where I was first exposed to the stock market and investing and it expanded from there. It became a defining aspect of who I am — not in a greedy way. My burning desire was to anchor myself in financial knowledge. I thought that if I understood money, I wouldn’t repeat the cycle and the mistakes I had seen in my family.
SN: Why do you feel financial literacy is such an important topic for children, and at what age should parents start having these kinds of conversations with their children?
MH: People are shocked when I say as early as four or five years old, while keeping the conversation age-appropriate. For example, with a young child, you might begin with bartering — “I’ll trade you a cupcake for a Barbie” — which is a very simple concept. It forces children to place value on things. Often, children just value things based on what they like. I love the cupcake versus the Barbie example because one you eat and it goes away, while you keep the other. As a child, you have to decide: Do I want the one that lasts or the one that only gives me joy in the moment? These are not small concepts, and they are subtle.
I also think it’s very important to teach children about the language of money, similar to how the best way to learn a language is to start as early as possible so your brain can start really processing the concepts. The same is true for the language of money. I think it’s particularly important because money is a source of great anxiety for adults. 77% of adults say they have anxiety about money, mostly based upon not having enough information about it or how they thought about money growing up. It’s interesting that these anxieties don’t correlate to wealth. People with great wealth and people with very little share similar levels of anxiety. And a lot of that has to do with knowledge. We worry about things that we don’t know or understand.
For wealthy families, they sometimes think if they talk about money too much with a child, they will grow up to be entitled, so they avoid the subject. And for families with lesser means, they feel that if they talk about money with their children, the children will be overwhelmed with worry. In both instances, people avoid the subject in a way that augments the problem. The ultimate outcome I seek in having these conversations very early is to create a financially literate society that makes better decisions. It’s not about more. It’s about what you do with what you have and how smart you are with what you have. Financial literacy leads you to ask lots of questions.
I’ll give you one example. I’ve been using my daughter Everest as a real-life case study. She’s 11, and recently we were going through a McDonald’s drive-through to get French fries, and the woman behind the window said that’ll be five dollars and whatever cents with tax. And Everest said, “What is tax?”
SN: Interesting.
MH: I thought that was so fascinating. How would she know what tax is? So, I broke things down for her. I said, “We pay taxes to the government when we work and when we buy things.” And she said, “Where does it go?” I then explained to her that they pay for things like roads, schools, the fire department and the police department. To be more specific, I used work as an example and said, “If you count all that I make and all that I pay in taxes, I work for free for the first few months of the year.” And she’s said, “Well, that’s terrible.” And I said, “No, it’s not.” I explained to her how these taxes were important to making sure society works. If something happens and our house is on fire, we want the fire department to come. We have to pay for that. The tax discussion is a practical example that explains real life. I’m not saying we need to sit down and explain the most complicated financial concepts to a child, but everyday examples anchor them in the reality of life and what it costs to live.
SN: Right.
MH: One thing that I heavily emphasize is that no matter who you are — if you live in a major metropolitan city in a developed country, or you live in a village in an emerging market — you have to deal with money. It’s a universal truth, and so the idea of becoming literate around money is something that can only raise society up.
SN: If you’re saying 77% of adults suffer from anxiety around finances, I wonder if that number would be lower if they were taught financial literacy earlier.
MH: The problem is that financial literacy is not taught in schools in America. Twenty-five states now have financial literacy standards, but they’re not at the level of what I would hope. I want a high school student to graduate understanding the stock market — the Dow, the S&P, the NASDAQ. I want a young person to understand the cost of living in our society. This is so fundamental and basic.
When I was little, despite our money problems, my mom made money front and center. This was in part because we talked about it often given it was scarce on so many occasions, but she also wanted to empower me. If we went to a restaurant, she had me literally hand the money to the server. As I got older, I would calculate the tip. As a result, I understood the difference between McDonald’s versus a white tablecloth restaurant versus a diner. I understood what things cost.
SN: Interesting. So, what compelled you to write this book now?
MH: I started writing during COVID because I wasn’t traveling and had time. I’m one of those people who is overly ambitious in all the things that I do (laughs). Unfortunately, type As don’t rest.
We have a saying at Ariel that we don’t admire problems. I saw this as being an issue that we’ve all admired and talked about ad nauseam — our financially illiterate society. I wanted to take action and do something about it. I wanted to start with kids in order to use them as a gateway to parents. The kids are my excuse to get parents to read the book and then to know and get comfortable with the topic themselves.
SN: That’s brilliant. I can’t wait to read it with my daughter.
MH: How old is she?
SN: She just turned 9. I can’t wait for her to dive into this to really understand the basic concepts.
MH: Part of the problem that is different than when you or I were growing up, is that a child looks at money today in a very mystical way. They see money as a plastic card or a cell phone with no sense of finality to it. At least with money in a wallet, you can run out, and there is nothing left. A lot of parents will tell me that when they say they can’t afford something, their children will tell them to put it on a credit card.
SN: Oh no.
MH: Because they don’t actually understand how that card works. And all of our money habits are learned behavior. We are teaching our kids whatever bad money habits we have — whether that’s overspending or making minimum payments. This is something consequential in life, and that’s why I get really excited about it. I thought I could actually effect change if I sat down and made this topic fun and created an interest that I could build on with other books as the child ages.
PRICELESS FACTS ABOUT MONEY. Copyright © 2024 Mellody Hobson. Reproduced by permission of the publisher, Candlewick Press, Somerville, MA.
SN: We’re all art lovers here and interested in the creative process, so we’re curious how you developed the idea to feature yourself and your Ariel Co-CEO John W Rogers Jr. as characters in the book.
MH: When we first engaged with the publisher, I didn’t have the concept laid out. They wanted me to have a cute character, and so I bought the most famous children’s books of all time — The Giving Tree, Where the Wild Things Are, Good Night Moon — and I sent them to kids that I knew, including my own child. I said, “I need you to read these books and tell me what you love about them.”
Two things sparked the idea. Nell Scovell, a friend who worked with me on the book and added all the funny lines, gave Everest this book called Amazing Facts About Animals. George, Everest and I read it. The facts were so amazing. They had only one fact per page, and they would say things like, a moose can feel a fly on its antler. Or — and this is disgusting — every single time a fly lands, it throws up (laughs). We loved this book so much, and we read it over and over. At the same time, one of the children to whom I sent these books said he liked nonfiction and that he just liked to learn stuff.
Nell and I were brainstorming, and we realized that just an encyclopedia is not fun — we needed to tell a story. She was the one who said we needed to narrate it, but I couldn’t do that alone. She pitched the idea of me narrating it as a child, with John Rogers as my sidekick because we work together every day. She said, “Let’s just replicate your relationship but as children.”
PRICELESS FACTS ABOUT MONEY. Copyright © 2024 Mellody Hobson. Reproduced by permission of the publisher, Candlewick Press, Somerville, MA.
SN: Caitlin Stevens’ illustrations are fantastic and make the lessons in Priceless Facts about Money really come alive. How did you select her to illustrate your book?
MH: It’s crazy — she was Everest’s art teacher at her elementary school. Everest overhead me interviewing illustrators on a Zoom. She was seven-years-old and came in and said, “Ms. Stevens would be really great.” I wasn’t sure, but she pushed me: “No, mom, you should really think about Ms. Stevens,” or “Mom, just look at Ms. Stevens’ website, please, just look at her website.” As soon as I opened up the website, I said, “Wait a minute, Ms. Stevens would be great!”
I called her and said that the publishers had been looking for illustrators. I wanted it to be a little gritty and realistic, but not scary and not photoreal. We gave Caitlin pictures of John Rogers and me as children as a test. I really did have that briefcase you see when you open the book (laughs). When we saw those two first drawings, we said one-hundred-percent yes, she’s the person.
SN: So I want to talk a little bit about how art and money relate. There’s a great story in one of the first chapters where you exchange a cupcake for a picture of an airplane. As an art collector, what motivates you to exchange that kind of metaphorical cupcake for a great work of art?
MH: Art has value. That was one thing we wanted to do — explain to children that even their art has value. We love art in our family, and it’s something that has never left me. I think it was Bono who once said to me, “It’s super interesting that children love to draw until one day someone tells them that the drawing isn’t good. And then they stop.” I’ll never forget when he said, “What if you just drew your whole life?” The idea that a child’s art has value was in the back of my mind. Parents value their children’s art, so why wouldn’t a child value another child’s art?
PRICELESS FACTS ABOUT MONEY. Copyright © 2024 Mellody Hobson. Reproduced by permission of the publisher, Candlewick Press, Somerville, MA.
SN: One of my favorite parts of the book — and I’m not going to reveal any secrets for readers — but there’s this beautiful passage where you explain how a piece of orange yarn is priceless to you. I think that many of your readers and many of our clients apply that same principle to a work of art. So why do you think people find art priceless?
MH: Because it’s not replaceable. At a certain level, a cherished item is more important than money. We wanted that to be part of the conversation too. If there were a fire in the house, you don’t grab the thing that is most valuable, you grab the thing that is priceless to you. We were trying to convey this concept to a child because children do have things that are priceless to them. I still have my doll from when I was a child. My housekeeper cleans my doll’s dress and irons it (laughs). It’s the funniest thing she does! But it’s the doll my mother gave me when I was maybe six or seven years old. Through all of our moving and the things that happened to us, it was the one thing that stayed with me because we lost so many things along the way.
You hear it from everyone too. We had a woman come up to George and say her family went through a terrible divorce, and her son kept an action figure in his pocket. It was what consoled him during the divorce. That little action figure is priceless to that child. How many people have a little blanket or things like that? Parents can’t just give them another one.
SN: That’s a really beautiful way to think about it.
MH: But it does share the idea that value is not always about money, which expands our conversation. Money should not be glorified or vilified in my mind. We over-value money in our society.
SN: Just one last, fun question: If you could add any work of art in the world to your collection, what would it be and why?
MH: I grew up in Chicago and we would go to the Art Institute sometimes — a library card gets you into any museum in Chicago. I used to stand in front of the Georges Seurat painting Sunday Afternoon on La Grande Jatte. I found it to be something I could just stare at for a very long period of time. I will never have that painting, but I loved it as a child.
SN: Is there anything else you want to share with us?
MH: Thank you so much for talking to me. This book means more to me than you will ever know. Every aspect of this project is just to get the information into the hands of children — that’s the only thing I want. Every dime gets donated. I want people to be able to learn.
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