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Teaching Children Practical Money Lessons: Entrepreneurship

This article was written by in Family and Life. 4 comments.

It’s important to impart a financial education to younger generations, just like the Rogersons who are teaching their children about investing. When you invest, you are relying on other companies before you can make any money. The companies in which you invest must perform well and brokerages must stand between those companies, their profits, and you. This is likely one of the reasons that entrepreneurship — finding ways to grow a business from the inside — is a lesson some parents would like to impress upon their kids.

This is the case with the Becks, another family profiled in a recent New York Times article. Ted Beck is the president of the National Endowment for Financial Education and his wife is a former banker, so it’s likely that he has a good handle on how to provide children with valuable lessons about money. His method involves garage sales. Mr. Beck allows his children to plan garage sales, from inventory to pricing. By working together, the kids have learned about themselves and about effective teamwork.

“What really struck us was that the kids knew each other’s strengths better than we did,” he said. “They split the $100 that they earned, but they agreed not to split it equally because Katherine had done the most.” Mr. Beck was quick to add that projects like this one wouldn’t necessarily interest all children equally. While his children all participated and cooperated well, he said, only Katherine showed real interest in business. She is now majoring in marketing in college.

garaga saleAs long as entrepreneurship isn’t being forced upon the children, I’m happy with the idea. The article mentions that the projects don’t interest all the children equally; I would hope that if one is not interested, they would be encouraged to find an activity for which they are more suited. Business lessons are fine, but it’s not for everyone. Matters of managing money are more important, in my opinion. Also, children are not adults and shouldn’t be expected to consume their lives with more adult-like activities. Every person only has one chance to be 16, and an upper-middle-class teenager should appreciate that he or she doesn’t have to work to support his or her family.

There will always be time for work later. No one on their death bed at the age of 90 has ever said, “I wish I worked more when I was a teenager.”

photo: colros

Updated January 16, 2010 and originally published December 20, 2007.

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About the author

Luke Landes is the founder of Consumerism Commentary. He has been blogging and writing for the internet since 1995 and has been building online communities since 1991. Find out more about Luke Landes and follow him on Twitter. View all articles by .

{ 4 comments… read them below or add one }

avatar 1 Anonymous

I’ve found eBay is less demanding on parents than a garage sale, as it gives more bang for the kid-time buck.

In the beginning, the parent is obviously helping more, so depending on how much the child actually did, ie enter the description, research which category sells the best, start price to attract most bidders, follow-up and shipping, etc, we have an agreed upon split ratio. As the child gets better and does more, he can keep a higher percentage.

My kids loved watching their auctions go up, especially that final hour.

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avatar 2 Anonymous

I loved getting to do garage sales as a kid. We did most of the work and then we’d get to spend the money on bigger ticket items.

eBay might be a good idea for kids nowadays (it was in its infancy back then and we didn’t have a digital camera anyway). Yard sales have the fun advantage of interacting with customers and bargaining in person.

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avatar 3 Anonymous

I agree with what you say specifically that an upper-middle-class teenager should feel appreciative of having the luxury of not having to support their family. However, I think that EVERY 16-year old should get some kind of job. Not to support their family, but to gain real-world fiscal responsibility.

I would consider my family upper-middle-class, and I got a job when I was 14 and a half at the local KFC. Now, I’m not trying to be one who espouses what I did as the best way; however, I feel that having a job before college is incredibly, incredibly important. By my freshman year in the dorms, I’d been working for a little over 3 years. Not for food money, not to pay rent, but to pay for Nintendo games, clothes, movies, etc. Because of this, I think I had more of a concept of budgeting, and how long it took to earn X amount of dollars.
Contrast this with some of my closest friends in college who didn’t have jobs as teenagers. They get to the dorms, it’s their first time away from home, they’re 18 and therefore newly-legal adults, and there are credit card applications everywhere. The credit card supplants the allowance they got as teenagers, and they swipe plastic for games and clothes, just like they used their allowance for in high school. All of a sudden they realize they’re up to their eyeballs in consumer debt and it takes much longer to work it off than they realized.

Also, everyone makes mistakes on the job and it is less costly to make these mistakes in your job as a 16-year-old working at Hollywood Video than as a 22-year-old in your career. Intra-office relationships, the interview process, the first time you miss work from being hung over…there are valuable lessons to be learned through experience, and that experience comes cheap when you’re young.

So, I am VERY appreciative and feel lucky to have spent my teenage years in a situation where my income wasn’t needed to support my family. But I am also appreciative that my parents let me get a job when I was young, and for the experience and lessons I gained on that path.

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avatar 4 Anonymous

Brian, I don’t agree. Every teenager should have some business experience, but it doesn’t need to be a job, per se. I didn’t have a “real job” until I was in college (my parents required me to have summer jobs from then on) – but I did have several ways to earn money as a kid (lawncare & shoveling for neighbors, mostly).

I did know how to budget, though. I received an allowance through college, and I knew that it needed to cover books and clothes as well as junk food and toys. If I didn’t have enough money, I could forgo treats or find ways to make more money (sell items, do surveys, do housework for people in the area). I never spent more than I could afford, which is the lesson you’re trying to teach.

I will say that the first summer that I had a job (I was 18), I was miserable. I worked in retail and never had time off that lined up with my friends’. I also had to work every weekend. I spent the entire summer alone or with my parents who were fighting all the time. Not the best introduction to the world of work.

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