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Teaching Your Kids the Value of Money

Teaching Your Kids the Value of Money

I am 43 years old. Up until I was about 30, I had no clue how to manage or invest my money. I blew every nickel I earned, racked up credit card debt up to my eyeballs and eventually went bankrupt. How did I allow this to happen? I’m a smart person with a lengthy resume of life accomplishments, yet my personal finances have always been a disaster. Well, it’s pretty easy to stink at something if nobody has ever taught you how to do it right.

In my 13 years of primary school, four years of college and 18 years of life under my parent’s wing, not one person, teacher, professor or parent ever taught me the importance of investing while I was young, the importance of saving money and how to live below my means (i.e. not being “a $40,000 millionaire”). I had to learn through Baptism-by-fire. When my daughter was born, I made a pledge to myself that I would teach her at age 3 how to start a business, invest money, save money and overall respect money. How would I teach this to a 3-year old? I decided to teach my daughter how to invest in a lemonade stand. Here’s how it works:

  • Conley had to earn pennies and nickels by doing chores, helping with her baby brother and by demonstrating excellent behavior.
  • After several months, Conley had saved enough in her piggy bank to buy a container of lemonade powder for $3.95
  • I invested in her business $3.50 to buy poster board for a sign and cups
  • We already had a table, 2 chairs and ice from the freezer

We were ready to open our doors for business! On a blazing hot summer day in Texas we set up shop on a high-traffic intersection of our neighborhood. We calculated that in order to double our initial investment of $7 that we would have to sell at least 14 cups of lemonade at .50 cents each. Well, we ended up selling 32 cups of lemonade and earned a grand total of $16 – so we doubled our initial investment!

After we came home, high-fived each other and wiped the sweat and grime from our brows, I sat down with Conley and advised her what to do with the money. I explained that most kids would choose to blow their hard-earned money on toys or candy, but smart kids will invest it wisely.

I gave her the options to either 1) Invest the money into another lemonade stand, but add cookies to our stand the second time to increase sales 2) Invest the money in her college fund 3) Give the money to charity

She chose to invest in a second lemonade stand. I think it was the word “cookie” that sold her on this idea. After we had an even more profitable second sale, Conley chose to give the money to an underprivileged elderly woman whose grown son was hospitalized on Christmas Day.

My daughter is now 9 years old and one of the savviest kids with money that I know. She saves every penny she earns, she won’t let me buy her any back-to-school clothes unless they are on sale (“Mom, you CANNOT pay full price!”), and she has learned how to ask herself “Is this something I need, or something I want?”

Parents, the sign you are doing something right is when your kids are helping keep YOU in line financially!

Kate Raidt Kate Raidt is author of The Million-Dollar Parent: How to Have a Successful Career While Keeping Family a Top Priority and founder of advantage4parents.com. She is also an alumnus of the Southwestern Company's summer work program. Kate is also the mother of two young children.
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