According to a recent T. Rowe Price Survey, 69 percent of parents have some reluctance around talking about money with their children. And yet, parents who do have these discussions with their kids are much more likely to have children who say that they are financially smart.
Let’s face it, talking about money is not something many parents are comfortable with. For some, money is complicated. For others, it’s scary. And for others still, it’s just not as exciting as other topics. But the earlier we teach our children financial literacy the better.
Children are natural entrepreneurs. Over the summer, I bought lemonade, bracelets, slime, dog walking services, and much more from ambitious kids who were excited to start a venture and start earning money. I believe that one of the easiest ways we can begin to teach our kids about money is to tap into that entrepreneurial interest of theirs.
In August, my sister, Melanie Staggs, and I launched the book The Startup Club: The Big Idea. It’s a fictional story of a group of best friends who start a business called CJ Chainz. Through following the story of the characters, kids are introduced to the concepts of revenue vs. profit, pricing, competition and more.
As an entrepreneur (I founded the company Goodshop), the host of Your Business on MSNBC, and a mother (I have three children ages 7, 8 and 10), I have tried to incorporate money and business lessons into my kids’ everyday lives.
Here are four tips I've used to turn their lemonade stands (and slime business and spa company and more) into actual teaching moments.
Don’t Buy the Supplies Alone!
I know it’s easy to just visit the store or do a quick online shop to get everything your child needs for his project, but stop yourself. Bring him with you and have him hand over the cash himself. This is the first step in him being able to understand the difference between profit and revenue.
Conduct a Price Comparison
Have her look online or at a local store to see how much other people are selling similar products for. You can dig a bit deeper by asking why she believes her product will be worth more or less than what else is out there.
Do the Math
Even a young child can put together a quick profit and loss statement with you. Let him guess how much he thinks he’ll earn and then subtract all the expenses to get the profit. Then, when the day has ended (or the sale has ended), you can put real numbers in. It will be fun for him to compare his projections to his actual earnings.
Call Her Signs What They Are: Marketing
By giving an official name to her work, you elevate it in importance. This will help initiate a discussion around why she chose specific colors, language, and design.
Choose a Cause
It’s nice to incorporate social responsibility into your child’s venture. But, allow him to choose the cause closest to his heart. And, if it’s a local cause, go deliver the donation by hand together.