Why is it a good idea to teach your kids how to make money?
Teaching your kids how to make money is an important part of parenting that should not be overlooked. As we raise our children, we teach them how to take care of their own hygiene, how to perform their chores, and how to treat others kindly, so why also give them the skills they need to start or run their own business. This certainly isn’t covered in very much detail through the public education system.
We wanted to give our kids their first lesson in making money (besides the tooth fairy and chores) and running their own small business. So, we thought a lemonade stand would be a good idea…
Benefits of Teaching Your Kids How to Make Money
There are several benefits that result from teaching your kids how to make money. Here are a couple that I can think of right off the top of my head:
- Learn to brainstorm what works – most kids learn by doing. By experimenting with ideas and figuring out what works and what doesn’t, they can begin to learn important marketing and business lessons from a very young age.
- Value of hard work – it was an all day process for the lemonade stand that we helped the kids setup and run. I know that being out in the hot sun from 8:30am – 5pm to earn a buck will give both of them more value for how hard money can be to come by.
- Place higher value on saving vs. spending – because it wasn’t easy to earn the money, kids are more likely to save the money versus spending it on the first thing that fits their fancy.
- Setting and achieving goals – teaching the kids how to run their own lemonade stand helps them understand the importance of setting a achieving goals. Our son set his goal to earn enough money to buy a Skylanders game for the Wii. He hit the goal with flying colors, but because is was tough to get there, I think he has changed his mind and decided to save the money versus spend it.
- Teach them to be better communicators – our son is very shy by nature. By the end of the day, he was walking right up to people asking them if they’d like to buy lemonade. This was a big improvement and something I hope to cultivate further.
Results of the Lemonade Stand
The kids worked hard to make the lemonade stand signs, help bake the muffins and cupcakes, set everything up, and run the stand for 8+ hours. At the end of the day the stand made a total of $88. Not too shabby – this was way higher than what I would have predicted. The stand was setup outside their Grandma’s thrift store, so they did have pretty good exposure.
The total expenses for the lemonade and the cupcakes was ~$25. I wanted to have our son pay this back to teach him about revenue, expenses, and profit, but my wife decided to let him keep the $25 for his first time. We agreed that future expenses for the next time will have to be self funded or will have to be paid back to the parents (probably without interest for starters).
Picture of the Lemonade and Treat Stand
Final Thoughts
If you haven’t taken the chance to teach your kids how to make money and start a new business, please consider taking the time to do this. What they learn from going through the exercise can lead to valuable life lessons that will help them in many aspects of their life!
I don’t recall anyone teaching us, but my gang of friends were always trying one “business” or another when we were quite young. Lemonade stands didn’t appeal to us, but we had a bait (fishing) stand for quite a while (some neighbors didn’t appreciate the night crawler searching holes in their yards!), a wasp nest removal service (smack the nest with a broom handle and run like hell!), and of course lawn mowing. I don’t remember if we made any money, but we had loads of fun!
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Yeah, the lemonade stand is kinda cliche, but we wanted to get them started with something. Lawn mowing is another obvious choice as they get older.
I like the idea of the wasp nest removal service; that must have been hilarious to watch!!
Very good derek. Fully agree like other lessons teaching kids about money is equally important, it is good to nurture them at young age. I was lucky to be taught by my parents. Also kids at teen age must be taught about debts
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He did great! My parents taught us by saying “oh, by the way, from age 18, you are on your own”… They always encouraged that we had jobs but we found them ourselves.
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I don’t think my parents ever came out and said you’re on your own, but I felt like it was kind of implied…
I’m 20 so I’m a long way off from having kids, but I can definitely understand the importance of teaching kids the value of money and work from an early age. My dad introduced me to the stock market when I was 6 and I’ve been hooked ever since. My parents also encouraged me to save and helped me with countless “business ventures” throughout elementary school; lemonade stands, stationary businesses, ebay stores, you name it. Last year I opened my first real business and I probably wouldn’t have done so without that early foundation.
Wow, it’s incredible that they got started with you at such a young age. I guess I need to get started with my son and the stock market. Holy smokes!
The earlier the better! When I was really young and wanted to know what my dad did for a living (he works in finance), he actually explained it to me rather than giving me the dumbed-down version. It was probably way over my head at the time, but I became fascinated with the idea of “owning” a piece of a company.
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I started trying to explain stocks to our son. I think he gets the basic idea, but he isn’t ready to use his money to buy shares yet 🙂
The thing I like most about this idea is that if you are going to teach your kids how to make money, you will also have to teach them how to budget. Budgeting is so very important, and not enough people learn until their mistakes force them to.
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Love this! My kid can’t talk yet, but just as soon as he’s ready, he’s getting a heaping does of financial wisdom from me!
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Nice Derek! Way to get out there and not only tell the kids but show them. My mom always said what to do but followed up it with showing us or helping us do it. Kids need to learn how to earn money and stop thinking its going to always be given to them. I had a project a few weekends ago and took my younger brother with me. Did 8 hours work and I paid him 8 dollars an hour. He was like all this work for this? I said yep and you didnt even pay taxes!!! Now think about how much work you did before you go spending money on expensive shoes.
88$ man that must have been some rocking lemonade!! I bet those cupcakes were good! Next time make sure to take out the expenses.
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Thomas,
Yeah, having kids earn the money helps them equate time spent with the value of an object so that they can decide for themselves if it’s worth it to purchase.
I think my son (he’s going into first grade) and I have already got his next idea formulating from a discussion this morning. We can normally find kids books at yard sales for $0.25 – $0.50 each. If we can get some good ones (like Dr. Seuss) these re-sell on ebay for ~$1.50 per book. If we can find a couple lots of them we can get the whole arbitrage thing going. I’ll do a post on it if it pans out…
Nice! I like that idea and you may be able to get them cheaper if you buy them in lots!
Derek!
I’m only 24 and am in no way mentally, emotionally, or financially to have kids – but when I do I’m definitely going to come back and read this post again!
That was quite the set up your kids had going on there! As far as the content itself, absolutely quality dude.
It’s funny that you write this because a month or so back my dad and I were talking about our upbringings. One thing my dad did every month when the recyclables got full was to go trade them in for cash.
While this did give us some spending money for candy as kids, I look back now as a young 24 year old and wish he had taught us the value of everything you just spoke about in this post.
How to effectively communicate, responsibility, accountability, finances, etc.
I will definitely be taking your approach when it comes to my children. Thanks Derek!
– Chris Altamirano (All-Tuhh-Murr-Aww-No)
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Chris,
It was kinda my wife’s brainchild, but I took most of the credit 🙂 There are so many opportunities out there to teach our kids about money that most folks pass up. Hopefully some of what we’re teaching them rubs off and they’re financially responsible. Good luck with the kids when you’re ready for them 🙂