Comments on: The “Seed Money” Idea: A Different Way of Looking at Saving for Your Child’s Future

By: Debbie M

Debbie M — Tue, 27 Nov 2007 22:50:19 +0000

I think this idea is fascinating. I think it would help us get over some of our fears of starting at least side businesses that might or might not grow into full-time opportunities just so we’re more likely to see it as an option. Also we can learn some things the hard way when the stakes are very low. And it gives us more chances to explore our interests.

I wonder what business(es) I would have tried.

By: Lazy Man and Money

Lazy Man and Money — Fri, 23 Nov 2007 19:40:07 +0000

529 Plans are very flexible. It can be moved to different beneficiaries and/or nieces and nephews. Perhaps your children don’t go to school, but maybe your grandchildren will have additional educational expenses. I’d be surprised if it doesn’t get used at some point for a purpose that you completely approve of.

By: Kristi

Kristi — Fri, 23 Nov 2007 19:39:58 +0000

I grew up with a friend whose parents used a system where their children did chores for money, then had to pay the parents for pretend expenses like their own rent, insurance, utilities, car payment, etc. Some also went to savings. They even went as far as having them help pay for groceries, gas, etc. This not only taught them about money, but just how to handle transactions at the store. Then what was left of their chore money, they got to spend on whatever they wanted. Of course they got paid more for chores than what would be considered normal, but most of it went right back into expenses. They were really just learning a lesson of work ethic. I asked her if as a kid she ever thought that she deserved to get paid for everything, and she assured me that while her parents did all of that, they also saw that she was involved in charity work through church and the community as well, so she didn’t grow up thinking that she always automatically deserved payment.

I remember as a kid thinking it was cool and wanted my parents to do it too. My friend is now very frugal, very successful and using the same strategy with her children.

By: Trent

Trent — Fri, 23 Nov 2007 05:10:42 +0000

I know the child who started the lawn business reasonably well – I’ll try to talk to him a bit and write a follow-up. I think the math tutoring business wasn’t as strong of a success, but I honestly have no way of really verifying that.

By: ericks

ericks — Fri, 23 Nov 2007 03:33:53 +0000

I’m of two minds on this. On the one hand, there’s something a little unbelievable about this story he told you. One kid who dives right into entrepreneurship after being forced to and starts a successful business, I’d believe. Two? Maybe. I just have a feeling this didn’t go as smoothly as he remembers.

However, this story reminded me of when I was 7 or 8 and wanted to earn some money because I was making a rather useless allowance of 50 cents a week. I decided to offer wagon rides to kids, but couldn’t get a customer. I was shot down by one kid who said her mom told her, “If you were my friend, you wouldn’t charge me.” Well, that made me feel guilty, and my hour as an entrepreneur was over. I never pursued money-making on a serious scale again.

I *did* have another business when I was a teenager, but it was much more a labor of love than a money maker, and eventually I pursued a career along those lines. I make a decent living, but I’m not rolling in dough.

If this guy had been my dad, would my story have been different? Maybe he would have helped me start a business and supplement my allowance.

By: annab

annab — Thu, 22 Nov 2007 02:53:50 +0000

I think the key to this story isn’t which savings vehicle your guy used, but his mentoring/teaching to his children. If you take the time to educate and reinforce financial education with your kids, they’ll likely follow your example. If you take a look at precocious children, they seem to have either 1) a really involved mentor or 2) constant exposure to the field (cause their parents are in the same line of work.)

By: Anitra

Anitra — Wed, 21 Nov 2007 21:14:55 +0000

Why are so many people criticizing entrepreneurship at 12? I was running a “lemonade and candy stand” outside my house when I was 6 – and started a leaf-raking business with my best friend when I was 8.

My entrepreneurship actually dropped significantly when I was in highschool, because my parents told me that school should be my first priority, and that they would provide me with chores to do if I wanted money.

It’s funny, because money was never the motivating factor for me. It was more about the pleasure of a job well done and the success of doing it myself. But that meant that I did just as much volunteering as I did paid work. But I wish I had stuck with it. I easily could have tutored in highschool, and made enough money to get through my university education without debt.

By: !wanda

!wanda — Wed, 21 Nov 2007 19:43:48 +0000

@Rob in Madrid: If you are a good student and go to the right school, you don’t have to graduate in debt. I got a full-tuition scholarship for college. Yes, it was an expensive, $30k/yr school, but the scholarship was $20k/yr. (My parents had saved the rest, but I probably could have made up a good portion of the other $40k if I had worked during HS or chosen more lucrative summer employment.) Now, I am being paid a good amount, $26k/yr, to go to grad school and get my PhD.

By: Kat

Kat — Wed, 21 Nov 2007 17:08:53 +0000

Rob in Madrid-

I had to have a degree in order to do what I love. So yes, the debt is worth it to me.
Also having my own business is worth it to me. I love what I do. Sure it takes some planning for time off around the holidays, vacations,etc, but for me and a lot of others it is worth those headaches. Working for others has its own set of headaches.

Trent,
I, too, would also like a follow up from the sons point of view.

By: George

George — Wed, 21 Nov 2007 16:50:03 +0000

@Rob in Madrid -

Because of my BS degree, I make $10-15k/yr more than coworkers without a degree. Because I take on responsibility that other degreed coworkers do not, I make about $5-10k/yr that they don’t.

I’ve had this job for over 10 years and similar wage comparisons, so, yes, a college degree is worth as much as $70k debt.

By: Rob in Madrid

Rob in Madrid — Wed, 21 Nov 2007 15:55:54 +0000

I sinply can’t understand for the life of me why everyone wants thier own business. Most people who so work for more hours than my wife for far less money. Working weekends and not having (paid) holidays doens’t appeal to me. Sure you get “tax” write offs but you have to first make some money! Thier is nothing wrong with being a wage slave and alot of advantages.

Secondly all the stories I read of people’s school debts makes me question the wisdom of a degree. Is it really worth it if you going to graduate with 10s of thousands of dollars in debt. I’m not against school but it’s hard to get ahead when you graduate deep in the hole. If you save enough for your kids college than aren’t you short changing yourself in the long run?

A much better alternative for many is trades. With a good trade you’ll never lack for work. Best part is you get paid to learn and you’ll never lack for work.

By: Stephan F-

Stephan F- — Wed, 21 Nov 2007 15:42:00 +0000

This is the same basic idea I have for our children. I have come to the current conclusion that if we are homeschooling our children probably won’t find working in a big bureaucracy as they won’t stand for all the BS. That means working at small companies or we can help them build their own businesses.

At any rate if they fail at it when they are young the consequences are not bad at all. There is plenty of time for them to recover. A bit harder at 40 to start trying it.

By: Chef

Chef — Wed, 21 Nov 2007 15:39:31 +0000

Developing a business plan at age 12? You have the rest of your life to spend chasing money, I’m glad my parents didn’t make me propose a business plan at age 12 – I was too busy playing outside.

By: Kelly

Kelly — Wed, 21 Nov 2007 15:34:18 +0000

I’d be interested to hear from the sons’ perspectives; what was good, what would have been better, what was bad. Could you do a follow-up, Trent?

By: Golfing Girl

Golfing Girl — Wed, 21 Nov 2007 14:51:38 +0000

When my daughter is older (currently 4) I will give her the choice of a part-time job like I had (bussing tables or working the grill at the golf course) or I will help her get her own business up and running if that’s her desire. I may even let her “partner” with me when I need extra help running my junior golf clinics.
The important thing is teaching the value of a dollar (how hard and long I worked for the dollar) at the earliest age possible. I remember looking at jeans thinking, “Those are worth 6 hours of flipping burgers and slicing onions!”

By: Let's Discuss Money

Let's Discuss Money — Wed, 21 Nov 2007 13:37:23 +0000

This guy definitely had the right idea. All children should be taught the value of money and giving them the challenge of running a mini-business is a great idea.

I think it’s also a good idea to explain to them from a young age how their money is invested and the technicalities behind it.

By: janewilk

janewilk — Wed, 21 Nov 2007 13:11:00 +0000

I know a family who sat their early teenage kids down and said that they would need to spend the rest of their middle school/high school years earning a portion of their college tuition. The daughter opened an organic bakery business (sold at farmers’ markets, at local restaurants, and catering events). The son decided upon lawn care/landscaping. The daughter is now college age and after her freshman year decided upon culinary school instead. The son is finishing high school this year. I’m not sure I would take this route with my daughter, but I’m not ruling it out!

By: Eileen

Eileen — Wed, 21 Nov 2007 13:06:04 +0000

I too feel that this article is a little”all or nothing.” “If you assume (in italics) they are going to college.” Why not instead view it as keeping all options open? Isn’t all savings based on some assumptions and some guesses? Heck, why assume I’ll live to retire, some of my family members died prematurely?

By: Pierre

Pierre — Wed, 21 Nov 2007 12:50:23 +0000

I strongly agree with the encouragement to the entrepreneurship. My only objection would be that allowance for household chores. I strongly believe that every family member should contribute appropriately to its age (chores, cleaning, help with cooking, etc.) and don’t expect to be paid for it to get a sense what family is all about – be together and do things together. I would rather give a (low) flat fee allowance and promise to double every dollar not spend to teach the kids the value of saving / investing

By: Minimum Wage

Minimum Wage — Wed, 21 Nov 2007 06:41:32 +0000

I think this is a brilliant idea. I think every kid should have at least one business stream of income by the time they graduate high school.