Over Mother’s Day weekend, my wife and son and I drove several hours to pay a surprise visit on my mother. We spent most of the ride talking about our newfound financial success and wondering what sorts of activities we could involve our child in in order to give him the spirit of entrepreneurship and of being an investor and not a spender. After tossing barrels full of ideas around (and me scribbling notes in my trusty idea notebook), we came up with eight concepts that we plan on involving our own child in to teach him the right kind of personal finance lessons for a lifetime of success.
The Four Jars Whenever my son gets money for any reason, we’ll split it up into four equal pieces that we’ll physically represent with jars: money to spend, money to save (for larger purchases), money to invest (for the future), and money to give to charity. This goes for birthday money from relatives and any money earned any other way.
Extra Chores For Extra Money We’ve largely decided to forego the basic idea of an allowance, as many basic chores should be expected (clean room, assistance with basic home maintenance). However, larger chores that require some significant effort can earn some extra money. I like to use the example that my father used to use for me – for every pound of weeds I pulled out of the garden, he’d give me something. Extrapolating this, we could have a vegetable garden and I would offer to “buy” a certain amount of pulled weeds from him.
His Own Investment Account My wife and I both feel strongly that he should be involved in investing decisions using the money in his “invest” jar as young as reasonably possible. This takes the form of a custodial account that I’m nominally in charge of, but one that he would basically control.
Lemonade Stand For the basic expenses for this, he would take money from the investment jar to buy supplies, then sell the lemonade. This is a good way to keep him busy but involved during a yard sale. After the sale is over, he takes the money, repays the investment, then splits the money among the four jars.
Parade Seller During local parades, there’s usually a few boys around the age of ten walking up and down the side of the parade route, hauling a wagon full of cold beverages on ice to be sold for a dollar each or so. Similar to the lemonade stand, my son would buy the expenses up front out of the investment jar, then repay the investment after the parade and split the remainder four ways. Doing this once upon a time netted me $50 profit in about two hours, incredible money for a ten year old.
Door-To-Door Servicing Entrepreneurial-minded youths in my hometown often went door to door during the summer offering to mow lawns for a small amount and also did the same during the winter, offering to scoop sidewalks on snow days. I lived too far in the country to capitalize on this, but my wife certainly did, especially on the snow shoveling side of things. I think I would permit him to borrow the family snow shovel for this purpose.
Can Collecting This was a business that I learned a lot from as a child. With nickel-a-can recycling in Iowa, it’s pretty easy to set up a can collecting route in the neighborhood. Just provide a receptacle for anyone willing to toss their cans, then go around once a week and empty out that receptacle (and possibly clean it). You can often collect several dollars worth of cans in a half an hour doing this.
Open Money Discussions My wife and I both feel an open book policy is a good idea, with monthly meetings that lay everything (or almost everything) on the table. Outside of a small discretionary amount, if I can’t justify it to my child, why am I doing it? It gives us a chance to be good financial examples and it also gives my son the chance to report on his financial moves as well.
After all of these, though, the best gift we can give him throughout his walk of life is love and emotional support.