Raising Cash Smart Kids

I have been thinking this week about all those parents who write to me (and I am sure for every one who sends an email there are hundreds who don’t) to say “I know I should be teaching my kids more about money, but I just don’t have time.” How does this “don’t have time” belief system get such a grip on people?

When you think about it, it’s not an unusual feeling to have.

Who here knows they need to shed a few pounds? Or could do with being a little fitter? That’s most of us, isn’t it? So how many of us are actually doing something about it? I know I am guilty of saying “one day, when I have time,” when it comes to exercising daily.

Dieting and exercise are two of the most procrastinated activities. In fact, there are very few things that are more put off, avoided, ignored, and denied, than the need to eat right and exercise.

But one of those few things that are just as much put off is managing money effectively. Why is that?

Those who borrow to buy things they can’t afford, or just make the minimum payment on their credit cards, or let late fees be applied to bills, library books, and DVDs, are all living dangerously, whether they know it or not.

Everyone knows we shouldn’t do these things, and everyone means to do a better budget sometime soon, and make some positive changes to the way they manage money, probably in the next year …

Now, I take the attitude that adults are entitled to procrastinate on anything they choose to. After all, when you’re 65, you have a heart condition and diabetes, and all you can afford is a tin of baked beans for supper, you will only have yourself to blame, right?

We all shrug off the long-term consequences of putting off dieting, exercising, or sharpening our money habits.

You can do it to yourself, sure enough.

But would you do it to your kids?

Would you feed your kids junk food and soda pop for supper every night? Would you let them watch TV all day and never send them out to run around? Would you put off buying any bats, balls, bikes, scooters, basketball hoops … and leave them sitting in a room too small to run across?

Of course you wouldn’t.

And yet, when it comes to money skills, many parents are doing the equivalent of exactly that to their kids. Cutting them off from any way to exercise those skills, to learn and grow in that area.

Many parents don’t talk to their kids about money at all, other than to say “no, I’m not buying that for you, now shut up about it”. Maybe because they don’t feel they have the time, or because they think they aren’t doing so well financially themselves, or because they don’t know how to explain things in a child’s terms. Some parents even think that kids have no business thinking about money”.

Do you think your kids are going to wake up the morning they turn 18, and somebody downloaded the Wikipedia entry for “money management” into them while they slept?

Of course not!

Good money habits, just like healthy eating and healthy exercise habits, are the product of years of practice and reinforcement.

If your kids don’t have money of their own to manage, they are like the kid in the tiny room – unable to exercise those muscles and practice their skills.

Regardless of the state of your own money situation, don’t deprive your kids of the chance to learn what they need to know. If you don’t know how to teach them, get help. You are the only thing that stands between your kids and a lifetime of financial struggle. If your parents let you down, that is even more reason to make sure that your kids get started in life the right way.

Another week has gone by, and I have had quite a bit of interest in the Cash-Smart Kids YouTube Competition. Several of the new members of the Cash-Smart Kids program are keen to get their kids up and running in a business in time to enter the competition, so I am spending a bit of time helping them out. This is just in from Ginny Daniels, of Upper Brookfield:

Thanks Jenny, and I’m hoping that we can come up something to enter the comp with – the kids have been making vids at school so it all ties in very well!!

Congrats again on what you are doing

Now, if these kids, brand new to the program, can come up with a competition entry, anyone can!

And you don’t have to do a multi-media spectacular presentation in your video, either. A simple head-shot to camera is all it takes.

Here’s another sample entry, again from Australia. (What are all you Americans doing? There are ten times as many of you as there are Australians – surely your kids are just as smart and entrepreneurial as the Australian kids are? Upload your entries, for Heaven’s sake, and show us what you’ve got over there!)

I can’t wait to see what happens when the bulk of entries start to flow in – there are so many smart, motivated kids out there with great business ideas!

I found some nifty tools on a financial education website made by the Australian Government today. You can take a Financial Health Quiz (I scored 86 out of 100 on my first try, but the cute part is you get to do it over until you get all the answers right if you want to – great for kids!) or use a range of calculators for Savings with compound interest and Loans with reducible interest. There is also a nice little Financial Basics handbook you can download in .pdf form.

These are all neat tools that you can use with your kids to start them thinking and talking about money ideas.

Remember, though, that thinking and talking are only a small part of the puzzle – you need to make sure they follow through by taking ACTION.

Are your kids earning their own money?

Are they saving at least half of it – divided equally between short-term savings (for the iPod or Playstation game) and long-term savings (to invest)?

Do they understand compound interest? A couple of weeks ago I shared an easy exercise you can do with you kids over the period of one week to completely cement for them the notion of compound interest. Check out my post titled How To Teach Your Kids About Compound Interest. (I know this is a big topic of interest for parents, because that post has had a stream of search engine traffic ever since I wrote it!)

Of course, if you are one of our Cash-Smart Kids members, you already know all this, don’t you?

“A child of five would understand this. Send someone to fetch a child of five.”Groucho Marx was right on the money – it’s amazing what a child of five can understand. The importance of the early years in terms of learning and development is widely recognised through a number of studies. Also well recognised is children’s propensity to adopt that sincerest form of flattery: imitation.

As parents, we recognise the importance of setting a good example for our kids (even if we do let the occasional swear word slip out in the midst of the peak-hour traffic). One area of influence, though, that is easy to overlook in the hectic bustle of day-to-day life, is financial management. Yet children overwhelmingly refer to their parents to learn about finance. A report recently released by the Australian Government’s Financial Literacy Foundation highlighted this, indicating that a large proportion of young people nominate their family as their major source of financial information and advice.

Read the rest of Justine Davies’ article in Melbourne’s Child Magazine.

While the family remains the single most important point of reference for kids to learn about managing money, how many families are actually taking that responsibility seriously enough to devote even 15 minutes per week to the subject?

It doesn’t take a lot of time to teach your kids the basics – but you do have to know what the basics are, and how to explain them. And that’s what makes it all so hard for a large proportion of parents.

I know what it’s like – in the past 12 months we have had three major illnesses in the extended family, and two of our kids have had life-threatening conditions which have had them in and out of hospital for extended periods of time.

Life can get pretty demanding sometimes.

But you keep giving them food, and hugs, and getting them off to school, and reminding them to do their chores, music practice, or whatever else they are required to do. You keep the wheels turning on the essential activities.

So I’ll ask you to consider this.

Is learning how to manage money an essential activity?

I absolutely LOVE reading the emails and seeing the videos that our young entrepreneurs are putting together!

Here’s a great entry from a girl called Rhiannon:

Doesn’t that just make you smile? What a great kid.

Notice that Rhiannon’s business is pretty new – but how well she explains her product and her marketing strategy? Any child could start today and be making a video just like this one in time to enter the competition.

Start today, if you haven’t already – choose your market, find a product, and design a way to promote it.

Notice, too, that Rhiannon isn’t trying to do this all on her own. She is getting help and advice from adults who have businesses similar to hers, through the Wonderful Web Forums and Women Internet Marketers.

You can also have a look at Jason O’Neill on HubPages, to get an idea what an entry looks like if you can’t make a video.

If you are one of the other people who have entered, don’t worry, I will be profiling plenty more people over the next few weeks. Stay tuned, and your turn may well come …

Click here for the full competition details.

Rich Schefren took a step into my world last week, when he went to talk to a group of five-year-olds about business – and according to Rich, he was “Shaking In My Boots”!

It can be daunting, trying to break down complicated business ideas into terms kids can understand. Especially if you have learned business through years of experience, or at university-level academic institutions, or both. The gap between your understanding and the world of a child seems almost infinite.

The truth of the matter is that it can be done. Parents are doing it every week, using the Cash-Smart Kids program.

I left a comment on Rich’s blog post, letting him know about the program – I wonder if he will come and check it out?

At his blog post, “Shaking In My Boots” you can download the gorgeous ads he had these 5-year-olds make to convince their parents to buy them things. Imagine how much more powerful it would be if they also included a business plan as to how they would earn the money to pay their parents back for the purchase?

We had another one of those “feel good” moments this week – you know, the ones where you sit back and marvel to yourself “they actually WERE listening, after all …”

In this part of the world, interest rates have been going up steadily. The twins came home from school the other day a bit confused because one of their friends had “gone off” at another of their friends for buying something from the canteen.

“You’re not supposed to buy anything,” this 13-year-old yelled at her friend, “Don’t you know interest rates are going up?”

“What’s that got to do with anything?” asked the confused ‘villain’.

“You can’t spend money at the canteen or our mortgage will cost more,” railed her accuser, “and then I won’t get new jeans for my birthday!”

This girl has been getting some messages about money from her parents, clearly, but she seems to have things a little muddled.

“Do you think her parents told her she couldn’t spend money at the canteen because their mortgage payments were going up?” one of my twins asked me.

“Probably,” I grinned.

At this point the older one, aged fourteen, who had been playing The Sims and apparently ignoring the whole interchange, suddenly piped up with “That’s silly. They should just get a fixed interest rate and then it wouldn’t matter.”

The twins nodded in agreement, and that’s when I realised that the whole thing has been worthwhile …

Some of you may have seen the comment left last week about the site bkfk.com.

Well, I have checked it out, and wow! How fantastic!

Here’s the backstory:

Founder and CEO Norm Goldstein based the company on the premise that young people have never been given the opportunity to be innovative and commercial.

Norm saw this first hand when daughter Cassidy over a period of days turned a plastic holder for roses into a simple device to hold the small or broken end of crayons. This useful product resulted in a United States patent being issued for Cassidy’s invention – The Crayon Holder – at 14 years of age.

From this experience Norm set about researching the topic of young inventors and came up with a large list – people like 14 year old inventor of the television Philo Farnsworth or Abbey Fleck, aged 8 when she thought up the Makin’ Bacon holder. In fact, Norm links the relationship to young people and inventing to the way women were treated half a century ago. For example the story of Patsy Sherman whose invention of water repellent (Scotchguard) was almost ignored because of her gender – “let the men take it from here,” she was told in the 1950s at company 3M.

Norm realized this treatment of women in the past was now happening to kids. He then resolved to set up a company for young innovators to take their great ideas to the commercial marketplace in a way that had never been done before. He likes to call it the “Entrepreneurial Finishing Line.”

“There are plenty of competitions and events for kids inventions, but not an organized and commercial approach to researching, developing and marketing a kid’s raw invention idea.” says Norm.

If your child’s business involves an innovation, head over to Norm’s site. It’s free to join, and there are lots of great resources. Your child may be the next Fraser Doherty or Ben Casnocha!

Well, we’re definitely off and rolling with the Cash-Smart Kids YouTube Video Competition!

The competition rules are now up on the Cash-Smart Kids website – check out the Cash-Smart Kids Competition Page.

There is a Hub about the competition on HubPages – see the Cash-Smart Kids YouTube Competition Hub.

There is also an entry on HubPages – visit the competition Hub to find out who it is! (Hint – it’s not Rachael. She has been good enough to do some example entries to help you guys out, but of course she is related to a judge and can’t actually enter.)

The competition blog post has been social bookmarked a time or two (no, not by me …)

If you belong to any of these sites, please hit the link and give the competition a vote up!

Cash-Smart Kids at Mixx

Educational YouTube Competition at Digg

Cash-Smart Kids YouTube Competition on Reddit

Careers Cash-Smart Kids Competition at Propeller

Cash-Smart Kids Competition News at Newsvine

CashSmart Kids Video Competition Story on Plugim

Cash-Smart Kids YouTube Video Competition on Marktd

We’ve also been written up by Janet Beckers of Wonderful Web Women in the WWW newsletter:

Jenny Ford is the winner of our first Wonderful Web Award last year “Web site most likely to change the world” and mother of quite an entrepreneurial family.

Tomorrow Jenny launches a special competition that I thought you’d really like to know about, especially if you have entrepreneurial children.

Tomorrow she begins the global search for two entrepreneurs under sixteen to be featured in the 2008 Charity Book Project.

The two winners will be profiled alongside big names like Ben Casnocha, who started a software business at 13, and was CEO of a Silicon Valley start-up by seventeen.

Runners up will also get exposure, with their names and the URLs of their websites listed in the book, and their stories being told in more detail in various marketing activities around the launch of the book.

If you know anyone under sixteen who has a business – or is about to start one – this is a golden opportunity to kick that business to a new level!

Entries are by submitting a 2 minute video to You Tube and Jenny will help anyone who joins her site to meet the entry deadline. This is such a great idea and I love how, as well as encouraging our children to be the best they can be, this project also benefits the community.

Go to Cash Smart Kids, sign up for entry to the site (it’s free), and check out her blog for details.

I have found the Wonderful Web Women site to be incredibly useful, and what’s amazing is that it’s free to join. Janet does interviews just about every week with successful female internet entrepreneurs, and all the info is there to share. What I really like is that there are transcripts of the interviews – “cheat sheets” – which are a real time-saver if you don’t have time to listen to a full interview.

I know there are a lot of membership sites out there where they give you “a new interview every week/month”, but most of them charge for the privilege. Janet is sincere about giving first, and trusting that the rewards will come.

We have had some very encouraging comments in all the places where the competition has been discussed, bookmarked, or otherwise brought to peoples’ attention. Keep it coming, and most importantly, get your kids going on their videos!

I have just come across a great site for any aspiring video-makers. It’s called Will Video For Food, and it’s written by a guy who makes hilarious videos himself, and knows more about YouTube than most of us will ever grok. Check it out!

Seriously, though, you do NOT have to get fancy with this video unless you want to. Shoot it with your phone or webcam if you have to. We will be judging based on the business idea, the person running the business, the results that are showing up, and the future potential, not how great you are at editing and making titles.

The full competition details are on the previous post – Kids In Business.

There’s a bit of excitement out there about the competition already – last time I looked it had more than a dozen Diggs and similar numbers of votes on other social bookmarking sites!

The field is still wide open, though – even the fast movers haven’t got their finished videos loaded yet.  So what are you waiting for? Get going on yours!