Money

Can you teach a child to become an entrepreneur?

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Literacy

I’ve recently written a few blog posts about finances and how one can talk to children about money. I believe it’s a subject we need to talk about and research at home. This time I thought I’d try to introduce the concept of “financial literacy” as well as a few basic ideas about supporting a young entrepreneur.

Financial literacy – getting comfortable talking in terms of money

Have you ever been in a situation where people have been talking about something that you feel you don’t quite understand? Some people jump into such conversations, seemingly without a thought as to how they might look to others, and eagerly start asking questions. I applaud such behavior and I encourage it in myself and in my children, but it’s not always easy. I hesitate to show my ignorance at times and I know it’s my fixed mindset rearing its ugly head.

But how are you ever going to become better if you never learn new things?

According to Wikipedia, Financial literacy means: “the possession of the set of skills and knowledge that allows an individual to make informed and effective decisions with all of their financial resources.”

I thought finances was boring and difficult to understand. So many words and terms that sounded important and complicated. But when I decided that I wanted to understand it, and committed myself to become a student again, I realized it was easier than I expected.

Start with the basic stuff; Money and the value of it, banks, bank accounts, credit cards and debit cards and cash machines. You probably know those terms already but have you talked to your children about them? Maybe search Youtube to look for videos that can help visualize, https://youtu.be/AjTwcQYgISA

Next comes terms like income, expenses, interest and investments. Other terms that could be beneficial to look into are; passive income, financial security and financial freedom. When it comes to investing, which will be interesting for older children, see what you can research together. Look for information on risk-reward ratio, fundamental analysis as well as ROI and exit plan.

When you feel you got the hang of these concepts, test your understanding by teaching them to your children. When you can explain something so that someone else understands it, the theory becomes truly yours.

Create money

So now that you know about money, as a concept, how can you create more of it?

Money is given in exchange for something that the buyer believes is valuable. Different people need/want different things. The trick is to find the right combination of products/services and the right kind of people that will value them. It sounds simple on paper right? Well, that’s because it is! You need to figure out a product or a service that you can provide to the exact people that wants to pay money for it.

It’s simple but not easy. It’s like with everything in life, if it were easy then everyone would be doing it. 🙂 You need to become a very curious and tenacious detective.

Start by asking and answering these types of questions:

  • What seems to be a problem to the people around me? What does people talk about as problems in their life? Is there something that seems to be a burden even if they don’t talk about it?
  • When does the problem appear? At specific times/days/situations?
  • Have anyone tried to solve these problems before and can I learn from that and do it even better?
  • How can I find out what people would be willing to pay for having this problem solved?

Children catch on quickly to knowledge and they don’t have the same restrictions as adults do. Don’t be surprised if your children start applying their new knowledge in creative and sometimes completely unrealistic ways.

Supporting a budding entrepreneur

Every experiment they do will teach them and deepen their understanding. Encourage every idea that comes up and participate without taking over. If you can lend your enthusiasm to the endeavor your child will anchor a positive feeling towards trying new ideas. Help them when they ask for help and only with what they ask for.

I don’t believe entrepreneurship is the only way to find fulfillment or to make money. Being an entrepreneur is one way, seeking employment at a company or organization is another. Using the “problem solving”-focus is an effective tool for deciding on career options regardless. For example it might be good to evaluate the company you want to join in terms of what problems they are solving. If they don’t know and understand the solutions they are providing for their customers there’s a high risk that this company won’t be around for long.

Being an entrepreneur isn’t better than taking up position as an employee. Having said that, I believe kids are exceptionally equipped to think entrepreneurially and I think the future job market will reward that way of thinking. If you want to support your children into this way of thinking there is a possible trap worth to consider.

When your child is young the closest people they know are you and your extended family. There’s a big chance that you will be considered the first potential customer. Maybe your kids, or your relative’s kids, have been trying to sell you things to earn money for some school activity? My kids wanted to bake cookies and sell to me so that we could have cookies for snacks at home. Very smart – two birds in one stone – they’d get money and yummy snacks 😉

Supporting a budding entrepreneur in a family setting

Parents and family members are the perfect customers to get a first great win in an entrepreneurial journey. But we’re not representative to customers in scale. We have a relationship to our kids that needs to be clarified. Our relationship is based on love and connection and money isn’t part of that. Money shouldn’t be offered as a sign of love or as a substitute for connection. If the love and connection is there then you won’t feel conflicted to simply say “no thanks” if your 7 year old asks to sell you a necklace she’s made.

There’s also a risk of losing focus from encouraging your children when they come up with great ideas to solve some problem you have. You might feel that your child should want to do this service for you for free. You might feel that as a family member your child is selfish if she tries to “take advantage of” your situation. If this is the case you will benefit from defining your expectations for how you interact as a family beforehand. Make your specific family rules for “helping out” clear together.

When your child approaches you with a “sales offer”, teach her to ask about what the value would be for you. Sometimes you might say “It would be really nice to get that thing or that service but I’m not willing to pay for it”. Be clear about what you value so that your child can get an understanding of how customers think.

Above all, if you want to foster an inquisitive problem solver, you’ll benefit most from encouraging the very act of coming up with the ideas and for acting on them.

As always..

BeBrave

Using money to practice the skill of impulse control

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Impulse control

One of the life skills I want to teach my children is to control their impulses and everyday money decisions provide ample situations to practice. I want to empower my children to live consciously and free from marketing schemes and buyers remorse.

Skills that can be taught using everyday finances as examples

Skills can be learnt and they have real life value for you. Money is an excellent arena, to use as a teaching platform, which contribute to other areas in your children’s lives. For example I want to teach my daughters to be responsible and also to have the ability to plan and set goals. See below for some ideas in each skillset area.

Behaving responsibly:

  • Using an allowance from an early age and helping them reason about what to spend it on so that there will be enough left for other things they want
  • Keeping a piggy bank with a formal cashbook to note down any deposit or withdrawal
  • Talking about the importance of always knowing where your credit card is and keeping the information secret. Never loan it to someone or give your information away to someone on the internet

The ability to plan and set goals:

  • When your children encounter something that they’d really like to spend money on you’ve got a golden opportunity to teach them about goal setting and planning. Help them create a plan including how much they “earn” in allowance and how long it will take them to get to the goal.
  • Set up a container that can be put somewhere visible and celebrate every deposit towards the goal.
  • Break the plan down into midterm goals and make them visual – maybe an estimated half way line on the container?
  • If your child is older you might brainstorm on how to impact the plan in terms of more income or less expenses. Maybe you can break the plan down into milestones like; looking for a temporary part time job, getting an interview and earning the first pay.

Teaching impulse control

Another important life skill is mastering your short term pleasure seeking gene and your brain with its inherent impulses. Learning the skill of impulse control could benefit you in so many areas in life such as sticking to eating food that is good for you, stopping yourself from vomiting angry words at your friends when you’re upset or to finish running that mile although it would feel so good to cut this session short.

Piggybank

I’ve used a special homemade piggy bank to teach ad practice impulse control. My children each have a piggy bank in the form of a tower of three boxes. The titles on the boxes reads; Save, Give away and My money.

When the girls get their allowance, or a gift of money from someone, they get to distribute the money into the three boxes. They decide how much money to put in each box. There are different rules for each box. Money put in the Give away box is used to buy gifts or to give to someone who needs help. The money in My money box can be used for whatever purpose, at any time.

The money that is invested into the Save box is different. I’ve made a deal to make that money grow. Any amount saved, and logged in the cashbook, for the year I will reward at New years eve.

I want to teach them to stop and think before spending money on impulse. To consider how important the thing really is, especially if you just now saw it in the store and didn’t even know such a thing existed before. What do I think I will get from owning this thing? How often, at what times and where will I use it?

Withdrawals need a cooling off period

We have a special rule regarding withdrawals from the Save box. If/when they find something that they can’t afford and they consider using the Savings in the Save Box we have a “cooling period” of a month. We write down in our calendar, the store and the price of the thing they want to buy, and set an alarm for one month. If they still want to spend the money when the cooling off month is up they’re absolutely free to do so.

So far it’s happened once that one of my girls has stuck to her desire to buy the thing she wanted. The decision was a good one, she’s played with that particular toy for hours and hours. She was completely committed to the investment, going in with her eyes open, and she never regretted it.

This idea started some years ago when my eldest was 9 and my youngest had just turned 7. At that time, to make things simple, I promised them to “double whatever they’d saved”. My nine year old caught on to the idea. She put most of her money in the Save box to ensure a good return. My seven year old didn’t at first.

When New years came I went to the bank and withdrew the amounts in Swedish 10 kronor coins – they’re golden in color. I asked  my oldest to hold out her hands and I let her coins rain down into her hands. The money overflowed on the kitchen table, she felt rich! 🙂 My youngest hadn’t saved as much and so got a lesser rainfall, much to her dismay. But guess what happened all year long after that? Yep, pretty much every penny went into the Save box.

You’re the most important teacher

As with every skill in life, the way you act will teach your children more than any theoretical idea. Do you, like me, want to teach them skills like to be responsible, to express a dream goal and make plans for achieving it and impulse control? What would be different if you implemented those skills in your own life?

BeBrave

Abundance or scarcity – Does money grow on trees?

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Abundance

What kind of life do you envision for your children? I bet you wish happiness and love for them, but what else? What kind of experiences do you see in their future? Will they become “successful” in something, what does successful look like? What about financial abundance, is that something you hope for?

Set your definition of successful

Before I continue writing this post I’d like to stop and make something very clear. I do not equate success with having a lot of money. Some people give me a special look when I talk about finances as if I’m going on about something that shouldn’t be talked about. Some have even asked me if I’m not afraid of putting too much pressure on my kids in terms of making a lot of money.

I don’t pressure my children into becoming financially free or some definition of “successful” that has a financial number tied to it.

I do, however, encourage them into learning about money and finances so that they can make informed decisions. Money is important, not because of image, but because of what it provides; some level of security and a world of possibilities. Money is a tool and when you know how to use it you can choose if and when you want to.

I do not equate success with having a lot of money. Neither do I equate success to being poor and struggling to pay your bills.

I want my children to focus on what makes them feel alive, on what makes them proud of themselves and how they can bring value to others. I believe that achieving success in life, according to that definition, combined with financial literacy will bring that financial abundance that all well-meaning people deserve.

So, when you envision the future for your children do you see financial abundance? What are your thoughts about money and abundance? Try asking your children the same questions and see if you can detect their relationship and view on this subject.

Does having money make you popular?

We’ve reasoned about money in our family. I’ve asked if they thought money was important, could money make you popular and are you a better friend if you have loads of money? They’re not easy questions to answer since they’re not binary questions.

Reasoning about money, and what having money means, is important. It helps children to become aware of this tool and their own thoughts and beliefs about it. Maybe your kids, like mine when they were younger, think that being able to buy things for their friends will make their friends like them more. I’m not saying that that is incorrect, maybe their friends love presents, I know I do, I’m just saying it’s a good thing to talk about. Does that popularity come with any downsides? How would they feel towards a friend that gave them gifts?

Astrid Lindgren, Swedish author of children books, writes about Pippi Longstocking who is super rich. She’s got a bag full of gold and she spends a lot of it on her friends – one particular episode fascinated my girls, the same way it caught my imagination when I was young, The visit to the candy shop. Pippi goes in and buys bags and bags of candy – she pretty much empties the store – and shares it with all the children in town. Needless to say Pippi is very popular amongst the kids in this episode.

The questions aren’t binary. The answers depends on how the actions make you feel. Is your relationship impacted in any bad way due to negative feelings on either part? If everyone involved are happy then everything is good!

Then the questions level up to;

  • Are there different ways to give?
  • How can you facilitate a completely positive response from the receiver?

Does money grow in trees?

Apart from the idea of what money can or cannot make you into, I’ve identified a number of other important concepts to introduce to my kids. One base concept is the mindset of abundance versus scarcity.

If you believe that money is abundant in the world you are more likely share it, fight for it and to use it. If you believe that there is loads and loads of money available, just waiting for you to go out and get it, you will be more likely to do just that.

We’ve talked about money growing on trees to make abundance into a visual idea.

“There is so much money in in the world that you could replace all leaves on all trees on the entire planet and that would still only be part of everything there is. Most of it is just waiting for you to claim it. You just have to show up and climb the trees and start picking!”

Showing up and climbing trees becomes metaphors for earning money – let’s look into that later. For now let’s stay with the concept of abundance.

Abundance versus scarcity

If you believe that money is abundant you will consider it to be relatively easy to get. If there is so much of it, why shouldn’t you be able to get some or even a lot? No more thoughts like; “it’s too complicated, only geniuses can do it” or “why would I succeed when there are so many smart hardworking people out there that have already thought of everything?”.

With an abundance mindset you believe that there is enough money on this planet, that if you can just find the right tree and are willing to do some climbing, you will be able to bring in a harvest that will set you up for life.

If you believe that there is money in abundance you will also be more willing to invest the money you have. This is a core prerequisite for making money grow. Yes, there is a risk to investing, but since you always can just go out and get more you’re more willing to look at that risk.

If you believe that it’s a scarce resource – you will start acting constricted towards it. You will start to pay more attention to securing what you’ve got than in how to invest it into growth or in how to use it for loving and giving purposes.

Some people agree on the abundance theory but think that any one individual shouldn’t focus on getting too much of it. “Then there won’t be enough for everyone.” Like if someone takes a too big piece of the pie there won’t be enough left for everyone else. But hey, what if there are infinite pies and pastries out there just waiting for someone to find them and deliver them to those who are hungry?

Be happy for people who are climbing and harvesting

An abundance mindset will let you feel true joy and gratitude towards people that have earned a lot of money. You will believe that these people have shown you where there are trees to climb and they will be an inspiration and a reminder of what is possible.

I think that money will make you more of what you already are. If you are greedy and selfish you will still be that way even if you win the lottery. If you are a giving person, and someone who loves to surprise people, you’ll use your abundance for doing good things for others. Having money doesn’t make you popular, at least not with the people that matters, it’s who you are and what you do that will make you loved and appreciated.

Good people should have as much money as possible. Because good people will do good things with that tool.

Some tips to help along the way to an abundance mindset:

  1. Stop saying that things are ”too expensive”. Those words are sending the subconscious signal to yourself and your children that you don’t have enough money. Replace it with the phrase “I don’t think it’s worth that amount”. This way you shift from the feeling of scarcity into a more constructive discussion about value.
  2. An abundance mindset is not equal to ignoring risk. Please do your due diligence and your risk-reward ratio calculations before doing any investing. (And if you don’t know those terms google them 🙂 )
  3. Helping others makes you feel alive and proud of yourself. It’s a great way to show yourself how good the abundance mindset can feel. Use it to create a good spiral of abundance and giving.

BeBrave

Teaching children the value of managing money

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Value

At what age is it proper to start to talk about finances and the value of money with your children? Should you talk about it at all? How much or little of it is appropriate to let your children manage at what age?

Do you want your children to live in financial abundance? Make sure that you know your own subconscious beliefs about money before trying to impact your younglings.

Make it a subject to research at home

When I started learning about personal development, and devoting myself to becoming the best version of me that I can be, I started setting goals. A few of those goals where in the financial area. I’ve gone slow but steadily forward moving from increasing the hourly fee I charge for my consultancy business to becoming debt free and learning about and creating passive income.

I threw myself into understanding money, how to earn it, keep it and make it grow. It’s been like going back to school but immeasurably more fun since this time I have strong reasons for learning. Everything I’ve learnt has led to even more areas to explore and to dive deeper into. As I’ve begun to see the real life value of understanding this area I’ve felt an increasing frustration of not having learnt about this before. Why isn’t this subject taught at elementary school?

I decided to make money and financial abundance a subject that we should explore at home. I wanted to create a structure for my own learning as well as for my kids’ and I began with defining a number of categories to investigate with my children.

Categories regarding money to research with my kids:

  • Mindset about money – Abundance and generosity
  • Financial literacy – getting comfortable talking in terms of money
  • The value of money and “Need vs Want”
  • Self-reliance – responsibility and the ability to plan
  • Creating, keeping and making money grow

Learning about the value of money

One of categories we explored early on was around The value of money. At what price is the price considered high or low? Who and what decides what the price should be and what is the actual price for different things?

My girls has gotten an allowance since they were old enough to reach the cashier at the store. It’s been a very small amount and we’ve given it to them weekly. A month is an eternity for small children and since their brains haven’t developed enough to judge consequences properly we thought a weekly amount would be best. Otherwise I think they’d spend all the money at once and then spend the rest of the month nagging us for when the next allowance was due.

In the beginning they could spend their allowance on whatever they wanted. We spent time in the store looking at the price tags and helping out with the math. “I want this!”, “Okey Sweetie, can you afford it?”. As they were growing older they started reflecting on how different the prices were and they started asking “Is this expensive or cheap?”. There were some interesting conversations about if they thought it was worth the price or not. Getting 5 pieces of chocolate versus the comic book with the puzzles and the toys… what to do what to do??..

We learnt that a price can be high for one person but low to another depending on how much you want it and how available the item is. If you can’t find that specific football card in any store close to home then it might be worth a higher price once you get to go to the store in the city.

Learning about supply and demand

Every summer there is a festival close to where we live. For a day the entire park, just meters from our apartment, is filled with people having a good time. There are live bands playing music and food tents selling fast food. Every year the festival draw street performers and small scale entrepreneurs looking to make some profit on the crowd that has gathered.

Booth sale

One year our daughters decided they wanted to try their luck and they asked for our help in setting up a small booth. They brought all the toys they considered themselves too old to play with anymore, small paper notes to write the prices on and on our suggestion a box to keep the money in. Apart from toys we also went to the store and bought a large bag of small individualized candy packs. The price for the entire bag was pretty expensive to our young entrepreneurs and they weren’t all that happy about lending the money to be able to buy it.

They soon realized that the small packs of candy was a gold mine. Kids drawn to the table, by all the toys, were off course immediately asking their parents if they could have some candy. The individual packs sold at a really good price since this was the only place in all the park that sold candy.

As the day progressed they got more and more into sales and shifted from standing timidly behind the table to targeting people walking by with questions and promoting the merchandise.

Replay the day and take reinforce the lessons

One of our most important jobs as parents, I believe, is to track our children’s progress and learning and make it visible and known to them. Realizing that you now know more or can do something you couldn’t before are building blocks for self-esteem and it nurtures the will to learn even more.

Knowledge has a way of sneaking up on you without heralding its presence. If you don’t keep track on your progress you might risk missing it altogether. I use a journal to keep track on my own progress and I revisit chapters from earlier months and years continuously to reflect on possible growth and development. One way to help our kids to recognize their new skills is to replay the day and talk through the things that has happened.

When our girls were done with their first entrepreneurial effort we helped them summarize and reflect. They paid us back the price for the initial investment and calculated their end results. They did a nice profit and we reflected on the day. How did they decide on the sell-price for different things? Was there any bargaining during the day? Was it easy to get customers? What was the actual profit? What made it possible to sell the candy at such a higher price than what they invested in the first place? How did it feel to sell? What was the total experience of the day?

Make a plan for your family’s skillset within the financial area

What areas within finances would you like to learn more of for yourself? Is it keeping a ledger, making a budget, exploring online marketing or even trading with stocks? What concepts could benefit your children? Take some time to reflect on what small experiments you could run together to start teaching them and yourself about one of the more potent sources of influence and independence.

See future posts for more ideas about teaching children about earning, keeping and making money grow.

BeBrave

Your relationship to money will impact the amount you have

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Money

How do you handle your money? There are few areas that trigger as many instinctive reactions in people as money does. Everyone has a relationship to it and everyone has been raised by people that have their view on it. Do you talk about money with your children? Do you talk about it with you spouse? How does this subject make you feel?

What kind of person gets rich and how does living in abundance look like?

If you close your eyes and picture a person who is financially wealthy – what do you see? Try it. Be honest. What characteristics defines this person? What must this person have done to acquire all that wealh and what must this person have sacrificed to reach this abundance?

Is your view on this person a positive or negative one? If we use a scale where 1 is completely positive and 10 is all negative where would you score the feeling you have?

Some people vision a corrupt, soulless person with greed and selfish desires as the only driving forces. Some vision a striving, hardworking person who never permit herself to rest or to have fun. Yet others see a person worthy of admiration but up on a cultural pedestal far out of reach.

So far in this post I’ve posed a lot of questions. The reason for that is that questions are the best way to access your subconscious from where all the programming for your actions stem from. You are operating based on your subconscious truths and beliefs. If you have any traces of a negative view on abundance and financial success it will trip you up.

You might, consciously, believe and say that you’re all for being rich and living in abundance. But if any of the answers to the questions above contained doubt, contempt, worry, jealousy or any resistance at all you know that you have some subconscious ideas that are not going to help you reach your goals.

Your relationship to money will impact the amount of it you have

Any negative feelings towards money and wealth will impact your relationship to it. Some try to explain this phenomenon as something esoteric or supernatural. They might complacently say something like “You have to talk to your money and tell it how much you love it so that it’ll come to you”. I think that would be a super way for me to feel stupid, I can’t seriously see myself talking to a coin..

I do, however, believe in the power of my subconscious and that the way I feel when I talk about money and finances is part of how much or little I have of it. It’s not like the money has an awareness that keeps it from me if I don’t “love it”. It’s because any negativity I harbor towards it, or people that have a lot of it, will steer my everyday actions that in turn will impact how I earn/save and spend money.

My sister sent me a link to a Youtube video of an adorable woman, Gill Fielding, talking about wealth. I particularly love her enthusiasm about money – “I really LOVE money!” she says at one point. The video is about wealth and the secrets of acquiring it and making it grow. It puts a smile on my face, I can recommend it 🙂

What can you do to change your view on money?

If you have thoughts and emotions that are negative towards money sometimes just knowing about them and consciously choosing other thoughts is all that’s needed. But most often we’ve been impacted by beliefs about money and wealth from the early stages of childhood. That means that our beliefs are thoroughly imbedded in our subconscious.

How do we best access those inmost hidden places? With questions and visualizations.

Close your eyes again and picture a person that is abundant, wealthy and living a life of financial freedom. Become determined to present this person as 100% good and to bestow admirable, virtuous and inspiring qualities to her.

Now ask yourself:

  • What thoughts and beliefs does she have to enable her to act the way she does that results in this abundance?
  • What skills have been essential for her to reach this level?
  • How can she now impact the world and do more good?
  • What will you do when you have all these resources at hand?

Were your answers totally free from negativity? If not, then commit again to a completely positive view and try the exercise again.

As with changing any belief, impacting the ones around money will take some conscious effort. However, any work in this area will not only help you in relations to finances it will also make you more aware of other limiting beliefs that are potentially holding you back.

BeBrave