Cash Flow For Kids

We are often asked whether the subject of money is really suitable for kids.

The basic ideas about money are simple enough that quite young children can grasp them. The biggest barrier to their learning is the emotional discomfort some adults have in even discussing the issue!

Our girls started their first business aged between nine and twelve (the full story is told at www.cash-smart-kids.com), and two of them are currently working on selling e-Books in the internet.

The trick to teaching kids about money is to find the money ideas expressed in a way that is engaging for kids. There are some great books written in the form of stories, which include many of these concepts. George Clason's The Richest Man in Babylon is a classic, and of course you can get a lot of good information from Robert Kiyosaki and Sharon Lechter's book Rich Dad, Poor Dad.

We have played Robert Kiyosaki's board game Cashflow 101 with our kids since they were very small. At first we played in a simplified form, known as "the rat game", but from about nine or ten they were playing the full version. We have also played classic games like Monopoly and Stock Market, and taken the time during the games to explain the real-life money lessons being taught.

It was an absolutely magic moment when one of the girls, aged about ten, during a game of Cashflow, looked up from the board and said "This is real life, isn't it? This is what you are doing in real life. You have an investment property and the businesses ... and you won't let us buy doodads with your money! We have to buy them with our own money!"

You can use your child's pocket money to start teaching them about saving and investing, even if they are not earning money outside the home. Teach them to set aside some money, for saving and for giving to charity, each time money comes in.

You can use a physical method, like cash in three jars, or you can keep the pocket money as entries in a book, and record deposits and withdrawals. The records, especially if you note what the money was being spent on, can be a useful teaching tool, too.

Along with the basic money facts, you need to teach your kids to have a can-do money attitude. This means being vigilant with your own use of language. I had to stop saying "We can't afford that," or "we don't have the money for that", and instead replace those negative statements with more empowering ones like "we choose to spend our money on other things", and "I don't want to buy that for you".

I usually followed up with "you can have the thing, you just need to buy it with your own money". If they didn't have enough money, I would say "well, you'll need to earn some more, then. Would you like me to help you get a paper run? Or take you over to do Grandma's ironing? Or ask the neighbor if you can wash her dog for her?"

In the early stages they need lots of help to think of creative ways to provide value for other people (and be paid in return), but once they have a little experience they quickly develop ideas of their own!

Everything from making jam or chocolates to desktop publishing or HTML coding has been used by a bright tween to lay the foundations for earning millions before graduating from high school. Just look at the Hubs about Fraser Doherty, Louis Barnett, Cameron Johnson and Donny Ouyang.