Cash For Kids

Kids learn much more from what happens than from what you say to them. This means that you need to get very good at understanding what "lessons" your kids are likely to learn from a situation, bearing in mind that these are subconscious lessons, not the sort of things a child might be able to repeat back to you after a lesson at school.

For example, it's important to think through the way you handle pocket money for your child. If your child doesn't have a regular amount of pocket money each week or each month, then he or she will need to ask you for money whenever they want something.

Of course, they want things a lot, which means most of the time you are saying "no". Some of the subconscious lessons kids learn from this are:

To get money (or what I want), I have to get good at whining, pleading, or manipulating

Money (or what I want) is scarce and difficult to get

Money (or what I want) is arbitrary, I can never predict or control when it comes

I am dependent on the mood of others to get money (or what I want)

And, of course, if you have ever made the mistake of saying no the first time, the second time, and even the third time, but then at some point getting worn and giving in, then what you have taught your child is:

If I just keep whining and pleading for hours I will eventually get money (or what I want)

I've made this mistake, I'm afraid! Two of my girls are master negotiators, and I have this terrible desire to be "fair and reasonable" (back to the guilt thing again). I have had to learn to draw the line and stick to it, because in real life you don't provide value to others by whining that they are not being fair, and I wanted my girls to learn other, more useful skills instead.

Having a set amount of pocket money teaches them to plan and budget, and also reduces dramatically the tendency to ask for things, since the response is invariably "do you have enough of your own money to buy it?"

They quickly figured out that starting a business was the way to get that money - the full story is at www.cash-smart-kids-com - and they have never looked back.

Oh, and while I am on the subject of mistakes - don't advance them money against their next week's or month's allowance. Any guesses as to why not?

I have just three words for you - credit card debt.

These days, in the USA, more young people declare bankruptcy each year than graduate with a Bachelor's degree. The culprits are credit cards and postpaid mobile phones - in the hands of kids with bad money habits.

Your kids absolutely must learn, at a deep experiential level, that if there's no money, there's no spending.

Of course, you need to balance that by making sure they have opportunities to earn extra money - otherwise they will learn that life is stingy, not a good subconscious belief for a budding entrepreneur!

It's pretty widely understood that parents are the key to kids learning good money habits and entrepreneurial attitudes - and that subconscious beliefs are the most powerful thing that kids learn from their parents.

One vexed question is whether to link pocket money to chores.

It is vital to build a habit of co-operation and contribution in your child, and if they associate chores too directly with pocket money they can start wanting to be paid for everything they do around the house. You need to keep a certain basic level of contributing activity happening without a direct link to pocket money.

It's also good if a certain amount of pocket money is "inalienable", in other words, no matter how badly they behave they get a certain basic amount. This is important to nurture beliefs such as:

I deserve to have money (or what I want) just because I exist

Nobody can completely starve me of money (or what I want) - I will always be OK

There is a lot of scope for additional chores and payments, though, above a basic level of activity and a basic allowance (which can be quite small). If you make a list of the household chores a child can do, and assign a dollar value to each one, your kids have the opportunity to do more and get more money.

They won't always want to - different kids are motivated differently. My brother has his own business, and from the time his daughter was about eight she had the opportunity to do things like filing, stamping, and folding mail for extra money. Even into her teens, she would only ever do it when she was saving up for a particular purpose. Other kids, like one of my daughters, will do as much as they can of a task they don't mind too much, and let the money pile up, with no particular objective in mind, just for the enjoyment of knowing it's there.

It's really good if you have more than one child, because as soon as one says something like "I have five hundred dollars saved up now," it seems to jolt the others into action!

It is very important that your child always knows they have ways to earn money - and it must be earning, not a wider circle of people who will give them hand-outs - because a key lesson you want them to experience is:

There's plenty of money (or what I want) - I just have to go get it

I can always do something of value for someone and get money (or what I want)

It's OK to want things, because I can go get them if I want them badly enough

One of the real tragedies of raising kids with hand-outs as their only means of getting money (or what they want), is that every time they ask, they are imposing a burden on someone else, who has actually gone out and worked for that money.

People, especially parents, respond to that imposition emotionally, and kids get the message that their wants are "too much", that they are "selfish" for wanting so much, that they shouldn't want things. They start to feel guilty about wanting things. Eventually, kids learn to self-regulate, to suppress their desires, and then as adults they have trouble getting in touch with what they really want in life, and going for it 100%.

A real key here is - don't tell your kids "no" when they want something, tell them "I'm not going to pay for that, but if you earn the money, you can buy it for yourself."

Of course, you have to help them find ways of earning the money, especially when they are young, or it's really unfair and they can start to feel helpless.

That's where programs like Cash Smart Kids can be very helpful, not only in coming up with a new money-making idea every week, but also in teaching your child to think like a business owner and develop their own business ideas.