Raising Entrepreneurs

Companies are always on the lookout for new customers, and they know that the younger they can get a consumer, the more likely they are to keep them for a long time. Particularly worrying for parents these days is the way cell phone and credit card providers are targeting teens.

Even debit cards can cause problems – my fourteen-year-old saves half of her earnings religiously into a high interest account. Once she had a debit card, though, and was being paid by direct deposit, she found that she had overspent her budget without realising, and didn’t have the full amount left that she had meant to transfer into her savings account.

Cell phones just chew through money, a few cents here and a few cents there for text messages or listening to voicemails, and suddenly the bill is enormous, or the prepaid card runs out long before the end of the month.

Credit cards are the worst of all, because it is so easy to build up a debt that you can’t repay all at once, and the interest rates on those things are so high it’s amazing they are legal. Once you get behind, you just get further and further behind.

Load up a high school or college kid with a cell phone and a credit card or two, and you can undermine the foundations of their financial life completely.

Student loans are bad enough, but many kids just shrug and add a bit of credit card debt on top, figuring “in for a penny, in for a pound”. We live in an instant gratification society.

Credit cards have become a fact of life on college campuses. With a reported $13 billion in discretionary income, college students represent a huge market for credit card companies (Kara, Kaynak, & Kucukemiroglu, 1994). Students often receive incentives, such as t-shirts or mugs, to apply for cards, and requirements, such as previous credit history, are often waived (Kara et al, 1994). Due in large part to these marketing efforts, a recent study reported that approximately 70 percent of college students possess at least one credit card–a number much higher than previously thought (Manning, 1999), while another study reported that 93 percent of college seniors have acquired at least one card (Markovich & DeVaney, 1997).

With companies lining up to seduce our kids into debt, the only protection we can offer them is a good, solid financial education, and a grounding in good money habits.

Images by PT, The Consumerist and B Francina.

Big news today!

We have been asked to extend the deadline for the competition.

It seems that the publishers will want some involvement in the process, so we will be extending the deadline to July.

This will give some of those American candidates who have ‘no time” a chance to use the first week or summer vacation to get the video done!

Those who had entries in before the end of May will get Brownie points for that, but we will not close the competition to new entries until July.

As before, we will give you at leave seven days notice of the closing date, so all you “last minuters” can get off your duffs and submit your entries.

Last week, 14 year-old Carl (The Kid Blogger) Ocab posted news of the competition out to his email list, and a couple of hundred people came to the Cash-Smart Kids website to read the rules. I am expecting a flood of entries in the near future …

One of the great ways for kids to make money is through busking. Of course, it goes with out saying that you need to make sure that the parents know where the kids are, and what they are doing, and that the situation is safe.

There are lots of safe and pleasant places to be busking, but sometimes people ask me whether it is a “real” money-making idea, or just a bit of fun to do one or twice and then forget about it.

I will say this - it’s not for everyone. If you can’t play an instrument, and have a singing voice that sounds like someone strangling a swan, then you are not likely to get far as a busker. However, for those who do have some talent, busking is a great start to an entertainment business.

I would like you all to meet Declan Galbraith, as he explains how he made 200 pounds the first time he tried busking, and where that busking led (yes, he’s just nine years old in this interview).

Declan is now sixteen, his voice has broken, and he is well on the way to global stardom as he works his way through a million-pound, three-record deal with EMI.

Here’s what he looks and sounds like today.

He has already made the transition that plagues many young male singers - the whole breaking-of-the-voice drama - and come out the other side still glowing.

My daughters are all besotted, and that can only be a good sign, since they are smack dab in his target demographic. His choice of songs to cover gets the parents in, too, I have to say!

He has learned how to play guitar and piano now, and is starting to write his own songs - another sticky step for former child singers. See what you think of this song, off his latest album, which he wrote himself.

My prediction is that he will continue to go from strength to strength.

Most of us have heard about the longitudinal study of Yale graduates conducted in the late 1900s. Researchers followed a graduating class through their entire working lives to age 65, and generated the following statistics.

By age 65, 36 out of 100 people had died. Now these days, with modern medicine, and extended life expectancies, that number may well be lower, but we can expect the proportions among the rest of the categories to be about the same.

Just 1% (one in a hundred) people were wealthy at age 65. Just one in a hundred Yale graduates - what would the statistic be for those who didn’t have a university education, I wonder?

Another 4% were financially independent. That is, they had passive income (income they didn’t have to work for) which was enough to comfortably cover their living expenses.

That accounts for 41% of the total sample.

The other 59% were in financial trouble. Some just had to keep working, because they couldn’t afford to stop. Others were dependent on government hand-outs or the charity of relatives.

More than half!

Do you think those fresh-faced young graduates believed that more than half of them would be struggling financially at age 65? Do you think any of them, through their working lives, planned to be broke, or dependent on others, in their retirement?

Of course not. They were as optimistic as we all are today. We all confidently expect to be financially OK, just like they did. We’re all working hard, paying off mortgages, and saving for retirement, like they did. And we are headed for the same kind of statistics as a result.

The situation for today’s workforce is no easier than it was for the Yale class of ‘32. If anything, times are tougher. Fuel prices are higher, work is harder to come by, and less secure, and financial traps like credit cards and upside-down mortgages have come into existence.

While it’s daunting to think that we, who are of working age now, are likely to find ourselves facing similar statistics - or being similar statistics - when we reach the age of 65, have you ever stopped to think about the other impact of lengthening life expectancy?

Not only will we have to come to terms with our own successes and failures in financial management sooner than we think, we will also live to see the effects of our parenting in the financial successes and failures of our children. We will, many of us, live to see our children reach the age of 65 - financially independent, or still struggling.

What are you doing, right now, to ensure that your child is one of the successful few?

(Photo by pedrosimoes7)

Last week, I was interviewed by LifeTips Radio about the YouTube competition, and the charity book project. Amanda, the interviewer, had seen some of the early entries, and she was very impressed with you!

You can listen to the LifeTips Radio Interview with Jenny Ford online for a limited period, and some time soon, when Carolyn gets around to it (hint, hint), the audio file will be available as a download from the Raising Entrepreneurs site, too.

I understand what it’s like, getting these videos together - I was planning to have Rachael do a sample entry (obviously she can’t actually enter, since she’s related to a judge, but I thought it would be good to have a sample available for people) and with one thing and another we still haven’t edited and uploaded it!

Maybe this is a form of karma, and when I get Rachael’s done, the rest of the world will suddenly finish theirs off and upload them, too!

I have had emails telling me to expect some, but they are not showing up on YouTube when I search for “cash smart kids”. So, if you HAVE uploaded an entry, and you haven’t had a reply from me, it means I haven’t seen your entry. Check the tags!!!!