Raising Entrepreneurs

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At the age of 18, Jake Lindemann already has a nice start on his lifelong dreams.

He hopes to one day own a nationwide chain of skateboard stores, and he’s got every intention of being involved with stocks. And with a successful run as a Manitowoc businessman already under his belt and money invested in the market, he’s well on his way.

One thing obstructing his path to success was financing a college education. But thanks to a whole lot of determination, this Manitowoc Lutheran High School senior will be attending the University of Wisconsin-Milwaukee next year at the expense of the McKelvey Foundation.

He was awarded a $40,000, four-year scholarship last month by the New York-based organization, which gave 100 entrepreneurial scholarships this year to students across the country.

Read more about Jake Lindemann in the Manitowoc Herald Times.

Here’s another bright light - another young entrepreneur whose business activities have earned him a college scholarship. Jake Lindemann and his younger brother opened a retail store in Manitowoc back in 2006, when they were sixteen and fourteen years old. Sales and inventory have tripled at the skateboard store since it opened, but Jake and his brother have wisely been re-investing their profits into the business.

The McElvey Foundation awards 100 entrepreneurial scholarships each year, and receives over 1000 applications. Now, those are pretty good odds, aren’t they? One in ten!

All the more reason to get your kids thinking in business terms from a young age. To qualify for a McElvey entrepreneurial scholarship, the young entrepreneur’s business must be more than a year old, and have at least one employee, so there is no point trying to cobble something together during your senior year in high school. This has to be a real business, which means having a solid business plan in place by the age of fourteen or fifteen.

I am looking forward to tracking down the other winners of the McElvey entrepreneurial scholarships - they are such great stories, aren’t they?

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.

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?

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 …

Step 1 - Seeing How Your Past Holds The Key To Your Financial Future

“Messages about money are passed down from generation to generation, worn and chipped like family dishes.” Suze Orman

It is important to spend time understanding your family’s stories about money - and the ones you created yourself, as you were growing up. Financial freedom begins with freeing ourselves from the burden of the past.

Step 2 - Facing Your Fears And Creating New Truths

“The trouble with fears is that when we keep them inside and refuse to deal with them, they grow, like weeds left alone in a garden. Take the fear of not having enough to cover the bills this month and let it wander around by itself, unchecked. Where will it go? It will become the fear of not having enough in general.” Suze Orman

New financial realities can only grow once you have faced your fears and replaced them with new, more empowering beliefs.

Step 3 - Being Honest With Yourself

“Most of us believe, or deceive ourselves into believing, that we need about $1,000 to $1,500 a month less than we actually do need to go on living the exact same way we live right now.” Suze Orman

It is very important to go back through your records and establish exactly how much you have really spent. Guessing won’t get you free!

Step 4 - Being Responsible To Those You Love

“It’s not OK when you get sick, or when you die, to leave financial chaos behind you for everyone else to clean up.” Suze Orman

Make sure you have a will, including a testamentary trust, adequate life insurance, income protection insurance, and health insurance. If you are not sure what any of these are, or how to get them, consult a financial planner.

Step 5 - Being Respectful Of Yourself And Your Money

“If you’re respectful of your money, and do what needs to be done with it, you will become like a magnet, attracting more and more money to yourself.” Suze Orman

The most powerful and respectful way to make money is to invest wisely. Plan for your future, take advantage of the superannuation plans that are available to you, face your debt, and stand guard over your money, ensuring that every penny you spend is a penny that must be spent.

Step 6 - Trusting Yourself More Than You Trust Others

“When it comes to every financial decision you will make for the rest of your life, you will choose correctly if you go with the answer that reflects your instinctual response.” Suze Orman

Your financial freedom is your responsibility, and it can only be planned and brought about by you. There is no “expert” or “insider” who knows better than you what you should do.

Step 7 - Being Open To Receive All That You Are Meant To Have

“Money is a living entity, and responds to energy, including yours, and to how you feel about yourself.” Suze Orman

Thoughts of poverty are the chains which bind - to release them, give money to a charity you feel stongly about.

Step 8 - Understanding The Ebb And Flow Of The Money Cycle

“How often have you heard, for example, of someone who is devastated by being fired, only to land a much better job and end up happier?”

To be at peace with the ebb and flow of money, remember two things. Always take the long view of your financial future, and believe that everything that happens is positive, if you are willing to let it be.

Step 9 - Recognising True Wealth

“True financial freedom lies in defining ourselves by who and what we are, not by what we do or do not have.”

You cannot put a price tag on your life. No matter what financial ups and downs happen in your life, you will be truly wealthy when you understand that none of that stuff matters. Not really.

“Money itself cannot make you financially free. Only you can make yourself financially free, and you can do it - and so much more. You have that power.” Suze Orman