In the survey, visitors to the site were asked what they would do if they spotted a great item at the mall that they couldn’t afford. More than half of respondents aged 29 or younger (54 percent) said they would put aside money each month until they had the full amount to buy the item. An even greater majority of kids aged 17 or younger (57 percent) agreed, saying they would save. In comparison, only 42 percent of adults aged 30 and above said they would save in advance.

“Kids today could become the most money smart generation since the 1940s,” said Meridee Maynard, financial literacy expert and senior vice president, Northwestern Mutual. “April is Financial Literacy Month, and like no other time in recent history, kids and parents alike recognize the importance of managing money. We learn money habits during childhood, and in these challenging economic times, kids are learning why saving can be sweeter and safer than paying with plastic.”

History shows that challenging times can affect personal saving behavior. In the early 1940s, during the Great Depression and World War II, the U.S. personal saving rate soared above 25 percent1. From 2005 to early 2008, that rate hovered between zero and one percent, and even became negative for one quarter (Americans spent more than they earned). But in mid-2008, the savings rate spiked, jumping to over three percent by year-end. And in January 2009, the savings rate jumped to five percent, the highest rate in 14 years.

Kids More Cautious with Credit Cards

The new poll results also indicated that kids are more cautious and measured when it comes to using credit cards. Only seven percent of people aged 29 or younger said they would use a credit card to purchase an item that they couldn’t afford. Of those 17 or younger, six percent indicated they would pay with plastic. In contrast, 13 percent of adults aged 30 and above said they would “charge it” and figure out a way to pay off the debt at a later date.

“If the current generation of young people pays close attention to the downsides of debt, the lessons learned from this recession could provide dividends for a lifetime,” said Maynard. “Low savings rates and high debt helped contribute to the financial challenges we’re seeing today. This financial environment offers engaging opportunities to teach kids about how money works and how to manage it wisely.”

Testing IQ to Avoid the Credit Card Trap

Kids can test their borrowing brainpower by taking the Credit Card IQ quiz on themint.org. Seven questions help to identify their knowledge of credit, and areas for improvement.

Maynard has five credit card tips for parents to share with their children:

1. Pay in full, on time, every month. Always pay off the balance monthly and avoid charging more than you can pay off monthly. Late penalties are costly, and some companies increase the interest rate after one or two payments are overdue.

2. Be aware of rates and fees. Credit card companies often offer low introductory rates to attract new customers. These rates typically last for only a few months and then jump as high as 20 percent. Also be aware of extra fees associated with pre-paid cards, such as activation, maintenance and late fees.

3. Don’t exceed your credit limit. This helps avoid penalties and ensures that you will have credit available in the event of a true emergency.

4. Protect your history. As soon as you start using a card, the payments – whether paid on time, late or not at all – become part of your credit history, which can affect your ability to rent an apartment, get a job, or buy a car or a house. Bad marks stay on a cardholder’s credit record even if the bill is paid later, so make sure to keep it clean.

5. Review your statements. Immediately inform the credit card company of any errors on the monthly statement.

The Young Entrepreneurs Academy that this 17-year-old junior is participating in after school is giving her a taste of the business world.

Whether or not there’s the next Bill Gates among them doesn’t seem to matter.

“Be proud of what it is you are doing. Have that passion,” said art teacher Nancee Sanders, who is helping run the academy.

Plenty of enthusiasm was evident at the first of these weekly Tuesday sessions. The group also meets every other Thursday after school for field trips or to hear presentations from members of the local business community.

Sanders told how, when she was 8 growing up in Livingston County, she ventured into the business world, selling coffee and cake to ice fishermen on Conesus Lake.

Many of the students came to the class with ideas of what they wanted to accomplish.

“I want to make jewelry from recycled materials,” said Ricca Prasad, a 17-year-old junior from Victor.

Money made from the sale of this jewelry, Prasad went on to explain, could help survivors of the genocide in Darfur. She said she would work through an international group.

At least several of the students have already dabbled in the business world.

Ninth-grader Ford Filer fixes computers and, in case anyone wonders if he’s too young to do the job, he has his own business card: “Ford Filer, F2 Technical Solutions.”

The 14-year-old wants to form a “geek squad,” offering computer services cheaper than his grown-up competitors.

Meanwhile, Billy Boyce, a 17-year-old senior from Farmington, is eager to help his dad expand the family’s farm.

Source: Democrat and Chronicle

These two student entrepreneurs, along with 22 others like them from the District of Columbia, Maryland and Virginia, showcased their companies and networked their businesses to the D.C. area business community during The National Foundation for Teaching Entrepreneurship’s Youth Showcase, held at the National Building Museum on Tuesday, December 9th from 6:00 – 8:30 pm.

The event highlighted the achievement of these student entrepreneurs who have created businesses focusing on a wide range of products and services, from dog clothing items to local artists’ CDs, painting services, lunch boxes, and more. With the holiday season rapidly approaching, the event also provided a venue for these entrepreneurs to sell their wares in time for gift-giving.

“Most children start out selling something — lemonade, cookies or candy for themselves or for non-profit groups. These student entrepreneurs have taken their childhood fascination in business ownership miles further than that,” said Amy Rosen, President & CEO of NFTE. “They have shown determination as only an entrepreneur can by voluntarily completing the NFTE training program. Some have also completed our summer BizCamp program, which teaches them how to write and present a business plan,” Rosen added.

Read the full story in The Earth Times.

Children will have an opportunity to get a loan, create a product, do market research and sell their goods for a profit.

Enterprise Charlotte is holding the camp for youngsters aged nine to 12 at the Community Building Development Corporation.

Stacey MacLean, youth economic development officer with Enterprise Charlotte, said because the children are not old enough to work it is the perfect age to get them interested in creating a business and making their own money.

“In this county there are a lot of aging entrepreneurs, so there is a great opportunity coming up for them in the next 10 years,” said MacLean.

“The point is to teach the youth of Charlotte County about entrepreneurship to introduce them to the possibility of owning their own business as an alternative to working for other people. “¦ Some kids don’t even know what entrepreneurship is.”

MacLean said 10 of the 15 spots have already been filled. She said many of the children are returnees while others are the children of teachers and entrepreneurs, and the friends of youngsters that attended last year.

“They are thinking, ‘Wow, I can make money on my own,’ ” said MacLean. “Their money comes from their folks, so to learn how to make their own money is an interesting topic for them.”

During the first day of the camp, the young entrepreneurs will get a tour of a local radio station and record a commercial. On the second day, they will look through books with potential products and try their hand at making products such as stress balls and candles.

On the third day of the camp, the youth will finalize their product plans and hit the streets to do market research by asking people questions such as how much they would pay for the product and what colour they would want it in. At the end of the day, the children will visit the Community Building Development Corporation to get a $20 loan. On the fourth day, they will have their materials and will make their products.

The products at last year’s camp included purses out of sheets of foam and pipe cleaners.

On Friday, Aug. 15, the children will be at the St. Stephen Market from 11:30 a.m. to 1 p.m. selling their items – and hoping to pay back their loan and turn a profit.

Source: Telegraph-Journal

Youngsters ages 6-12 in West Lafayette, Indiana, will learn more than how to sell lemonade during a three-day entrepreneurship program at the Purdue Research Park.

The 20 young participants will tour the park, learn what it means to be an entrepreneur, work with a “Robosapians,” study aerial imaging and visit a manufacturing facility. The three-day program is part of the Just Us Entrepreneurs program jointly offered by the Purdue Research Park and Nancy Justice, owner of Just Us Kids daycare center, which is based in the park.

* Monday ( Aug. 4 ), Purdue Technology Center, 3000 Kent Ave., large conference room. From 1:45-3 p.m. students will “Meet the Robosapians” with Susan Manahan, assistant director of diversity for the Purdue College of Technology. Students will “program” three different Robosapians to dance, move and pick up items.

* Tuesday ( Aug. 5 ), Purdue Technology Center, 3000 Kent Ave., large conference room. A 3 p.m. presentation from Sean Henady of Aerial Imaging. Henady will explain what aerial imaging is and then demonstrate the technology by flying above the park in his helicopter and taking a photo of the students standing below.

* Thursday ( Aug. 7 ), Chao Center, 3070 Kent Ave. From 1:30-2:30 p.m. students will tour the Chao Center and learn how manufacturing takes place.

The 725-acre Purdue Research Park ( http://www.purdueresearchpark.com ) has the largest university-affiliated business incubation complex in the country. The park is home to more than 140 companies. About 90 of these firms are technology-related and another 39 are incubator businesses. The park was ranked No. 1 in 2004 for university- affiliated research parks and received the 2005 Outstanding Commercialization Award, both from the Association of University Research Parks. The park’s companies also have received numerous recognitions, including a 2006 MIRA Award: Innovation of the Year for Purdue Research Park/Quadraspec Inc. and a 2005 CoreNet Global Innovators Award finalist. The Purdue Research Park is part of the Purdue Research Foundation, a private, nonprofit foundation created to assist Purdue University in the area of economic development. In addition to the Purdue Research Park in West Lafayette, the foundation has established or is currently constructing technology parks in other locations around Indiana including Merrillville, New Albany and Indianapolis.

Source: Newswire

Young people who aspire to one day start their own business, or see an existing enterprise grow, are being encouraged to take part in the Young Entrepreneurs Program being offered this summer at the Small Business Development Center (SBDC) hosted by College of the Canyons.

The Young Entrepreneur Program (YEP) is a free, four-week-long course designed for young people from age 14 to 27.

“There are many young people in our community with dreams of pursuing their passions through business endeavors,” said Paul De La Cerda, Director of the COC Small Business Development Center. “But all too often these budding entrepreneurs have no guidance or knowledge about how to get started. So we launched a special program specifically for them.”

Through a variety of creative partnerships with local business owners the YEP will offer students free business counseling, while implementing business training programs in the areas of management, finance, marketing, sales and eCommerce by using a variety of outreach and delivery methods — including websites, blogs, social networking sites, virtual reality games, youth-oriented trainers and business simulation products.

In addition YEP participants will be partnered with a local business to brainstorm and create a new commercial product and accompanying business model — which will then be entered into a region wide business plan competition.

“This new program will aid participants in the development and operation of part time businesses – which could eventually lead to full time operational status – all while they complete their junior high, high school or college education,” said Bruce Getzan, COC Dean of Economic Development.

Source: KHTS Radio News

Middle school and high school students will create their own businesses – working alongside successful New Jersey business owners — at the Young Entrepreneur’s Academy, an eight-week, Summer Saturday series, July 11-August 23 at the Academic Resource Center, which serves middle and high school students in Essex and Union Counties.

Open to boys and girls ages 11-17, YEA! uses the fundamentals of entrepreneurship to promote creativity, basic understanding and skills in money management, business concepts and financial literacy. It encourages students to frame their dreams, and current interests into future money making and career satisfying professional options. Using tactical problem-solving approaches, the program enhances confidence, creativity, self esteem and self reliance.

It’s so great to see these small programs popping up – of course, you can’t hope to get all the concepts across in just a handful of Saturdays, but exposure to the concepts is a great first step, and the kids will retain some of the material, each in their own way.

At least there are summer activity options beyond making candles and going to camp these days!

Image: riot jane

Stay tuned for news of when Rachael’s interview will appear on Amanda’s blog. In the meanwhile, enjoy Amanda’s great motivational tips for kids and adults alike.

Hello Fellow Parents of Kid Entrepreneurs,

I was honoured to be asked to write a post for Jenny.

I really like what she teaches. And her kids are amazing!

A little about me: who is Amanda van der Gulik?

I am a homeschooling mompreneur who is dedicated to helping parents raise their kids financial IQ’s.

Jenny and I seem to have a lot in common and plan to work together to help give our kids the best start to their financial lives that we can.

Did you know that the main reason young couples today divorce is because of financial stress?

Did you also know that the majority of bankruptcies today is with young adults under the age of 30!

We can give our kids a better chance in life with both their finances as well as their relationships with their future spouses by simply giving them a good financial foundation to grow from.

I will be writing a series of posts for Jenny and she will be doing the same for me on my own blog. Today I will begin by talking to you about the Law of Attraction. We achieve what we conceive and believe.

In other words you first need to dream, then you need to believe that you will achieve your dream from the depths of your soul and then you will achieve your dreams.

I highly recommend you get your child started on creating their own ‘vision board’. This is a board that they can hang on their wall in their bedroom somewhere where they will see it on a regular basis.

I suggest hanging it in front of their desk or even attach it to their ceiling above their beds. If they have their own bathrooms then I suggest hanging their vision board opposite their toilet so that while they visit this important room on a continuous basis they can digest their vision.

So what is a ‘vision board’?

Okay, a vision board is a board that you create a collage on with picutres drawings of the different goals that your child would like to achieve or have.

Here are some steps on how to help your child create his or her own vision board:

1. Plan a special time to sit down as a family.

2. Have each family member make a list of all the goals they would like to achieve or have or be. Here are some questions that may help your child to come up with some of his or her visions:

• What kind of house would you like to live in?
• What kind of car would you like to drive?
• What kind of clothes would you like to wear?
• What places would you like to visit?
• Would you like to have a private jet or space ship?
• What kind of boat would you like to have?
• Who would you like to meet?
• Who are the people you would like to hang out with?
• What about your body, how healthy would you like to be?
• Are there any sports you would like to be good at?
• Are you interested in the arts, is there anything that you
  would like to achieve there?
• What kind of person would you like to be? Would you like to
  be more confident?
• Would you like to be more kind?
• How much money would you like to be earning every month,
  automatically?
• Which charities would you like to make a huge impact on?
• How many children would you like to have?
• How many and what kind of pets would you like to own?
• What does your future spouse look like and what kind of
  character is he/she?

3. Now get some old magazines or look online for photos (just make sure to set the search engine to ‘safe search’ mode first before asking for any photos or else you may have your child seeing photos that you would otherwise not like them to see.) I recommend using www.Google.com photo search or www.flickr.com.

4. Let your child have some fun being creative and encourage them to dream BIG!

5. Now choose a spot to hang the board where your child is most likely to see it many, many times a day.

6. Every morning have a look at your child’s vision board and go over their goals by having them say out loud,

“I am so happy and grateful now that I have ….built my dream house….. and/or…..filled my
closet with the most beautiful clothes…..and/or…… I am the best player on
my school’s baseball team….helped 50 people on my favourite charity by giving them the opportunity to eat healthy food….etc.”

The key is to have them say it as if they have already accomplished their goals and dreams.

They need to make their subconscious minds believe that their goals have already been achieved to make it become a reality. No one is ever successful until they absolutely believe from the depths of their souls that they are a success already!

It’s amazing how this simple vision board can make your child’s dreams a reality.

It serves as a constant reminder of why they are doing what they are doing to achieve their dreams. It will help them keep their focus when the rough days approach.

I highly recommend that you also create your own vision board.

Being a role model really makes a huge impact on your child. They will take their vision boards much more seriously if you also have one. And it’s fun to see your dreams as if they have already happened!

I recently found a website www.ActLikeARichKid.com that havecreated a system for you to make your
vision boards turn into a movie that really makes your dreams come to life! I have used them to create my own mind movie which I watch every morning when I wake up and every evening before I go to bed. The movies use moving photos and emotional music that really bring your dreams to your heart centre.

Here, watch mine to get an idea:

As you can see in my mind movie above, I created that one for my whole family, my kids love seeing their new bedrooms and are constantly asking me to watch our mind movie. My 6 year old daughter has even come up with a business plan because she wants to have a water bed, so she’s decided to start up her own face painting business to pay for it!

The power of the law of attraction and the usage of vision boards and mind movies is absolutely incredible.

Have fun, and let Jenny and I know how successful your own vision board and mind movie become!

Cheers…..Amanda van der Gulik….Excited Life Enthusiast!

====================================================

FREE E-BOOK: “50 Easy Ways for Kids to Make Money”

To claim your free copy, visit: www.TeachingChildrenAboutMoney.com

====================================================

Molin Upper Elementary School Principal Dave Archambault asked faculty and the business community a simple question: “What happens when you inspire more than 75 fifth-grade students to create an invention or new business idea?”

On Friday, Archambault was pleased with the answer.

“This is great — we have a lot of great ideas,” Archambault said.

From eyeglasses fitted with windshield wipers to clear one’s view in a rainstorm to a “sweet flavored gum” that was claimed to have the ability to bring about world peace, the second annual Young Entrepreneurs Contest showcased students’ creativity.

The contest, sponsored by the Newburyport Education and Business Coalition as well as teachers Ellie Bailey, Mary Ann Daley and Carol Snow, included special exercises for students to go along with teaching students about business and sociology.

David Strand, president and owner of Strand Marketing, was brought into the Molin School to assist in creating and presenting the ideas that inspired entrepreneurship and encourage fifth-graders to come up with their own ideas about business.

Read the rest of the story in The Newburyport News.

I love hearing about initiatives such as these.

Gradually, ever so gradually, the traditional education system is being infiltrated by little bursts of entrepreneurial spirit.

These kids participated in simulations, where some of them played the role of bankers, some the rols of suppliers, and others represented retailers. Once a supplier had “won” the business of a retailer, the young retail entrepreneurs then had to persuade the bankers to finance their purchase of the stock.

These simulations are a fantastic way to provide kids with a solid learning experience when it comes to business concepts. We encourage the families in our Cash-Smart Kids program to engage their kids with “mini” business situations and simulations whenever possible.

Kids are remarkably creative – I loved the description of one young inventor’s product, the “my-Cod”. This fish-shaped contraption would allow swimmers to listen to their iPods through a swimming “fish” broadcasting when placed in a swimming pool.

I really think that one would be a goer!

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?

“A child of five would understand this. Send someone to fetch a child of five.”Groucho Marx was right on the money – it’s amazing what a child of five can understand. The importance of the early years in terms of learning and development is widely recognised through a number of studies. Also well recognised is children’s propensity to adopt that sincerest form of flattery: imitation.

As parents, we recognise the importance of setting a good example for our kids (even if we do let the occasional swear word slip out in the midst of the peak-hour traffic). One area of influence, though, that is easy to overlook in the hectic bustle of day-to-day life, is financial management. Yet children overwhelmingly refer to their parents to learn about finance. A report recently released by the Australian Government’s Financial Literacy Foundation highlighted this, indicating that a large proportion of young people nominate their family as their major source of financial information and advice.

Read the rest of Justine Davies’ article in Melbourne’s Child Magazine.

While the family remains the single most important point of reference for kids to learn about managing money, how many families are actually taking that responsibility seriously enough to devote even 15 minutes per week to the subject?

It doesn’t take a lot of time to teach your kids the basics – but you do have to know what the basics are, and how to explain them. And that’s what makes it all so hard for a large proportion of parents.

I know what it’s like – in the past 12 months we have had three major illnesses in the extended family, and two of our kids have had life-threatening conditions which have had them in and out of hospital for extended periods of time.

Life can get pretty demanding sometimes.

But you keep giving them food, and hugs, and getting them off to school, and reminding them to do their chores, music practice, or whatever else they are required to do. You keep the wheels turning on the essential activities.

So I’ll ask you to consider this.

Is learning how to manage money an essential activity?

It can be daunting, trying to break down complicated business ideas into terms kids can understand. Especially if you have learned business through years of experience, or at university-level academic institutions, or both. The gap between your understanding and the world of a child seems almost infinite.

The truth of the matter is that it can be done. Parents are doing it every week, using the Cash-Smart Kids program.

I left a comment on Rich’s blog post, letting him know about the program – I wonder if he will come and check it out?

At his blog post, “Shaking In My Boots” you can download the gorgeous ads he had these 5-year-olds make to convince their parents to buy them things. Imagine how much more powerful it would be if they also included a business plan as to how they would earn the money to pay their parents back for the purchase?

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 …

We were just at the World Internet Summit in Sydney – and I tell you, the quality of the content from stage was even better than I expected. Most speakers gave good, useful, NEW information, and the focus on mindset and having the right attitude (from all the speakers, not just one or two) was fantastic to see.

But that’s an aside – I may say more about that later.

While we were there, I was talking to last week’s guest blogger, Michelle Peterson Clark, who was there with her family. She was really excited – check this out:

Video footage of Michelle Peterson Clark and Cash-Smart Kid, Taylor Bamford Clark, at World Internet Summit, Sydney, 2008.

Taylor has since started his own blog – www.carskidslove.blogspot.com – and plans to produce an information product soon.

My daughter Rachael also talked to some of the speakers over the weekend, and I caught some of that on video, too – more in later posts.

But my point is that these days it is not unusual to have kids as young as ten sitting in the audience in these seminars with the adults, taking notes, asking questions – even ANSWERING questions that the adults there were getting wrong!

Right now, it is still enough to get the attention of a speaker when someone is obviously quite young, yet understands enough about business to follow the presentation.

But not for long.

Two or three years from now, there will be dozens of kids at these events. Several people told me at this event that after watching the Cash-Smart Kids participants in action, they were going to bring their own kids next time.

Two points to note:

First – get your kids to these seminars!

Second – before long, it won’t be enough to just show up. To get the attention of a speaker they will need to have started an internet business.

Grab yourself a copy of “Finding The Right Niche For Your Cash-Smart Kid” and get it happening with your kids THIS YEAR, or they will be lost in the crowd in years to come.

I am thinking of creating “The Parent’s Guide To Taking Kids To Internet Marketing Seminars”. Who would find that useful?

As the mother of two gifted boys and a business woman (www.RaisingGiftedKids.com )I was interested in finding out what I could about teaching kids to run their own businesses and to grow up being entrepreneurs.

There is no doubt that most gifted kids need extra activities to keep them stimulated. Much has been written about what makes them “tick” and how mainstream schooling often doesn’t do enough for them.

So are they any different to the average child when it comes to the ability to set up and run a business? My research took me to the website www.cash-smart-kids.com and my husband and I began to think of ways in which we can help and encourage our gifted boys to start their own business and to begin to understand the role money plays in our society at a young age.

After following the first few lessons from cash-smart-kids, we realized we were trying to “manufacture” the outcome of what we were trying to teach them. When it comes to getting things done quicker we are no different than the parents of the average kid. The tendency to “help” is overwhelming, but we have to stop ourselves from doing that.

One of the good things we do for our boys is play cash flow kids by Robert Kiosaki. The author of the “Rich Dad- Poor Dad” fame has a special kid’s version of the adult “Cashflow 101″ game.

It took about 2 months of playing the kids version of the game before our boys wanted to play the adult version. It took them another 5-6 games before they “got it” and really started playing the games with a serious determination to beat the adults at making money.

There is a lot of research that shows that the parents of gifted children tend to have higher representation at higher education and business levels. They are more likely to own their own business, or hold high managerial positions in large companies. In my role as

The research also shows that this does rub off on the children. We are in the process of working through options with our boys on what they might like to do for their first business venture.

Our youngest got a milk shake maker for Christmas. His original idea was to start charging us all to make milk shakes because he was making 3 or 4 of them a night for free…taking up all of his free time for no financial reward hhmmm sounds like being a parent!!! Lol What we had to talk to him about was the fact that he would have to pay for the ingredients and deducted that from the price he charged to work out how much he could sell them for and there for make as a profit.

We offered to be his joint venture “JV” partner, where we would supply the ingredients for 50% of the revenue he collected.

Our eldest thought this was a “rip off”..he offered to finance his brothers milk, syrup and ice cream purchases for les than half the talkings!!. The last we spoke about it Daniel was still trying to work out if our family members would be prepared to pay $2 or $2.50 a night for a home made milk shake J

But what options are there for them to start a small business besides a milk shake business?

Here are a few we are considering that you might like to think about

Ebay selling: – they may have lots of stuff around the house (old toys and books) that they might want to sell to get some money for. Plenty of children move on from that to setting up actual EBay stores to sell products that they buy to fill orders.

They could do what Jenny Ford’s girls did and set up a business breeding rats for pet shops.

If you run your own business, there is no reason why they shouldn’t be able to help you do some aspect in that business, even if its filing papers or sending faxes or packages.

Filling orders for my paper business (www.notjustpapers.com) is an easy simply task the boys are able to do. So is counting stock when we do our stocktake.

As a result of what we are learning at www.cash-smart-kids.com , we have talked to our children about the importance of saving (and not just for the latest Playstation game) but for their longer term future. We have instituted at 25% savings plan on ALL money they receive, even for birthdays and Christmas, and making them bank the money themselves. From as soon as they could write properly, we have made them fill in their own deposit slips and stand in the line at the bank and pass their book over to the teller. The older ladies in the line at the bank love seeing 5 and 6 year olds standing there with their bank books and money saving their money.

There is no doubt that as we progress with our program at www.RaisingGiftedKids.com, we will be able to help our members more, from the knowledge we have learnt at www.cash-smart-kids.com but more importantly for us, we are gaining important personal knowledge that will help our boys grow with a better understanding of money and the role it plays in our society. If that leads to them being entrepreneurs or not remains to be seen, but they will certainly have a head start.

Michelle Peterson Clark

Director, mother of 2 gifted boys

www.RaisingGiftedKids.com

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Compound interest means that you get some interest, and then next time you get interest on your interest.

Over the long term, compound interest really adds up. Albert Einstein described compound interest as “the most powerful force in the Universe” – and he knew a thing or two about forces!

To do this demonstration for kids, we need to shorten the time span, so they can see the effect happening. Instead of years, we will use days, and instead of the interest rates the banks pay on deposits, we will use 50%, so it’s easy to calculate (50% is half).

Stop for a second!

Take a quick guess as to how much interest you will have to pay your child on one dollar, if you pay them 50% interest, compounded, each day for a week.

Have you guessed?

Read on …

Day 1: Take one dollar your child has saved, and put it in a big glass jar, somewhere prominent in the house.

Day 2: The next day, at the same time of day, have “interest time” – add 50c to the jar.

Day 3: The next day, at the same time if day, have “interest time” again – and this time, the interest will be 75c (50c interest on the dollar, and 25c interest on yesterday’s 50c). Make your kids work this out if they are school age!

Day 4: The next day, when you have $2.25 in the jar at “interest time”, you will be adding $1.13 in interest (halves round up).

Day 5: Now you have $3.38 in the jar, so the next day’s interest will be $1.69.

Day 6: Our total is $5.07, which means the interest will be $2.54 (halves go up).

Day 7: Your little tycoon is the proud owner of $7.61 – plus today’s interest of $3.81 – a grand total of $11.42.

Did you think you would be paying out that much?

Of course, in real life, it takes longer for compounding to really have a visible impact.

The purpose of this demonstration is just to give your kids a feel for WHY you keep going on at them to save their money.

If you want to give them a sense of urgency, ask them how much they would have made if they had waited a day or two before investing the money. You don’t lose the first day or two’s payouts – you lose the last day or two.

A hundred dollars put away before your child turns 10, even at a reasonably low rate of return, will turn into thousands by the time your child is 65.

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Gail talks about the generally poor level of financial education in schools (well, we’re all worried about that), but she gives some really great examples of individual class teachers who are doing some good work in teaching kids about money.

Maybe if we explained the reality of money to kids early enough, we’d have fewer kids dropping out of school. I mean, if you knew that if you settled for making $10 a hour you would have to work 70, 80 or 90 hours a week just to keep a roof over your family’s head and food on the table, maybe then you’d be less willing to blow school off.

My son’s Grade 6 class is learning about money. Ms. Moran has set up a town, Fletchville, in which the kids in her class live. They drew jobs from a jar and have to figure out how to live on their assigned incomes. They started by finding a place to live for the amount they could afford. Malcolm and his friends, Logan and Liam, combed through local papers and the internet to find a place within the geographical parameters set. I heard lots of talk of making sure the rent included utilities because “they can cost a lot of money.”

The project then turned to figuring out a meal plan – based on the food guide – and creating a priced-out shopping list so they would know what their food budget was. Wow! How many of you have done that?

And last week, they had to buy themselves cars. So they had to figure out what they could afford and go shopping for a car that fit their budget.

Doesn’t that sound like a fantastic exercise for 11 and 12 year olds?

Don’t wait for the lottery win that will put your child in a classroom with a teacher like this one – start now, running exercises like this with your own kids. If they have a blog, they can blog their research and results.

I find my kids work better on these things if outside kids are involved – fortunately,my girls have a cousin of a similar age, and her parents are THRILLED that she finds mathematical exercises so entertaining over at our place!

I know you’re busy, I know it’s hard to overcome the moaning and whining when they would rather be on the computer or the phone, I know sometimes it’s easier to put these things off, but hey, we all know it’s important, right? Just make it happen – you’ll be glad you did.

I highly recommend checking out the rest of Gail’s blog, too, because she tells it like it is!

How can parents explain these ideas to their kids if nobody has ever explained them to the parents in the first place?

This post is the first in a series providing definitions of key money concepts, and suggestions for simply ways to explain the concepts to your kids.

We distinguish two types of income – active income, and passive income. The Australian Taxation Office refers to them as “personal exertion income” and “unearned income”, which I think is a bit rough. Most people I know who have passive income worked very hard to build it up, thank you very much! They have certainly “earned” it.

The difference is that with active income, you are trading your time for money, while passive income will keep coming, whether you get out of bed in the morning or not.

The most obvious form of active income is having a job. You put in a certain number of hours, and you get a certain amount of dollars in exchange.

There are other forms of active income – if you make things and sell them, that is still active income, because you have to put time into the making and the selling.

If you organise other people to do the making and the selling, and you get a percentage of the profits because the people are using your design, then you don’t have to put time into it any more. It has become passive income.

This is a form of passive income called royalty income, or licensing income.

Other forms of passive income are interest, rent, and dividends. These forms of income require you to have an asset (cash generates interest, real estate generates rent, and shares generate dividends).

Your kids can grasp this concept fairly readily. We played Robert Kiyosaki’s Cashflow 101 with our kids – it is a game specifically designed to get the idea of passive income across to the players. By the time they were ten, they all understood it.

You can give your kids a powerful visual demonstration of the power of compound interest by playing a game with them. Ask them to save their allowance money, and not spend it. Each day, check their balance, and give them a payment of interest. Each day, the payment will be higher (in the best of all possible worlds, one of your kids will break ranks and spend some of their allowance, while the others hold firm, to give a direct contrast). Make the interest payment big, 50%, or even doubling their money, so they can see the power of compounding in just a few days.

After a week, show them that they can spend the interest each day, and leave the original investment in place to earn them more interest the next day.

Most kids grasp it pretty well – just be prepared for the inevitable question, if you are still heading off to a job every day.

“Why don’t you do that, then, Mummy? Then you could stay home all day and play with us!”

I have recently started writing articles on HubPages (just go to www.HubPages.com and search “kids money” and you’ll find them), and I had some interesting feedback on one of the pages this week.

Lissie wrote on my Hub titled “How Much Should Kids Know About The Family Finances?” that she was amazed we even asked the question.

Wow I had no idea parents hide finances from their kids how silly is that.  I grew up in a single parent family and my mother worked under the table, paid in cash, to make ends meet.  The cash was kept in an old honey pot at the back of the fridge – I distinctly remember at about 12 or so knowing to check the amount of money in the stash before I asked for something – mum never said we were poor  and we never went hungry or without essential clothes and shoes.  We just knew instinctively that we couldn’t afford to go on expensive school outings or get expensive clothes etc!  Neither of us kids ever stole anything from the stash either – we knew that she worked hard for it.  I think it was great, but unintentional, lesson of the value of money and work!

I think Lissie says it all, really – kids know, even if you don’t explicitly tell them. How much more understanding could they have if you involved them in your thinking about the issues, and in developing solutions?

Thanks for the feedback, Lissie, and congratulations to your mother for making it through some very tough years!

The issue is that old chestnut that it’s five times easier (and cheaper) to sell something to someone who has already bought from you than to find a new customer from scratch.

In a retail store, that means coming up with creative ways to collect contact information from your customers, and then posting them physical letters (although these days more and more traditional retailers are collecting email addresses).

Internet marketers have so many advantages over traditional business when it comes to creating their customer database. They usually collect an email address when they make a sale, and, what’s more, people expect to be asked for their email address when they shop online. They don’t resist it in the way that they do when their local pizza delivery guys asks for contact information.

And yet, I know that many people online are only selling a single product. How can you follow up and make the five-times-easier second sale if you don’t have anything else to sell?

I was trying to think of a way to make this idea concrete, for younger kids especially, who struggle to visualise what we mean when we say “customer database”.

And it came to me.

Did you ever see that game Trac Ball, with a ball and two scoop-shaped racquets? Like plastic tennis racquets which have had the edges curled forward, so no matter where the ball hits, it is directed to the bottom centre, near the handle, into a pocket. When you make a throwing motion, the centrifugal force lifts the ball up out of the pocket, and the curve of the racquet sends it curving beautifully through the air to your partner, who just has to get theirs into the ball’s general vicinity and the shape of the racquet does the rest.

By comparison, a standard tennis racquet is really good ball-repellent. I mean, those balls just BOUNCE off that racquet, so hard that if you’re not really careful with the angle of the head the ball shoots out of the park, and you spend the rest of the afternoon hunting in the woods for it.

These two types of racquets are a great analogy for the two styles of doing business.

In the sub-optimal business, customers come along, interact once, buy or don’t buy in that instant, and then “bounce off”, never to be seen again. You can get crazy busy hitting ball after ball, but you can’t stop because when you stop there are no balls around at all – no sales in your business.

What you really want to build is a Trac-Ball business – a business which “scoops” up prospects from the general vicinity and channels them to where you want them. You can hold them as long as you like, and send them “over the net” to your product offers when you are good and ready.

Your opt-in list is the key to your Trac Ball business.

If you don’t want to give them yet another time-wasting computer or Play Station game, here’s an assortment of business-related gifts that I’ve come across in the past couple of weeks.

Teach them how to manage all that money they are earning with a four-compartment money box. One compartment for spending, one for saving, one for investing, and one for giving.

Upgrade them to a full version of a piece of software they have been using, like Dreamweaver, Wordtracker, or NicheBot.

Get them their very own web site, all set up and ready to go – SiteBuildIt! is having a 2-for1 Christmas sale.

Subscribe them to a Private Label Rights website to help them build content faster – some of these subscriptions are even free! Have a look at all the giveaways at Resell Rights For Newbies, for example.

Purchase them tickets to a seminar about their chosen business.

Buy a DVD set about their chosen business (one of my 11-year-olds has an eBay store, and she will actually watch a talking head for 25 minutes at a stretch, but only if it’s talking about eBay! Her favorite is Derek Gehl’s “Insider Secrets to Selling on eBay”.)

The most important gift you can give as a parent, though, is the gift of your time and attention.

Give a gift voucher for a weekly one-on-one get together, or a fortnightly one, good for the whole of 2008. Spend that time learning more about what makes your young entrepreneur tick. What are their likes and dislikes, their ambitions and their fears? Where do they need help dealing with the challenges of growing up?

In years to come, whether they are hugely financially successful or simply muddling through, those times will be the times they remember.

In our busy, ever-changing, competitive, interrupt-driven, attention-starved culture, the act of carving out time specifically to spend with one other person is the single greatest demonstration of love one can make.

And at the end of the day, that’s what your young entrepreneurs need most from you – to know that you love them enough to make them a priority in your life.

The backstory to this one is this. A couple of years ago, my daughters started a business breeding pet rats. They borrowed the start-up capital from us, and paid interest out of their pocket money. After a while, two of them wanted to pay down the principal out of their pocket money, too, to get rid of the debt earlier. (We decided not to intervene with a good-debt-bad-debt conversation at that point!)

One of the twins didn’t want to pay extra, and there were words exchanged.

In the end, we reached a compromise – the one who didn’t want to pay extra would become an employee. She would be paid each time she helped with the cage-cleaning, but she would not be entitled to a share of any profits which came down the track.

This smoothed things over, and some time later the debt was all paid and the profits were being distributed between the other two. We discussed the difference between being paid for what you do at the time you do it, vs taking a risk and possibly getting a bigger payday later.

They wound the rat business up after a couple of years, and a couple of months later, the oldest was finally old enough to apply for a job a McDonalds. The younger two, about the same time, started internet businesses. I talked to the oldest about having an internet business, too, but she was so dazzled by the enormous size of her first fortnight’s pay from McDonalds that she wasn’t interested.

She said she wanted to repeat the employee-vs-business experiment they had done with the rat business, with her as the employee this time. She was very confident that she could make more as an employee than the others would online.

Over the past few months, she has started to notice the problems with being an employee. She was sick, and had to reduce her hours. She was rostered to work while her friends were out at parties. She learned how everything worked within a few weeks, and boredom set in.

The final clincher was when she started rethinking her career choices. The years of study to become an anaesthetist started to look like a bit of a drag.

“But,” she said, “if I’m not going to be an anaesthetist, what will I be?”

I pointed out that there’s not a huge hurry to decide (she’s only fourteen after all), and then I dropped in a mention that if she had a bit of money coming in from an internet business, she wouldn’t have to make a final decision about her career for quite a few more years.

She thought about it. Then she said “If I was making enough money from the internet business, I wouldn’t ever need a job, would I?”

“Not unless you wanted to do something that you have to do as an employee,” I said, “like being an astronaut.”

Wheels turned almost audibly.

“I want a website,” she said.

And so endeth the experiment!

Don’t get me wrong – I’m not opposed to people having jobs. There have been times in my career that I have been, at least on paper, on someone’s payroll.

But I am opposed to people being raised with an employee mindset. I am proud of my McDonalds employee daughter, not just for having the gumption to apply the very first day their website would let her in to do so, but also for going out and getting a trade certificate as a barista before she applied, to make herself more appealing as an applicant, and for almost immediately becoming one of their fastest front-counter operators.

The way she explains it, she sets herself challenges to see how fast she can get the orders together, because it makes the work more interesting and rewarding. She never just shows up in “time serving mode” with the sole aim of surviving her hours and collecting her pay. Even at a job as apparently menial as working at Maccas, she is thinking all the time about how to add value, for herself and for her employer.

If everybody approached their work with that kind of attitude, what a wonderful world it would be!

So, she and I headed off to visit the writer with a nifty new Ipod microphone to do some interviewing to help get the project moving again.

On the way up there, she was telling me about the Zone athletics meet, where she represented her school at shot put.

“I sucked,” she said. “I only got to go to Zone because the best two in each sport went to Zone, and there were only two of us who put our names down for shot put, so we both got to go.”

“Well,” I said, “It’s easy to come first when not many people are competing with you.”

“Hey!” she said. “That would be a great example for the internet business!”

And so it would.

What we are doing, with all the researching we teach our members to do, is looking for the niches like shot put in athletics – the places where not many people think of competing. The places that aren’t sexy and flashy and celebrity-generating.

And the beauty of an internet business of course, unlike sports, is that they don’t gather people together from further and further apart until you meet some real competition. The internet is a global market, but it’s composed of millions of little pockets, and you only need to come first in your own little pocket to make a decent income.

All we are doing when we look for a profitable niche is finding our own little pocket where we can come first.

Just like my 11-year-old shot put “star”!

Now, I can see an argument in favour of waiting until kids reach a certain age to teach them some topics. Sex education springs to mind immediately. Obviously, you don’t want to try to teach kids about sex and romance at too young an age – not only would it be potentially disturbing to the kids, but they actually can’t grasp the idea at all until they reach a certain level of maturity.

You could express it as a bit of a rule of thumb – the time to teach kids all about something is immediately before the first time they are likely to think of using it.

Now, the topic of money is just as charged and difficult in some families as the topic of sex. Parents don’t know how to discuss it between themselves, let alone in age-appropriate language with their kids.

Problem is, unlike sexual transactions, which under normal circumstances don’t start for kids at least until puberty, financial transactions are part and parcel of life from the time they are tall enough to wave their coins over the edge of the supermarket checkout and buy their first candy.

When is the right time to start formal discussions about earning and managing money?

At the moment, we regularly hear of grown women in their 40s and 50s, on becoming widowed or divorced, confronting a complete knowledge void when it comes to managing money.

I don’t advocate teaching 12-year olds how to do mortgage wraps and no-money-down property deals, but there is definitely a middle ground in there somewhere – a middle ground that not enough parents can find.

Regardless of the age or gender of your children, your goal is to prepare them for life – prepare them in such a way that they can take care of themselves even if you aren’t around, and even if they don’t have a romantic partner.

Make a list of the financial topics you deal with each month or each year – earning money, budgeting, saving, investing, giving to charity, insurance, consumer credit, and so on. It gets quite large!

But if you gradually work your way through discussing the items on the list as the issues arise in daily life, you’ll probably find you can cover all the topics without undue strain.

Certain speakers were real favourites of ours – mostly the ones that were funny, because the content followed a predictable pattern. Speakers would either give us aspirational stories about the huge new house with all new furniture, sheets and towels, where “the cleaner comes three times a week so it always looks like a hotel”, or how-to advice on techniques for building the business. A bit of humor made it more fun to listen.

We did our Kiyosaki-prescribed “five or more years”, and I thoroughly endorse his recommendation. Network marketing is a brilliant way to get your millionaire mindset without outlaying a fortune on hyped-up speakers with $3000 “sure fire” packs containing seventeen home-made DVDs and a manual full of spelling mistakes (valued at $12,345!).

But it must have been eight years or so since we were playing those tapes in the car, and I’d just finished a sabbatical year (that’s a year when you don’t do any work at all – I highly recommend that practice, as well!). Although, to be entirely accurate, I did do some work because we said goodbye to the live-in nanny at the beginning of that year, and I got reacquainted with cooking every night and cleaning every week (well, every week or two …)

Anyway, I had just got excited about a new business idea, and decided to put some serious time into it, so I thought this would be a good moment to point out to my girls that they were all just as capable as me, and perhaps the housework load should be shared more evenly in future.

Of course, they thought it would be better just to get a cleaner in. I want them to learn how to be domestically responsible, so I do want them to do it for a while, but I agreed that at some point we would have a cleaner coming in.

“Can they come three times a week?” asked the oldest, “So it always looks like a hotel?”

“Maybe later,” I said, “but in the beginning it will probably be once a week.”

It was quite some time later that I realised why that set of words had sounded to eerily familiar. One of our favourite tapes from our network marketing days, something she had moaned and complained about and wanted us to switch off when she was three and four years old, had sunk in there into her subconscious programming.

I’ll have to make sure we do get the cleaner three times a week some time in the next three or four years, because fulfilling those small aspirations is an incredibly powerful way of programming her to believe that anything is possible. I’ll just have to figure out a goal to set with her, and get the cleaner three times a week once she achieves it. That way, she knows she is getting what she wants directly due to her own efforts.

I was out with one of my girls, aged 11 at the time, waiting for our pizza to cook in a small, family-owned pizza store by the beach.

She looked around, thought for a bit, and then asked “Does a shop like this lose money, or make lots of money, or just sort of balance out?”

“Well,” I said “They have to spend a certain amount of money on things like rent and wages, whether they sell anything or not. And they have to buy the ingredients, and if they don’t sell enough pizzas, they have to throw ingredients out.”

“Because they go mouldy?”

“They got too old to use, one way or another” (Discussion of Health Department requirements can be saved for another day!)

“But if they have too many customers they run out of ingredients.”

“Yes, they need to balance the ingredients so they don’t run out and they don’t have to throw too much away.”

“And if they sell lots they make lots of money?”

“That’s right.”

“So they have to get lots of people to come in and buy things?”

“Yes.”

“But we’ve been here for ages and only two other people have come in.”

“That’s true. But it’s still early – I’m sure lots of people will come in later tonight because it’s Saturday.”

“Still,” she said thoughtfully, “it’s hard. You can’t go out and get people to come in.”

“I’m sure they advertise, and put coupons in the newspaper,” I said.

She frowned.

“I think I’d rather stick with having an internet business,” she said. “It doesn’t cost rent to have a website.”

She finds that thought process just as interesting as the other thing she learned that same day, which was that the beach we were on was part of a sand spit joining an island to the coast. At one point you can stand on one beach, facing inland, and look down the street to see the other beach at the other end. She was fascinated.

All I did was to answer her questions (about both topics) in words that she could understand.

She still doesn’t have the vocabulary of an accountant – she couldn’t tell you the definition of fixed and variable costs, ROI, or expected return – or isthmus (the sand spit), or bombo (the island).

But she has the concepts, based on her own experience. Business concepts are so simple that a child can understand them, as readily as they understand islands and sand spits.

Now, it doesn’t happen by accident. Our mainstream culture doesn’t explain business ideas to kids in the normal course of events. However, once children have grasped the basic idea of how business works, learning more advanced business concepts is fun and interesting for them, so it’s worth getting the conversations going early in their lives.