I heard a prominent motivational speaker once say that he never once got an allowance. He was expected to take out the trash, clean his room, and do other chores as a part of his family duty. He said that he was never “paid” to simply “be a part of the family and its responsibilities.” His money would have to be earned through other work and investment. My father incorporated a similar philosophy with us as kids. We were never paid for things that didn’t deserve pay. Mom didn’t get paid for doing the dishes. We didn’t either.
As soon as I could handle the pressure and learn from the experience, Dad began to help me dream about starting my own business. From the start he made it clear through our discussions that this wasn’t about making money, although that would be a great benefit; it was about learning responsibility when it came to money. With my parent’s speaking schedule, my proximity and connection to other speakers in town, and the large church we attended, I decided (with great encouragement from Dad) to start a tape duplication business at just 13 years of age.
I borrowed the money from my parents to buy the first duplication machine, which was over $1,000. The first month I started the payment plan to pay them back and well within the year I was on my own. I would duplicate large sets of speaking tapes with a 40-50% markup and once I owned a few duplicating machines outright, and had a large stock of tapes, I started to turn a nifty yearly profit, socking much of it away in the bank. By the time I was 16 I retired from my “Dave’s Cassettes” business (a pretty campy name I’ll now admit) and invested the money in a small rental house. The money from that income helped me pay my percentage of college costs, of which I was expected to pay an increasing, pre-planned amount each consecutive year I went.
Teaching Our Kids to Fish
What a gift it was to learn so many financial principles from those years in a miniature business that rose and fell on my own money and hard work! The parable is true, and my father proved it by “teaching me to fish” rather than just giving me a weekly allowance “fish” as the old parable teaches us. And when you add up several years of potential allowance it likely would offset the money it took my Dad to get me started. With this small measure of financial independence I wasn’t able to “bum” off of my parents when I needed money. I learned early that spending money to make money is the best way to save. I also learned that money doesn’t make itself, and that I needed to be responsible with the small measure of money I did have. During these growth years my father made it a priority to make a man out of me when it came to money. When I look at the financial shape my friends are often in I don’t think as much about the financial decisions I make now, I more often than not think about the principles I learned when I was thirteen. We must understand that being Dad on purpose means teaching our kids to be responsible with money.
Tips on Teaching Financial Principles to Our Kids:
- Principles Over Profit
It is more important for our kids to figure out the principles involved when dealing with money than to actually make any of it. In fact, not making a boatload of money may teach them the stark reality that money does not come easily—or learning to regroup and invest their money in something more wise the next time. (Of course, in this situation we fathers may have to pony up a second “start-up” fund.)
- Monetary Investment Over Manual labor
Lots of kids have to “go get a job.” The difference comes when a kid has to use his or her creativity, contacts, opportunities and resources to make more money than just hard work will get them. If you want your kids to work in a fast food check-out career forever, then an entry level “McJob” is the way to go. If not, help them see the value of investing for future reward over just working for temporary funds.
- Personal Independence Over Paycheck Dependence
My father once wrote a chapter in a book called “How to Get Rich Slow.” In this wry title you can see a bit of his financial philosophy. He always told me that the key to financial independence was not in how much you can make, but in how little you can spend. My Dutch wife from Holland, Michigan was overjoyed to discover that such doctrines had been ingrained into me. It is no surprise that families are sending into the world paycheck-to-paycheck credit card slaves today. We teach these habits to our kids early and they simply act like 12 year-olds making a 35 year-old paycheck, and spending it likewise. When a kid “borrows” five bucks from next month’s allowance in order to buy candy is it any different than a 40 year old using a credit card to buy a motorcycle when he doesn’t have the money for it yet? It is essential that we teach our kids to be independent with their money and responsible for how they spend it.
- Efficient Work Over Easy Work
Many younger people today likely remember the cartoon character Scrooge McDuck’s favorite motto, said in his hokey Scottish accent: “Work smarter, not harder.” This was also the theme of my father’s constant financial advice. Every word of wisdom spoke to doing things with more efficiency rather than simply doing things the easy but mindless way. My brother’s entry into the same early teen business start-up world is an example of this. Instead of simply watering every tree in his large tree-farm, they put together a system of irrigation with automated controls. This way he only needed to flip a switch and everything would get watered. After adding several timed computers to the system he could practically forget the whole business for several weeks at a time. When he sold the business in his later teens (with all the trees still in the ground) he made a $10,000 profit! We need to teach our kids not just to “work hard for their money,” as the song goes, but to work smart for it as well. I’d call a 17 year-old with a cool 10 grand pretty smart, wouldn’t you? I might even call him up to ask for some money myself.
Questions to Ask Yourself or a Group of Other Dads:
- What kind of things did you learn about money growing up in your home?
- What do you wish you had been taught that you weren’t?
- Do you agree with each of the following claims of this chapter when it comes to teaching kids about money?
- Principles are more important than profit
- Investing money is more important than manual labor
- Becoming independent is more important than getting the paycheck
- Kids should learn to work smarter, not just harder