In these challenging economic times, when the spending power of a dollar is declining but expenses keep increasing, it’s important for parents to equip their children with the necessary skills to become good money managers.

Last week we learned how Andrea Reid-Davis, a realtor and shrewd investor, has successfully taught her daughters Gabrielle, 18 and Gayan, 14 to save and earn money. Their wisdom with money belies their years, and this week we’ll look at some of the strategies they have used to enrich themselves.

The Value Of Work

One of the key principles that Reid-Davis has passed on to her daughters is the value of honest labour. She insists that children should be very aware of the work that their parents do to get money to take care of them. This is even more important when the adults have a family business, she confirmed, as children should be encouraged to participate by working in the enterprise.

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Reid-Davis has successfully incorporated her children into her real-estate business. “Gayan keeps her eyes open for ‘for sale’ signs,” she revealed. “If the contact she finds ends up in a sale for me, she gets a percentage of the commission I make on that transaction.” The children also help to market their mom to their teachers and their friends’ parents, as any successful referral will help not only their mother to earn income, but will put money in their pockets too.

In addition, the money-smart mom looks for any opportunity to teach her apprentices the importance of job responsibility. She recalled a time when Gabrielle needed extra money to meet a savings goal. They looked around the house for a chore that she could take on to earn what she needed, and decided to have Gabrielle take full responsibility for the care of their dog. A work contract was drafted and signed, and she started in earnest to fulfill her duties.

Reid-Davis recalled that eventually Gabrielle started to slack off on the job, and she had to write her a memo outlining her job failures. “She still didn’t comply with the terms of the work agreement, so eventually I had to fire her,” she laughed. “Gayan then applied for the vacant position and she did an excellent job, until she had to resign to focus on studying for the GSAT.”

Seizing Opportunities

One of the ways to increase income is by answering the question: ‘Is there a problem I can solve, or a need I can fulfill, and make money doing it?’ Our money-wise teens seem to have all the answers, as throughout the years, they have successfully raised money this way.

Gabrielle recalled when she was about nine years old that all her friends used to ask her for ice from the igloo her mother had provided for school. “I didn’t mind giving them, but I wouldn’t have any ice left at the end of the day, and I didn’t have money to buy juice,” she reflected. So she decided to collect money for the ice, so that she would have enough funds to buy a drink in the afternoon. She even used this demand to ask her mom for a bigger igloo, along with cups and bags, so that she could supply the students with cold water on Sports Day. “I made about J$500 that day,” Gabrielle revealed.

Gayan and Gabrielle has even used friendly rivalry to spur them to make money. There was a time when they were competing to see who could first hit a savings target of US$300. At that time, the sisters were complaining about the long lunch lines at school, so they decided to make their own sandwiches. Their culinary efforts were such a hit that other children started demanding the food, because it tasted better then the canteen fare, and it could be supplied faster and at less cost. After two months, both entrepreneurs had reached their savings goal.

All Money Is Money

Raising money can be almost effortless if your money values are strong. Gayan was very concerned that many children in her prep school wasted money. She noted that some didn’t value their books because they knew that their parents would just buy another one if they lost them. “They even used to throw away the ‘red money’ change that they got from the canteen,” Gayan confirmed. Being money-smart, she collected the money they rejected and by the end of her first term of grade five, she had saved over J$2,000.

Advice To Parents

Reid-Davis offers this final piece of advice to parents trying to educate their children about money:
“Let the child respect what you do for a living. They need to understand how you make money, so have family meetings to discuss your finances. Show them your bills and your pay slip and let them help to calculate the home budget. They need to understand the pressure of rising costs and help to come up with ideas to lower expenses.”

Copyright © 2007 Cherryl Hanson Simpson. No reproduction without written consent.

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Originally published in The Daily Observer, September 27, 2007

Cherryl is a financial columnist, consultant and coach. See more of her work at www.financiallyfreenetwork.com and www.financiallysmartonline.com. Contact Cherryl