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Own a Business? Why You Should Hire Your Child This Summer

Many self-employed parents have no idea that it’s absolutely legal—and a great tax move—to hire their own kids to work in their companies. Better yet, it’s a great way to help your kids develop a work ethic, teach them some basic work skills and encourage them to work for their spending money.

The Lure of the Lemonade Stand: Your Child’s First Business

Are you interested in helping your kid start a first business like a lemonade stand, but need some backup? Consider signing up your budding entrepreneur for National Lemonade Day. Many communities hold coordinated Lemonade Days sometime in May. Signups are underway now.

When they participate in Lemonade Day, your child gets a free backpack filled with everything they need to know about running a successful small business. This includes an explanation of the mysterious “supply costs.” Parents of first-time stand proprietors can tell you: Most kids have no idea that someone actually has to pay for lemonade and other ingredients, then get reimbursed from the stand’s profits. In other words, ingredients aren’t magically produced for free by Mom and Dad.

Adult Supervision Required

Each Lemonade Day setup kit also includes an adult guide. The sponsoring nonprofit organization, Prepared 4 Life, requires kids to partner with a responsible adult—a parent, grandparent, teacher or neighbor—on the project. The guide prompts adults to ask the kids key questions to help them set financial goals, choose a site for their stand, create an advertising plan and more.

This project also emphasizes the three-jar money concept of spending, giving and saving. Once kids earn their Lemonade Day profits and pay for their original supplies, they get to:

  1. Keep some of their earnings
  2. Connect with a local bank to save some of the profits, and
  3. Choose a charity to which they’ll donate a portion of their funds

The Lemonade-Day Advantage

Of course, you can always help your kid start a drink stand—or a dog-walking or lawn-mowing business—on their own, anytime. The coordinated Lemonade Day project just gives your kid’s business some extra structure and support. Plus, local organizers often connect kids with sponsoring community organizations.

Is your community participating in National Lemonade Day? Check the map.

(photo courtesy © Elvert Barnes cc2.0)

Financial Literacy - Greenlight Debit Card for Teens

Imaginary Dogs: A Clever Way to Raise Financially Responsible Children

Do you want your kids to be financially stable when they’re adults? Want to avoid having to take-in your wayward son after he’s run out of money, forcing you to shelter him in your basement until he gets back on his feet? Want to make sure your daughter doesn’t waste her entire paycheck on a frivolous, impulse purchase?

If your answer to any of the above questions is “yes,” consider this technique: Have your child look after an imaginary dog for a month.

Why an Imaginary Dog?

When I was in high school, I had a friend named Scott who desperately wanted a dog. His parents were hesitant, worrying about things like, “What if we end up taking care of the dog all the time?” and “Can we afford all the expenses that come with a dog?” But, in a moment of parenting brilliance, Scott’s mom and dad came up with the Imaginary Dog Plan. This plan required Scott to wake up every morning at 6am, walk a leash around his neighborhood, put down an empty food bowl, and then open and close an empty dog crate. Immediately after school, Scott came home and walked that empty leash again, put down the empty food bowl, and spent 30 minutes either vacuuming, dusting, or completing some other household chore as a stand-in for the time he’d have to spend cleaning up after a dog. Additionally, his parents struck a deal requiring him to pay for half of all the expenses that come with having a dog. To prove that he could do this, Scott did extra chores around the house and got a part-time job. By the end of the month, Scott had walked his empty leash 60+ times and had saved $300. By the end of the month, Scott had a real dog.

How an Imaginary Dog Can Help Your Family:

So, how does my friend’s dog apply to you and your family? Simple: the principles Scott’s parents taught him through this exercise are the same principles any kid needs as a foundation for a successful financial life. If your son or daughter wants something, whether it’s seemingly insignificant, like a crazy new pair of socks, or something bigger like a pet or laptop, consider using this technique to help them get what they want while also teaching them the importance of being responsible with their money. Some of the lessons they’ll learn from an exercise like this are:

  • If you want something, you need to work for it
  • You need to consider all the responsibilities attached to making a purchase
  • You need to be fully prepared, financially and physically (with your time, etc.) before making a purchase
  • You should give yourself time before making a big purchase to make sure you really want that particular thing
  • Often, making purchases (especially big ones) requires some sort of sacrifice, so you need to ask yourself, “Is it worth it?”

Obviously, if you decide to try this with your kids, the situations will be different, and you’ll need to adapt strategies. It wouldn’t make any sense for your daughter to walk a leash every day to prove that she’s responsible enough to buy a laptop. Instead, you may start by asking her to save a certain amount of money each week. Then, have her to carry around a fragile place-holder (picture frames, perhaps), proving that she’ll be careful with something as breakable as a laptop. You could even have her do research on how to fix common laptop problems, making sure she’ll know what to do if it won’t turn on one day, or if it gets a virus.

Whatever way you apply this to you and your child’s life, just be sure to remember the main point: If you prepare your kids now to be responsible, both financially and personally, they are much more likely to continue these practices as adults. Try it today, and hopefully you’ll still have your basement to yourself once your kids grow up!