4 Finance Lessons to Squeeze Out of Your Kid’s Lemonade Empire

by ParentCo. May 15, 2017

Most of us began our employment history in the home: our parents gave us chores and, in return, we received a small allowance. Vacuuming, washing dishes, folding laundry, and taking out the dog reaped the seemingly staggering reward of a few dollars stashed away in the old piggy bank for a rainy day. Simple “jobs” for relatives, friends, and neighbors are the first taste of responsibility and accomplishment many of us get outside of our home. The sense of accomplishment and independence these first forays into the larger world of adult employment bring shouldn’t be underestimated. Not only do these first “jobs” teach children the importance of showing up to honor a commitment, how to satisfy an employer, and how to problem-solve on their feet- they also teach them important lessons about money. Take the opportunity to introduce financial literacy through the time-honored tradition of the lemonade stand – tricked out and upgraded for the entrepreneur of the next generation. A mobile lemonade stand can be an alternative way to bring in the Benjamins: set out on the sidewalk in the late afternoon sun, neighbors and children flocking to throw down cash for the quintessential summer thirst quencher. If the fish aren’t biting at this corner, easily pack up shop and wheel yourself to more profitable pastures. More than just a way to while away a long, summer afternoon, a lemonade stand can be their very own small business, teaching them the importance of capital investment, interest, savings, and budgeting with the four exercises below.

Lesson One

Takes Money To Make Money

Concept: Teach your kid about the capital investment it takes to get a business going.

Setup: In the infancy of your lemonade stand planning – before setting out for the store with your budding entrepreneur – ask your kid for ideas about their lemonade stand and brainstorm ways to make it more profitable.

For example, making the stand mobile is one way to increase traffic and visibility. Providing unique lemonade varieties might entice reluctant customers.

Exercise: Once you’ve purchased supplies, go over costs with your child. Refer back to this expenditure after they’re finished selling lemonade, and compare the cost to their gross earning. Now refer below to step two....

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Kenz Stroller Wagons have sponsored this post because they know your first set of wheels can set you on a road to sweet success.

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LESSON Two

Concept: There is a cost to borrowing money, and it comes in the form of interest.

Setup: Explain to your child that you have forked up the dough needed to create this glorious lemonade stand on wheels. Your kid can repay your generous investment in two ways:

1) Give you a percentage of their proceeds. 2) Pay you back over time in small increments with interest as a payment plan.

Exercise: If they choose to set up a payment plan, explain that they will end up paying more over time with this staggered approach. For example, if you (generously) decide to (only) charge them $2 to help cover the cost of supplies, they will pay you 50 cents once a week for six weeks, bringing their loan repayment up to $3.

 

 

LESSON Three

It Pays To Save

Concept: This lesson teaches kids about the payoff of accruing interest on their savings.

Set it up: Explain interest to your child. Then talk about the benefits of setting aside a portion of their proceeds as savings. Your kid might enjoy identifying a special toy or treat as a purchase goal.

Simple example to assist your explanation

Start Account	Deposit	Deposit + Interest	End Account
$0	$10	$10.00 + $1.00 = $11.00	$11.00
$11.00	$10	$10.00 + $2.10 = $12.10	$23.10
$23.10	$10	$10.00 + $3.31 = $13.31	$36.41
$36.41	$10	$10.00 + $4.64 = $14.64	$51.05

 

Exercise: Each week, add 10, 25, or 50 cents for every dollar of their savings. Take time each week to count their savings together and document the growth so they’ll better understand the compounding benefits.

If your child is old enough, show them a compounding calculator and get them excited about potential profits for the months and years ahead.

 

LESSON Four

Create A Budget And Stick To The Program

Concept: Money management is a crucial aspect of happiness and success in adulthood (*source needed). This skill, however, is still not a mainstream component of the curriculum in the United States. Setup: Supplement your child’s education by helping them create good budgeting habits. Exercise: Allocate their funds into buckets reserved for specific purposes. For example: “pocket money” for after school treats, “That toy I want” for those larger special items, and “Savings”, reserved for very special occasions. Inevitably, there will be a day when your kid asks you to buy X, Y, or Z. This is where it’s important to “stick to the program.” Use the buckets of their budget to help them find the funds themselves, come up with loan terms so they can borrow from you, or tell them to grab the sponge ’cause it’s time to earn some sweat equity.

More ways to "hotrod" your stroller wagon

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Keenz Stroller Wagons have sponsored this post because they know your first set of wheels can set you on a road to sweet success.

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