There are many ways for kids to make money, but have you ever wondered the advantages of teaching your kids how to do this?  Beyond just getting paid kids are learning some vital skills that could never be learned in a classroom.  Let take a look at some of these:

1.     Money Management – When your kids are making money they will have to learn what to do with that money.  Do they spend it?  Do they save it?  Do they give to help someone in need?  These are decisions you make every day as parents and your kids can now begin thinking about these types of things.

2.     The Value of Money – It is amazing how people will spend differently when they are spending their money.  When someone else is paying spend freely.  When you are paying, spend wisely.  When kids have their own money to spend.  Money they have earned.  They realize there is no bottomless pit of money.  They also learn that buying this item may mean I sacrifice something else.  What a great lesson to learn especially as a child.

3.     Time Management – When you consider the different ways for kids to make money usually it is in addition to activities they already have on their schedule, whether that’s school, church, sports or family time.  Kids will soon realize that there are only 24 hours in a day and you can’t be everywhere and do everything.  Hopefully they will learn how to prioritize what’s important even though this is sometimes very difficult to do, even for us parents.

Some parents will help their kids start businesses and for these kids there are skills they learn in addition to the ones above.  Here are some of these

1.     Marketing Skills – Marketing is a wonderful skill because kids are learning how to create excitement and branding for whatever product or service they are promoting.  Companies spend huge sums of money to get the message out about their product or service.  Think of all of the millions of dollars spent on advertising every year, whether it’s print, TV or internet?   Marketing professionals are vital to the success of every company and your child is learning these skills at a very young age.

2.     Sales Skills – Selling is an invaluable skill that can help your child in every area of life, both professional and personal.  You can use these skills whether it’s persuading a customer to use the product or convincing the college interviewer that you are the right choice for that college.  Selling happens all of the time.  People often say they don’t like to sell, but they usually don’t realize they do it all of the time.  Having your kids do it and recognize they are doing it can give them a world of confidence and an advantage in every situation they face in life.

You see parents, finding ways for kids to make money is about more than just making money.  It really is about preparation for life.  Not just teaching your kids how to support themselves but helping to develop skill sets that are vital to success in every area of life.

For the past three years, my business partner (Helene Kempe) and I have been researching, looking for the answer to the question "When is a good age for teaching kids about money"?

What we've discovered is that any age is a good age to start and the earlier the better.  As you may already know, the first 7 years of a child's life is known as the "Imprint Period" where they unconciously model everything you do without any conscious awareness.  Therefore, whatever you do, they do without questioning why.

We recently interviewed a 4 year old (georgeous) little girl named Kayla.  She regularly played shop with her grandmother and had an EFTPOS machine where she would ask you (the customer) for the money and swipe the card in the machine.  When we asked her where money came from, her response was "Out of the hole in the wall".  This was simply because she had seen her mother take money from there repeatedly over the past 4 years of her life.

As soon as your child is able to speak and understand concepts, start introducing them to money.  Ask them questions such as "where does money come from?" and see what your child's response is.

A friend of mine has a very talented 19 year old (Ashlee) who can create, act and produce a video in a VERY short period of time by using her video camera and Apple Mac computer.   I was in the process of looking to create some videos to upload on You Tube and came up with a brilliant solution….

I hired Ashlee to create some videos for me to put up on You Tube which cost me less than than $50 a video!  The amount of time and effort I saved far outweighed the cost to pay Ashlee to do it.

If you have a business and are looking to create videos, hire a teenager to do it.

Check out the video as an example of what they can create by clicking on the You Tube link. 
http://www.youtube.com/watch?v=dnF_dnn0Ja0

Whatever you demonstrate to your children on a daily basis about how you manage and spend your money is giving them the opportunity either to choose to do what you do, or not.  The period of development from birth to seven years old is referred to as the imprint period. It is the period of their life that children copy what people do in the world around them without conscious awareness. The people they spend most of their time with are who they will most likely choose to copy or model.

Who did you spend most of your imprint period (up to seven years old) with? With whom did your spouse spend most of their imprint period?

Realising this modelling happened for you as a child, really important questions to ask and thoroughly consider include:

• What did you model from your parents (or significant adults in your life) about money?
• Which decisions did you make to purposefully NOT model things from them?
• Are you still modelling from them?
• How is that working for you?
• Did you choose new models along the way?
• Did your new models for financial management improve you financial situation?
• Which of your financial management habits and strategies are helping you move toward financial freedom and which are holding you back?

Whatever models you have chosen to use in the past, the great news is that it is up to you who you chose to model from this point forward. Choose the behaviours around money you want your children to see and do in their future. Just make sure you check in and see what results the people you choose as models are achieving for themselves before you consciously make the effort to start learning and doing what they do!

Here’s a great example, a friend has a retail business and her 3 year old daughter loves to play shop. She greets the customer, thanks them for their purchase and asks the customer how they’d like to pay - cash or credit? When the 3 year old girl is playing the customer, she realises she doesn’t have enough money and so she goes to the wall and punches in her PIN number to get ‘money out of the wall’. Where do you think she learnt this behaviour?

There are many strategies like these to consider when teaching your kids the value of money. For the next piece of the puzzle, check out our "Teach Your Kids the Value of Money" e-book.

On the front page of the Australian newspaper on Friday 27th February, the story runs ANZ plans to SLASH (the media loves using words like these) dividends.  

Dividends are the profits that companies share with their part owners (shareholders).  For many, this is the reason for investing in shares, a steady and usally growing income stream with capital that grows about inflation.

Most investors were receiving around 3% to 5% pa of their capital back each year in dividends.  However over the last 18 months many shares have fallen by around 50% and investors have seen the capital value of their portfolios savaged – but what about the income?

Well for most this will be the first time in many years that they will also see a decrease in their income too.  But if you were looking to invest in shares today would the headline excite you or scare you off?  For most people they would be scared off but let’s see what this really means...

Let’s face it, we are in the midst of a pretty severe economic downturn and in tough financial times, companies need to make tough decisions, and if that means paying out less income so that the company can continue to operate profitably then it would negligent not to.  So what does that mean for an investor today?  If the price of an investment halves and the income only drops by 25% wouldn’t that make it twice as good as what it was?

For illustration purposes I am going to simplify the numbers.  If 12 months ago a share cost $1 and you received 4 cents return for every share your return would have been 4% (4/100) x100. 

But today with the share price being 50 cents (50% less – which many have) and we SLASHED the 4 cent dividend by 25% the dividend would now be 3 cents.

So if you bought a share that cost 50 cents and received 3 cents you would be getting a 6% return on your money (3/50) x100. 

So which is the better investment, getting a 6% return with the potential for your capital to grow over the long term so that it will keep up with inflation or the perceived safety of 4% (and still dropping)of a term deposit with no possibility for your money to grow?

 It is up to you to decide, but is important that you understand what the headline means because it might excite you to know.  

Reine – Senior Financial Planner

Giving is one of the best things that you can do to increase your wealth accumulation.
So why don’t more people do it?

The reason is, is because people don’t have specific money allocated to give to charity, so when they do give, they feel like they have to take it from their own personal savings and it feels like more of a sacrifice to them, rather than the good feeling of giving that it should be.

The only way that giving will allow you to increase your wealth is that:

(a)     It’s spontaneous and;

(b)   Comes from the heart.

So how do we satisfy these two criteria? 

One way is to have an account specifically designed for you to give from.  Funnily enough, we call it your “Give” Account.  You take a percentage of everything that you earn and you put it into this account.  Then, when you find something worthy of giving to, you can act spontaneously, knowing that the money is there and you can give freely knowing that that money is designed to be spent on giving, which means it will come from your heart.  Giving in this way will send out a message to the universe that you are willing to give and by the law of opposites that you are willing to receive.  The universe will then deliver in ways that you can’t imagine.

Happy Giving and Merry Christmas
Nicole Clemow

Over the weekend, we held our MAGNET Money training event on the Gold Coast.  The students were great, they asked a lot of questions and showed high levels of enthusiasm and a willingness to learn.

What surprised me most was our feedback at the end of the day when we asked them what they enjoyed the most.   The majority of students said while they loved the MAGNET Money System, they also loved our Compounding example.   This is where I take a $20 note and talk about having your money working for you versus you working for it. 

First of all, I calculate putting $20 away each week for 50 weeks of the year into a money box.  This equates to $1,000 at the end of the year.  I then mention that if they have been putting a $20 note away each week for a year, they would have formed a habit and therefore would be likely to continue doing it each year for the next 50 years.  This amounts to $50,000. 

I then took this figure and showed them what it would become if they had their money working for them, if it makes a compound return (where the interest is reinvested) at 5% per year, like what they may get by putting it in the bank. 

I then calculated it at 10% compounding per year, a return that they may get from investments that grow like shares and property.  This is purely an exercise to illustrate how much harder money works for us compared to us working for it.  This is the secret to becoming wealthy.

When I showed them the figure of approximately $1,170,000 at the end of 50 years with a compound 10% return, the students were shocked!  They are now more motivated than ever to start saving.  Wouldn’t you be?!

Using simple calculations such as these is a great way to illustrate to people the importance of starting early and having your money working for you.   Most people think that the more money they make, the better off they will be.  This is only true if they make their money work for them and compounding the secret to making your money work for you. 

So, the lesson here is: It’s not how much money you make, it what you do with it that counts!  Anyone who saves and invests $20 per week throughout their working life can become a millionaire – the question is how quickly do you want to?

If you would like to know anything about the power of compounding, drop me an email at info@moneytoolkits.com

Nicole Clemow