When my boys were 5 and 7, they decided to set up a neighborhood lemonade stand for charity.  They enlisted their friends and neighbors to help —Robbie, Mikey and Tommy Good. Together they set up the table, designed and colored the attractive sign, and came with me to the grocery store to buy the lemons, sugar, cups and napkins. We squeezed the juice together and managed to get a few pitchers of lemonade to sell. 

After about 45 minutes of hawking their beverage to the neighbors who drove or walked by, my son Tom came to me and said, “Mom, look, we made $5.50 for charity.” Being a businesswoman and familiar with P&L, I asked, “What about the cost of the goods?”  Tom thought about it, looked behind him at his friends, and said, “They work for free!” We all had a good laugh, but hopefully, they learned a little about the value of a dollar. They worked hard but had netted little.

Financial literacy is an important part of parenting, not just the value of a dollar or advocating a strong work ethic but learning the responsibility of having money. According to Adrienne Penta, Executive Director, Center for Women & Wealth at Brown Brothers Harriman (and author of the feature on page XX of this issue), “Kids know more than we might assume about money, but often they cannot put it in context. As parents or mentors, our job is to help them understand what they see and hear and to model the financial behaviors that we want them to emulate.” 

In a recent article by Penta in Women & Wealth Magazine, she outlined 10 strategies for raising kids with wealth ,beginning with little kids who need to be taught delayed gratification, responsibility and autonomy in decision making. As they get older, kids begin to understand the disparity in wealth and the harder questions are asked. Penta feels that it is never too early to initiate conversations about spending and saving decisions.  She even recommends starting a lemonade stand to make money more concrete for this generation of kids who are living in a cashless society!

Penta further advocates transparency. So much information is public that you don’t want to mislead your kids about your wealth. It is wise to address wealth issues before children hear in school, for example, about the sale of the family business or the purchase of an expensive home. 

Most important is that children learn the difference between having a safety net for taking responsible risks and a free ride. There is a balance between developing a strong work ethic in children despite their knowing they won’t starve.  Hopefully, the opportunity to teach such lessons begins at an early age.

Penta suggests giving kids the “Gift of Work”—a real job that they obtained themselves and one where they are held accountable. And if it involves the neighbors, lemons and colorful signs, never forget the cost of the goods.