Kid Scoop 06-06
Turning lemons into lemonade
Hot summer days are a great time for kids to earn some cool cash by starting a summer business.
“Whether your child is looking into starting a lemonade stand, mowing lawns or babysitting, there are some steps every parent can take to help their child’s first business venture is set-up for success,” said Katie Scofield, Financial Education Officer at Numerica Credit Union.
This is a great teaching moment for parents. Going over start up costs should be the first step. For example, how many lemons will you need to make lemonade? And how much will those cost? Take your child to the store so they can see the actual price of the lemons and other needed materials like sugar, a pitcher and plastic cups.
“Just because you may have the item around the house, doesn’t mean it’s free!” Scofield continued, “For parents, the opportunity to talk about costs of everyday items with young entrepreneurs is the beginning of conversations about budgeting and managing money that can last for a lifetime.”
How much will your child charge customers for the lemonade is a big question that needs to be answered. As any good shopper knows, price point can make or break a sale. While it may be tempting to set a price that just “sounds” good, two main considerations are costs (startup and ongoing) and potential profit.
Chances are your kid won’t have the money to get their business up and going. If this is the case, they might need a loan from the Credit Union of Mom or Dad. It’s also important they know before any profit can be made from their business, they have to pay the loan back.
There are other important considerations when it comes to running a business — big or small. According to Numerica, another important element of any successful business is the ability to give back. A model the credit union encourages is to use 70 percent for wants or needs, save 25 percent for the future and share 5 percent by giving back to the community.
Let’s talk about the payoff or goal of your child’s fledgling business. Why are they trying to make money? Perhaps it’s to save up money to buy something they really want to have. Great, if your child is saving for something specific — make sure their goal is measurable, attainable and relevant. They also need to have a time frame in which the savings goal can be achieved. Numerica Credit Union has a variety of tools on this topic that can be found on their website at numericacu.com/news/saving-smart.
You’ll always have a relationship with money, why not make it a good one! Find more money tips to keep you living well at numericacu.com/youth