Being a parent doesn’t come with a “how-to” manual, and providing our children a financial education is no different. However, it is a responsibility that I do not take lightly. As I look for opportunities to provide that education to my own children, ages six and three, I took some time to consider how I was exposed to different financial concepts.
Financial Lessons From Raising Livestock
I was raised in a family of humble farmers and teachers. Probably like many American families, as a child, I don’t recall many conversations about investing. We had a roof over our heads, food on the table, and gave back to the church. Although investing wasn’t a common topic, I am grateful for some unique opportunities our parents exposed us to that delivered key lessons and awareness of financial principles at a young age.
When I was probably eight or nine years old, we joined a local 4-H club. If you’re not familiar with 4-H, you can learn more here. I participated in programs such as Horsemanship, Swine, Woodworking, and Photography.
Raising swine provided one of the earliest financial lessons I remember from my youth. Each year, one of my siblings started a new checking account to manage the operating expenses. In the spring, our parents took us to the bank where we applied for a loan. We deposited the money from the loan in the checking account to buy the livestock, feed, and other expenses until they were sold in the fall.
We were responsible for writing checks when the feed was delivered or a vet bill when unfortunate enough to have them. Autumn was an exciting time and for a young boy, auction day specifically!
This is when we found out how much our swine would sell for! I could feel my heart pounding as the auctioneer would increase the price per pound bid as we chased our not so well trained swine around the show ring. Only soon to be reminded that only a portion of that money would make it to our pockets as we still had a loan and other obligations!
After the fair, we sat down to pay the loan and any remaining bills before we determined our share of the profits. We also participated in a program with the Missouri Department of Agriculture that returned 50% of the interest when the loan was successfully paid in time. Once all of the expenses were paid, we put 50% into our savings accounts, gave 10% to the church, and the remaining 40% was ours to spend.
A Business Owner at 13
I had an incredible opportunity at an early age to gain valuable insights into what it takes to run a business. Growing up on the farm, we spent a lot of time working with Dad. When I was 13 the family started a business. My name was listed as a partner of the Limited Liability Company. Sounds cool, right? It didn’t come at an inexpensive price, but the lessons learned significantly influence who I am today!
The primary purpose of our business was training and boarding horses. We also had a few stallions and broodmares, did some farrier work, and started a small tack shop. While this list is far from conclusive, here are a few pieces of education this experience provided.
- Work Ethic: My responsibilities ranged from feeding, cleaning stalls, riding horses, property and equipment maintenance, doctoring a sick or injured animal, or even mowing pastures and harvesting the hay.
- Balance Sheet: I saw cash and checks dropped off for hundreds or even thousands of dollars. I knew who had accounts past due. I also quickly learned that our accounts payable were competing on the balance sheet! I gained an understanding of the overhead and operating expenses required to feed and care for the animals, the cost to maintain the property and equipment, or even pay our part-time employees.
- Inventory & Sales Tax: The tack shop provided an opportunity to learn to maintain inventory, the cost to keep the inventory on hand, profit margin, and how sales tax worked.
- Customer Service: We had a small sign in the office that said “If you don’t take care of the customer, someone else will”. We rarely did any marketing and when we did it was usually to support local youth at fairs, school, or within the community. Dad had a great reputation for quality work, treating others with respect, and always doing the right thing. If we missed a riding day, we kept the horse longer to ensure we delivered what we promised. Referrals and word of mouth was our best advertisement! It was an early and very important lesson that no matter what industry you are in, it’s a people business!
If we don’t take care of the customer, someone else will.
As a teenager, it could be challenging to work full summer days doing physical labor, rarely having time for the swimming pool, and infrequent and irregular paychecks. The family had just purchased a farm the year we started the business and most of the income went to improving the barns, fences, or new equipment to make our work more efficient.
Twenty years ago, it wasn’t always easy to understand the value of that sweat equity. But today, I am able to look back on the example and lessons as we begin our own businesses to serve others. And that sweat equity has turned into equity in the family farm which contributes to the ability of Long Brothers to rehabilitate local real estate, a small part of our parent’s legacy shines through as we create our own.
I had a few other “side hustles” through my high school years to make sure I had spending money. I cleaned hog buildings, mowed yards, cut and sold firewood, and gave horse riding lessons amongst a few others. All of these experiences provided lessons into personal responsibility, time management, the value of my time, and the cost of equipment or consumables to execute the job.
Our family may not have sat around and “talked” about investments a lot. However, early real-world experiences gave me an opportunity to make more informed financial and business decisions. They haven’t all been right, but at least they were informed or I knew to ask the questions!
The Next Generation
My children turned six and three this summer and we’ve started to have some basic money discussions with them. In one lesson earlier this year, I offered the kids $1 to help pick up a few leaves as I trimmed hedges. My six-year-old daughter told me she’d rather have £1. I’m not sure if that is only because we currently live in England or if she has the exchange rate figured out!
My three-year-old son disappeared a few times so his pay was cut (harsh, I know!). Honestly, at three, I doubt he understands the difference in the value, but rather is comparing the number or physical size of his coins to his sisters. That is why I was also careful to consider that when distributing the coins as well. Meanwhile, my daughter crushed it despite losing half of her crew, so she received a slight bonus.
They received these banks for Christmas that have places to Spend, Share, and Save (I added ‘INVEST’ to this one!). We talked about examples of each one and I let them choose where to put their money. One chose Share and one chose Save/Invest! Proud Dad moment!
You can find the bank the kids received for Christmas here:
The kids were excited to make their Share & Save/Invest choices with their earnings!
Or this bank already has the Saving and Investing separated which is nice!
Alternatively, just make a label on three or four mason jars that you have sitting around or can pick up at a thrift shop!
Don’t Wait to Start Teaching
A study by the University of Cambridge found that money habits in children are formed by the time they are seven years old.
If you feel like you have a good baseline and control of your own finances, don’t delay in providing real-world opportunities for your child. On the other hand, if you are not sure what or how to teach them, subscribe to the Legacy Letter and I will deliver ideas and resources directly to your inbox!
Either way, the clock is ticking. Grab their hand and take your child on a journey!
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