A mother has the money to lend her daughter for a jewelry business, but she's not sure it's a good idea.

Question: I read the weird question you got last month from a mom whose son didn’t want to take her money. He wanted to start a pool-cleaning business by himself without any help. Well, I have the opposite problem.

My 16-year-old daughter wants me to loan her $500 to start a handmade jewelry business. Thankfully, I have the money and no credit card debt. (I took your advice and called for help a couple years ago.) So I’m not worried about losing the money. I AM worried my daughter will get so discouraged if she fails, she won’t appreciate the value of money. 

What should I do?

— Amanda in Idaho

Howard Dvorkin CPA answers…

If I understand your concern, you think your daughter will lose your money and not feel the proper pain — because it wasn’t hers. I think you’re half right.

The best way to impart the real-world lessons about money on our children? Make them earn the money, then let them lose the money.

So in your case, I’d give your daughter chores or other work so she can quickly earn the $500. Yes, that will delay the start of her business by perhaps a few months, but if she then fails in her jewelry business, the sting will stay with her.

Actually, I believe your daughter wins whether she succeeds or fails — and so do you.

Let’s suppose she sells enough jewelry to not only recover the initial $500 investment, but she also earns enough to spend on entertainment, shopping, or whatever she wishes. You might find that frivolous, but it can also be educational.

If your daughter wastes her money trying to impress her friends, you can help her realize the futility of that. You can also encourage her to save for college or a car, or some other purchase that involves delayed gratification.

Now, what if she fails horribly?

For $500, you’ve taught your daughter that many successful people fail. What made them a success was getting back up after getting knocked down. In fact, I’ll make you a deal: If your daughter’s first stab at being an entrepreneur fails, tell her to email me at the address below. I’ll personally help her create a business plan for another attempt.

Why? Because I don’t know a successful businessman (certainly, myself included) who hasn’t struggled at some point. As you can tell from what I’ve written here and elsewhere, much about success isn’t about what’s in your wallet. It’s what is in your head.

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About the Author

Howard Dvorkin, CPA

Howard Dvorkin, CPA

I’m a certified public accountant who has authored two books on getting out of debt, Credit Hell and Power Up, and I am one of the personal finance experts for Debt.com. I have focused my professional endeavors in the consumer finance, technology, media and real estate industries creating not only Debt.com, but also Financial Apps and Start Fresh Today, among others. My personal finance advice has been included in countless articles, and has appeared in the New York Times, the Washington Post, Forbes and Entrepreneur as well as virtually every national and local newspaper in the country. Everyone should have a reason for living that’s bigger than themselves, and besides my family, mine is this: Teaching Americans how to live happily within their means. To me, money is not the root of all evil. Poor money management is. Money cannot buy happiness, but going into debt always buys misery. That’s why I launched Debt.com. I’m glad you’re here.

Published by Debt.com, LLC