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.
Have a debt question?
Email your question to firstname.lastname@example.org and Howard Dvorkin will review it. Dvorkin is a CPA, chairman of Debt.com, and author of two personal finance books, Credit Hell: How to Dig Yourself Out of Debt and Power Up: Taking Charge of Your Financial Destiny.