Teaching kids the value of money (as an entrepreneur)

When I teach my kids, ages 4 and 6, about money, I break it down into four main steps:

Getting used to being told “No” (but ask anyway)

I encourage my kids to ask me for anything they want to buy, but I also remind them to expect that I will likely say “No.” Asking is free, and there’s always a chance I might say yes. The worst that can happen is the same result they already have—a “No.” This helps them get comfortable with rejection, while also teaching them to keep trying.

Savings

I teach them to spend just enough to be happy, and save the rest. With sufficient savings, they can move on to the next step. When I was in Primary School, I used to spend 20c on rice and gravy, and save the rest. Sometimes the canteen auntie would give me half an egg out of pity. There was no expectation from my parents to save so drastically, but I took it as a game.

Trade

For most parents, they will teach their kids how to spend their savings here, but I taught my kids that with the money the saved, they can now use their money to trade for greater returns. For example, they can figure out what is the most popular toys that are in trend, buy from a wholesaler, and sell to their friends in school. With this,  $1 can become $3, and then become $10. During my time, country erasers in lower primary, and Pokemon cards in upper primary were very popular, so I traded in them and made good money. 

Spend 

With the amount they multiply as earnings from savings, they can now buy items which are much more expensive and hence more enjoyable than what they could previously get from just saving their allowance. Additionally, they have learnt the value of having capital for investments and trading, they will naturally be more careful with their expenditure as they innately understand the time value of money. By the time I was 16, I could buy my own Canon DSLR system, which cost around $5000 at that time, just on my own earnings over the years. I also enjoyed reading, and could buy books from Kinokuniya without being too concerned about their price. 

Repeating this virtuous cycle will teach the child how to be observant of trends, macrocycles, perceived value of products and build a long term mindset towards money.