Just how do you teach a kid personal finances?

An Experiment in Business

by Olivia Fox


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Just how do you teach a kid personal finances who's mathematically challenged, oblivious to cause and effect, and a bit distractible? It seemed a pretty tall order. "Good morning Mr. Phelps. Your assignment should you choose to accept it..." Delivering papers was out, and John was too small to mow. Our son did like to putter in the kitchen though. Well, how about playing to his strengths and starting a food business?

After dumping favorite recipes onto the dining room table, we started the elimination process. John preferred chocolate. The product had to use simple ingredients, simple processes, and the microwave. Out of the pile, one recipe stood out. John dubbed the fledgling business "Mr. Fudge," and immediately went to work designing a logo.

"OK kiddo, what should you charge?"

He looked up from his drawing and his eyes glazed over. "Why don't we just charge what we pay for stuff?"

"Because your time and effort are worth something too, and costs vary."

I stood by him as he painfully added the ingredients' regular prices, lining up decimal places and carrying numbers. "Add $2 a batch for your time and effort and round it to the nearest fifty cents. If we get ingredients on sale, your profits increase." (The theory was that he'd look for sales. That lesson didn't pan out.)

"Now we have to set up an order form." Sitting at the computer together, he chose the type style and wrote the little identifying blurb at the top. The page left places for people's name, address, phone number, and type of fudge with the price. I hit save and printed it out.

His dad took him door to door, getting orders from neighbors and friends. During the first run, he handed out samples. The usual turn around time from order to delivery was about 10 to 14 days as he made the fudge in single batches and his arms tired from stirring. People paid when they received their fudge. John soon discovered cause and effect. If he didn't seek orders, he got very few.

Sometimes people weren't home for delivery when they promised. We'd have him call, leave messages, and make alternative arrangements.

Accounting worksheets were simple things, usually notations on the bottom of the order forms, costs subtracted from the gross profits. Our state requires tax, and John also gave to church from his net. Figuring those amounts involved a good bit of math. Once accomplished, he was free to spend the profit.

An occasional failed batch, though disappointing, taught him to measure and follow instructions more carefully. It wasn't a total loss; we enjoyed the "duds" at home.

He also came to understand marketing strategies. Giving samples away makes everyone happy, but giving too much eliminates profits. Fudge is seasonal. You can saturate a market. There can be too much chocolate. Careful presentation matters. Testimonials are good.

Some people sent thank you notes and Mr. Fudge developed a following. Overall, John learned a lot of great lessons like adding, subtracting, multiplying, following directions, measuring, marketing, quality control, perseverance, customer service, phone manners, cause and effect, and the satisfaction of earning his own money.

editor's note: Before starting any money making project, it may be wise to check local ordinances to see what's required to keep it legal. Teaching our children to skirt the law is not part of the educational process!


Olivia Fox is a stay-at-home-mom and official new fudge flavor taster.

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