Teaching Kids About Entrepreneurship? Here's One Skill They Absolutely Should Learn
Accordingly, schools and other educational institutions have jumped on the bandwagon, with scores of programs and camps that teach kids all about entrepreneurship. Yet, these entrepreneurship programs are missing one key element: financial literacy.
A few years ago, when my daughter, Lauryn, was 10, she excitedly raced back from school one day to tell me that her school was hosting an "Entrepreneurship Day" on the last day of the school term.
Here is how that unfolded:
- I had to buy the ingredients for cupcakes, which I then had to "help" her bake. She lost interest mid-way, but dutifully kept checking on me to make sure I was on task.
- The next day, she happily took them to school where she sold them at the "Entrepreneurship Fair."
Ta-da! The kids apparently had their first taste of entrepreneurship.
I politely enquired with the other parents and her teacher about whether the kids had noted how much they spent on the ingredients, calculated how much profit they made, etc. (I knew my daughter was clueless, but I was desperately hoping nobody else was.) However, I was told that this was mainly for the kids to have a bit of fun.
My kids weren't impressed when I suggested they name it "Fun Day" instead.
I was given "the look." You know the one- the "Mom, please don't be a wet blanket" look. Sigh!
To be clear, my beef is not with the teachers or the school staff. I know they already have a lot on their plate, and that they are doing an amazing job to ensure a great experience for the students.
My issue is with the system. A system that doesn't recognize that this was a lost opportunity. And this isn't limited to primary or middle school either.
Earlier this year, I was invited to speak to MBA students, and the theme was again around entrepreneurship. But when I said I would speak about financial literacy, I was told it didn't really go with the topic, and if I could please choose a topic that was an easier fit.
Studying entrepreneurship is hugely popular with kids and teens, because many of them want to start their own businesses when they grow up. Nearly 70% of college graduates want to be entrepreneurs, if recent surveys are anything to go by.
And accordingly, schools and other educational institutions have jumped on the bandwagon, with scores of programs and camps that teach kids all about entrepreneurship. Yet, these entrepreneurship programs are missing one key element: financial literacy.
They teach kids various skills like writing business plans, pitching to investors, prototyping, marketing, hiring a team etc. And while all of these might be important to a young entrepreneur, the knowledge of how to manage money smartly and responsibly is paramount.
And yet, there isn't a single entrepreneurship program that gives financial education the importance it deserves. And it deserves a lot.
A majority of the young entrepreneurs out there will be bootstrapping their business, and this is where their knowledge and habits of being careful spenders and budgeting efficiently will come into use.
They need to distinguish between (and prioritize) their needs over their wants. The lack of this basic awareness will lead them to burn through their funds at an alarming rate, thus paving the way for an entrepreneurial disaster.
They need to understand how credit works, and how to stay away from bad debt, while capitalizing on the advantages of good debt. Young entrepreneurs also need to understand the importance of having and maintaining a good credit history.
Many bank lenders look at personal credit histories before they agree to give these entrepreneurs startup loans. Having a poor credit score will scuttle their chances of getting those loans, even if they have the best business plan out there.
Most importantly, they need to develop a proper mindset about money that will help them grow their business and wealth, and not hinder it. Not teaching our kids about money is thus hurting their ability to be successful in the future.
But we need our kids to be successful entrepreneurs in the future. We need them to take on (and solve) problems, and contribute meaningfully to the betterment of society. So, let's equip them with the skills they need to do that- and financial literacy is possibly the most important one in that respect.