Many Business Answers
For kids who are not getting this information in school or who lack a parent with either the time or knowledge on these issues, I put this together as a little primer for kids ages 10-15 just to get their feet wet on understanding the basics and idea of money. Please share this content with any young person whom you think would benefit from and enjoy this primer, particularly any youth who seems to lack the potential for having any such financial/economic guidance in their lives.
What is money?
Money is paper and coins that we use to pay for things that we want to buy.
Why do businesses accept money?
The paper itself is not valuable. It’s only paper! But the United States government promises that it has value. So, it’s “the promise” by the government to accept it from people, if no one else will accept it, that makes it valuable (but that won’t ever happen. It will always be accepted by other people.)
Where does money come from?
The government prints it (and in the case of coins, like nickels and dimes, they “coin” them) in Washington D.C. using special machines. Then they send it to banks and the banks lend it to people and to businesses, and those people and businesses buy things and pay people to work for them. Then those people- people like you and me- spend that money. And that is how money gets around.
The United States government only prints a certain amount of money so that it is special and valuable so that people want it. Otherwise, it would be everywhere- like rocks and grass – and it would not be very valuable.
How do you get money?
- You have a “job”- or even better, a “career”- with a company where someone pays you every week.
To get a job, think of something that you like to do- but also think of something that you can get paid to do. Then see what jobs are available that you would like to do, or that you can make money at- or, hopefully, both. If you are young (under 18), you can just ask at a local store, like the supermarket for a job (you probably have to be 16, but there may be jobs for people even younger.)
If you are older than 18, you want to go to college or learn a very important trade at a special trade school. While you are in college, you can get a “job”. But after college or after learning an important trade, you now want a “career”. A “career” is something for which you have good training or education and then plan to do for many, many years. A “job” is mostly done to get money and pay bills- rather than something for which you train and study for in school.
If you get good grades in school, you will have more choices about both “jobs” and “careers”.
- You own a company and sell things or do things for others who pay you.
What do you do with money once you are paid?
- Spend it on things you need- like food, rent for a home, electricity in your house, a car.
- Spend it on things you want: Ball games, going to a movie, eating in a restaurant.
- Save it: Put it in the bank and don’t spend it.
- Invest it: Buy something that you think will be worth more money later.
What is “Interest”?
When you put money in the bank, the bank will pay you back even more money than you put in. That’s called “Interest”. But it’s not a lot more money. It’s only a little.
Why does the bank do that?
If you put $10.00 in the bank, the bank give may give you back $10.50. But the bank uses the money in the meantime to help another person buy a house and that person may give the bank $2.00. So, if the bank makes $2.00 and the bank gives you $.50, then you made some money, and the bank made some money. So, everyone wins.
How do I start my own business?
- First, you have to think of something that people want or need. Then you have to see who already provides that to them and see if you can do it as well, or better. Or, even if you can’t do it much better or for any less money, if you are good at sales, you can use those skills to get business. Be likeable and honest. And then do a good job, as promised.
Also, make sure it is something that will be good in the future and not only today. Make sure to consider all the technology changes going-on and how that will affect the future. For example, even if you want to paint houses, make sure to understand how house painters get new clients using the Internet.
- Get partners. Your partners should be people whom you like and whom you trust. It is best if each partner has a different skill. So, for example, one partner can be good at sales to get new customers, one partner could be good at using the computer to get customers, one partner could be good at taking care of the money, and one partner could provide the actual product or service that you want to sell.
All partners should agree on their job, and there should be an agreement about the business in writing. This will require a “lawyer”.
Where do I get money to start a business?
First, you have to have a job and save the money.
Each partner can put in a little money to start the business.
Or, even with little money, each partner can just provide the skills needed to start the business. This would be the case if you are selling a “service”, instead of a product (because products cost money to create). A service may require, at least, some equipment.
What is a lawyer for?
A lawyer will help you form the company and agree with any partners.
Maybe she or he will do more, depending on your company.
What happens when someone pays my company for the work?
After you are paid you have to decide if the money is to be used for:
- Something you need, or
- something you want, or
- savings in the bank, or
If you have a business, you also have to see if the money that you made should be used in the business, such as to pay for things that the business needs- including to pay all any partners, advertising materials, and any equipment.
One more thing: You can’t spend all the money you get because you have to pay the government something called “taxes”, which is the amount of money that has to go to the government every time you make money. The government uses “taxes” to pay for schools, and roads, and bridges, and all the things we use every day. So, ask your parents to get an “accountant” to tell you about this.
I will write about “investing” money for kids at a later date.