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Financial Lessons from the Lemonade Stand

“Mommy please, can we do a lemonade stand this weekend??” said both daughter and son – repeatedly.  My husband and I gave in.  We decided to approach it as a teaching opportunity, as opposed just four hours in the hot sun – waiting, and waiting for potential purchasers willing to pay 25 cents to quench their thirst.

The day became an introductory training session for the kids on sales and finances.  My husband specializes in both and me the former – so we were well positioned to convert our lifetime of knowledge into kid-friendly learning.
Sales Lessons
After the supplies were purchased and table and chairs in place, we sat the kids down to draw their signs.  Advertising is key to draw attention to the product.  They affixed signs to both the front and back of their stand, so both foot and auto traffic could be attracted.  They marketed their products by going door-to-door, inviting neighbours to buy their lemonade, and by jumping up and down yelling “lemonade for sale”, each time they saw someone approaching. 

At times they were disappointed and frustrated.  Why didn’t everyone stop to buy their lemonade?  We taught them about prospects, patience and rejection.  Only a small number of people reached will be interested in the product and/or have the cash to pay. One lovely neighbour walking her dog yelled out “sorry, I didn’t bring any money”, and then returned 30 minutes later to make her purchase.

Financial Lessons
All-in-all, it was a fairly successful afternoon.  After subtracting the initial expense, $6 fronted by Dad, they were left with $30 (rounded).  We then spoke to them about responsible financial management.    They put aside $6 for future expense - their next lemonade stand.   They were left with $24 to share.  Initially, they were excited at the thought of spending it all – my son at the Lego Store and daughter on Justice clothing.  We quickly reined them in.

We explained that earnings should always be divided between expenses, savings and spending money.  Many experts suggest allotting one third to each category.  Since their future expense for another lemonade sale had already been subtracted, they were each left with $12.  We suggested to divide each share in half; $6 in the piggy bank and $6 in the wallet for the next shopping trip.  To our surprise, they seemed to get the concept and agreed without objection.

Many neighbours, friends and passers-by got refreshed from pink and yellow lemonade, and our budding sales people and responsible spenders had their first practical lessons in sales and finance. 

We are on the right track.
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