Economics Even A Six Year Old Can Understand–Part 1

Posted on March 18, 2011


Every parent hopes children learn the following important lessons about money:

How to live frugally.
When it is okay to borrow money.
How to save for a rainy day.
How to be wealthy, but still win the respect of your servants in a way that ensures they’ll hide you when the local peasants form a mob to attack your country club charity event raising money to help poor people by auctioning off even poorer people.

As a kid, an adult told me he remembered when candy bars were cheaper, ten cents a piece instead of fifty cents, and I dreamed of building a time machine to go back and get those cheap candy bars.  (On a side note, I did eventually build that time machine, little knowing that when I arrived to buy the candy bars, the years stamped on my coins would reveal me as an impostor and land me in jail from 1936-1946, so when I returned to 1989 I had aged dramatically in what seemed like only one day to all my 5th grader friends.  But that’s a boring story, and I don’t want to bore you with my childhood memories.)

Adults are fond of saying how much cheaper things were when they were kids, but the statement doesn’t mean much to children because they don’t understand inflation, and also adults are boring, and also they weren’t listening.

Economists suggest discussing the following money issues at a young age, which I recently did with my six year old, whom I’ve nicknamed The Fonz:

The Fonz: How much is a dollar worth?
Me: This question is relative to what you can buy for a dollar, so let me give you an example you can understand: one dollar will buy you 1/100th of a chicken pox vaccination, although part of the cost is tax deductible, so don’t quote me on that ratio.

The Fonz: How much work does it take to earn one dollar?
Me: If Dad pays you one dollar an hour to scrub his solid gold bidet, it will take you one hundred hours to earn a chickenpox vaccination.

The Fonz: How do I pay others to do my work for me without doing any work myself to earn the money required to pay those people to do my work?
Me: (Sniffling as I hold back tears) It makes me so proud you’re already considering that question at such a young age.  Maybe if you spent less time studying for school and more time considering that question you might come up with an answer and tell Dad.

The Fonz: How much money will win me love and respect?
Me: The amount is relative to the type of people you want to impress.  A net worth of zero will win the love of some girls who say they’ll love you no matter what you’re worth, but you’ll soon discover something unattractive about a woman who doesn’t care if you have no career and no ambition and also doesn’t care if you gain weight or get out of bed and she reads your email and is slowly poisoning you.  Before long you’ll set your sights on impressing a higher caliber of woman, and this means a higher net worth.  Or if working hard to earn money doesn’t interest you, you may still win high caliber girlfriends in the short-term with the following formula: one very expensive suit, a friend who works at a sports car dealership with a liberal test drive policy, and an above-average ability to lie.

The Fonz: Is there a super expensive hat that will make women find me attractive?
Me: Yes.  It’s called the Top Hat 5000, but that’s all I’m allowed to say at this time (patent pending).

Despite all my efforts, the lesson is not getting through, and my kids are absolutely terrible with money.

Part 2 tomorrow.
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Posted in: Columns, Kids