HOW TO DEVELOP KIDS’ IDEAS ABOUT SPENDING, SAVING AND EARNING
By Steve Kaufman | Illustration by Adam Kleinert
IF GRANT DIERKING offers to negotiate a deal with you – to sit your baby or walk your dog or mow your lawn – be careful. Be very, very careful.
Grant may look to all the world like a typically unassuming 13-year-old, but behind that boyish grin lurks a steel-trap financial the mind. He not only wants to earn your money, he wants to bargain with you until he wins.
Grant has been on a money-management education course since he was 7, overseen by his father, Will Dierking, a (surprise, surprise) accountant who was named 2016 CFO of the Year by Business First of Louisville. Will is a partner with 3 Crown Capital LLC, the New Albany boutique investment firm.
“I opened a bank savings account with Grant to help him understand managing money,” says Will. “Any time he received a birthday gift or earned some money, he’d come with me to deposit it into his account. And he became increasingly excited about watching it grow.”
Rachel Levin of Jasper started with piggy banks for her three small children. “As money was gifted for various occasions, we encouraged them to save it in their banks,” Levin says. “We also involved them in their own individual savings account as they got older, to make regular deposits and to be updated on their balances.”
Levin is regional retail banking officer of German American Bank at its Jasper location. She also volunteers in a Junior Achievement program teaching financial literacy courses to children as early as kindergarten. Levin became active in financial education after hearing a comment her 4-year-old daughter made upon being told they didn’t have enough money to purchase a toy at Walmart.
“My daughter replied, ‘You do too have the money. You have that card in your purse.’ ”
Similarly, her son, at age six, told her that “you can get free money at that ATM, just put your card in.”
In today’s digital world, money sometimes loses its significance as a solid, tangible element – paper greenbacks and metal coins. Money has been replaced with plastic cards, electronic transfers and Apple Pay. And where cash was finite – you either had it or you didn’t – digital money is infinite.
“We talk a lot about a credit card, about what credit is, about needing to have money to pay the credit card bill when it comes in,” says Levin. “I’ll pull up my online banking and show them the amounts due and the amounts available, so they understand where it all comes from. They also understand why we go to work every day – what we do there, how we get paid for it and that’s where the money comes from.”
Understanding where the money comes from is what turned Grant Dierking the saver into Grant the earner. “He was always asking me if there were anything he could do for me at my office,” Will says. “So I’d pay him for that. But instead of handing him money, I’d deposit it into his account.”
Will says Grant focused in on that. “His working model is, he never spends any of his own money,” says the father. “But, at some point, he has to learn that he’ll have to spend his own money, so he has to have some appreciation of what things cost.”
So the next part of the program was helping Grant distinguish between “need” and “want.” And there, Will drew some lines. If the item were something he needed for school, or, say, a new pair of shoes because his were falling apart, Will would pay for it. But if it were something he just wanted, like an iPad he didn’t really need, Will would pay for half of it and make Grant dig down into his savings for the other half.
Banker Levin feels the “want vs. need” decision is perhaps the most important lesson for young people. But, she says, once you’ve established that notion in their minds, it’s also important to show them when, on occasion, it’s OK to buy the want and when it’s not.
“It’s about making good choices,” she says, “and setting limits.”
Grant Dierking has absorbed that lesson. “He now genuinely understands the cost of things,” says Will, “and he understands the value of saving money. He may be attracted to something initially, but once he thinks about it for a short period he’s done with it.”
Grant also understands the concept of entrepreneurship. Will says Grant made wristbands out of colored rubber bands – red and black, or blue and white, or red and white, depending on team affiliation – selling them to vistors any time they had people at their house to watch an NCAA tournament basketball game.
He charged $5 for a single wristband but, says his father, “he also understood the concept of volume. So if you bought three, he’d charge just $12.”
As Grant got older, Will taught him how to negotiate honestly based on what he thought his time or services were worth. “I won’t tell him what I’m going to pay him, I’ll ask him what he thinks it’s worth. He started out shooting for the moon, of course, but I gradually brought him back to the realities of the marketplace, what the prevailing minimum wage is and how to compromise – but not too much.
“In one case, he ended up accepting less than what I was originally willing to pay him. That was a useful lesson in negotiations.”
The fun of seeing his savings account grow soon turned into something much more practical. Grant saw that the accumulation of money, if left untouched, could produce something of value.
“A couple of years ago, he told me, ‘Dad, I’m really watching my account grow, and I’m going to use that money to buy my first house because when I buy my first house, I don’t want to have any debt.’ That’s a pretty good concept for a kid of any age to grab hold of.”
Every penny he can put his hands on goes into the account. Nothing comes out.
“He has not made one withdrawal from his account,” says Will. “Not one. Ever.”