I believe economics education is very important, but have had a struggle trying to figure out how to teach it. I think I have finally come up with a plan to get us started. We have been covering the basic issues all along and have even started the formal academic study of economics with a great little book titled Whatever Happened to Penny Candy. The kids have earned some money and we have laid down some rules that with any money that comes in, ten percent goes to charity, ten percent goes to retirement, fifty percent goes to college savings and the rest is for spending. The two big things we think we are missing are the parts about day-to-day management of money and investing.

For the day-to-day management of money you can only go so far with the management of a weekly allowance. Most of those knowledgeable about homeschool recommend that homeschool families start a small business where the children can keep the books and manage the business. Of course the purpose of the business is to make money, but the amount of money that is made is secondary to learning about running a business, being responsible, and managing money. We plan to do that in a year or two. We are not sure what kind of business we want to start, but we want the kids to be fourteen or fifteen years old. We will probably spend a year before we start to identify a business and write a business plan that includes goals such as how much money we want to make and the expectation that the business will shut down after two years of operation.

The more immediate goal is to find a way to teach the kids about long term investing. It is quite evident that the early one starts saving the better off they are going to be when they get old and the more options they will have, even in middle age. To that end, I am going to have the kids keep track of some investments in stocks we will pick together. The idea behind our investing will be that any stock we pick we will hold at least a year, give or take a couple of weeks based on tax issues. We will pick the stocks based on their goodness and cheapness. I will have them take turns tracking the stocks values versus the S&P 500 which is a good representation of the market as a whole. In conjunction with that, we will set a target amount of savings for them to start investing for themselves. In a couple of years, when they have been tracking the stocks for awhile, they should have enough money together to start investing themselves and enough experience to pick stocks with their investing goals in mind. We will post our results here.