Is It Important to Have Kids Pitch In Financially for Their Hobbies?
Erin has three daughters, and one of them is in 4-H. The cost of the animals is expensive. Should Erin have her daughter help pay for this hobby somehow?
QUESTION: Erin in Indiana has three daughters, and one of them is in 4-H. The cost of the animals is expensive. Should Erin have her daughter help pay for this hobby somehow?
ANSWER: This is an expensive game we’re playing. You kind of primed the pump and got it started, but each year, the animal rolls over. We can roll over into another animal, she rolls that back in, and then at the end of the day after this goes on for a few years, she may have some pretty substantial profits tied up in these animals that she’ll get out at the last time she sells them through. You’ll get your initial investment back then.
You can afford the $5,000. This is $5,000 on this instead of $5,000 on competitive cheerleading, and there’s a chance on this you break even and you won’t on competitive cheerleading.
I taught mine work ethic for a lot less than this. There’s a lot of ways to do it. You can just buy animals. You don’t even have to go through all this other stuff, and you can roll the animals over once a year and actually make money just farming, in a sense.
You’ve got the money to do it. That’s fine. Go ahead. There’s not a problem with it. I just want to make sure that you don’t get caught up in this activity is actually bringing more value to your teaching than it actually is.
In these situations, if there’s big dollars coming out of this profit, so to speak, it’s going to be rolled back into the project until the project comes out, and that includes setting some money aside for feed and for vet bills and whatever else we’ve got to do because you’re running a business when you’re running livestock—or at least hypothetically you are. You should be.
That’s how I would do it, and that’s how we did it when our kids were running businesses themselves. Our kids had a snack business, and I bought the initial run of the snacks and put them in, but they did the restock of their inventory out of their cash flow and out of their profits. They had to keep up with cost of goods sold versus what they were selling it for, what the net profits were, and make sure they set money aside to be able to buy the next round when they went over to Sam’s or Costco or wherever and loaded up on the restocking snack business. Same kind of thing, but I primed the pump. I bought the first set out to do that and put them in place, and then when the thing closed down later, I don’t remember if I took my money back out or not, but I certainly would’ve reserved the right to do so. That would’ve been a normal way we would’ve interacted with them.