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Last night my daughter and I had a conversation about the cost of college.

She’s 9.

I didn’t mean for it to happen. But she was asking for math problems, so I said to her, “Here’s a math problem I just did yesterday: What’s the difference between 55,492 and 21,177?”

Naturally she wanted to know WHY I had done that particular problem. I told her it was because I was comparing what my college cost now to what it cost 20 years ago. After we solved the problem, we guesstimated what the tuition would be in another 10 years.

She turned to me. “Dad, I really want to go to that college, but I don’t think I’m going to be able to afford it.” Then she thought a little more and said, “I’ll put all the money from my allowance into college savings. I don’t need spending money.”

Well, then we did a little figuring on how fast money grows if you put it in the bank. (Not so fast.)

And I told her that one way to make her small savings grow much faster would be to invest the money in starting a little business. We ran a few numbers on a hypothetical window washing business, and she was intrigued.

Naturally, later last night I came across this video on a friend’s blog:

The video is 20 minutes long, but it’s worth watching. First off, it’s part of TEDtalks, which if you’re not familiar with it already is a fantastic series of short lectures available as free videos. Second, he’s got some great points about how we can work with our children to give them the entrepreneurial bug.

There were a couple of moments in the piece where I did start to lose interest. For a few minutes it seems like he’s just making a list of all the entrepreneurial things he did as a kid. But even these are pretty inspiring.

What really got my attention were some of his comments about allowance. He thinks a regular allowance is something that trains children to wait for a paycheck. Instead, he advocates training your children to keep their eyes open for things that need to be done, then coming to you and negotiating a fee for doing them.

Honestly, I loved this idea. I am by and large against the idea of paying kids to do chores (and my thinking was confirmed by some comments in Daniel Pink’s recent book, Drive), but this changes the game completely.

Instead of using payment as a compliance tool (“I know you want money so I’m going to give you money to make you help me around the house.”) you give the kids the central role in the transaction, solving our problems in exchange for money. (Note that he didn’t seem like the kind of person who would ever pay a kid to clean their own room. There are many things we do just because that’s part of being alive, and we don’t get paid for them.)

I also liked the focus on negotiation. My kids negotiate with me all the time, but it’s for more dessert or a later bedtime. I’d like to see them negotiate a fair payment for a task I would be willing to outsource.

Take a look at the video and share your thoughts in the comments!

Here’s the blog post where I found the video: SuperWAHM. Mel is smart and worth following.

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