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Invest with James: Spreadsheets for kids — for real

James can't wait to get his hands on a spreadsheet. Right after he gets done with Angry Birds.
James can't wait to get his hands on a spreadsheet. Right after he gets done with Angry Birds.
Matthew DeBord

Another great post from Fred Wilson, a successful venture capitalist and partner at Union Square Ventures in New York. This one has nothing to do with startups or high-risk/high-reward finance and any of the nice juicy VC stuff. This one is all about...budgets. Budgets...for kids! Here's Fred:

For a long time, probably the first fifteen years of our life together, [my wife and I] lived paycheck to paycheck. Sometimes it was two paychecks, other times it was one. For a brief period as I was starting Flatiron, it was none. I got shingles that year.

As our income went up and down, our spending had to do the same. I created "fredsheets" that we looked over, debated, discussed, and then adjusted and signed off on. Then we created budgets so that each of us would live to these spending plans. It worked. We always made it to the next paycheck. Many times by the skin of our teeth.

In the second fifteen years of our life together, we've had the pleasure of living in a different financial situation. But we still use budgets. We created budgets for our kids which they live up to. We created budgets for our real estate projects, our angel investing, art collecting, and so on and so forth.

OK, that that sounds kind of fancy at the end, but Fred is successful — he's earned his hobbies. What's key there is the "spreadsheets for kids" concept. There's a lot of financial management software and cloud-based services out there, but when it comes to budgeting, I think spreadsheets are the way to go. It's very useful to understand the math — the Excel formulas or whatever — and to be able to make tweaks. 

You don't need anything complicated, just a sheet that shows your basic monthly cash-in/cash-out situation and maybe expands that to include to year-long spending schedules, like vacations, car repair, holiday spending, retirement targets, and so on. 

The cool thing about this for kids is that you can (1) show them how the family finances work (Transparency!) and (2) show them how technology is your friend when it comes to money management. A kid's budget might entail only three or four spreadsheet cells. But as he or she gets older, that kid will be able to expand the basic sheet into a plan for life, at various stages.

I've been planning to set up sub-budgets for my kids for a while now — especially my six-year-old son, James, who has an interest in money and a grasp of some of the core concepts. Maybe I'll do as Fred does and create some "fredsheets" that my kids can actually own, separate from out family budget. It it goes well, maybe James will start creating pivot tables and charts and look at me funny when I fly a spreadsheet using a mouse.

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