Education for Financial Management from an Early Age By Galit Zamler
One of the most significant factors for the success of a project over time is a wise use of money.
Israel improves the public education and financial awareness through the Ministry of Finance programs, some of which focus on students in schools. At first, these programs focused on adults and adolescents, but recently, these programs were extended to young students.
Education for financial management should begin at an early age in school because habits acquired in childhood are continued into adulthood.
Education for financial planning
Beyond the basic mathematical knowledge required to perform various financial calculations, the entrepreneur should also know how to act appropriately financially.
In order to succeed in saving until the point where you see income from the project, the entrepreneur must often perform a wide variety of tasks.
In an interview for an Israeli 'Business' magazine by Ma'ariv from 25.12.2011, the entrepreneurs of the successful company, Light and Strong, said:
We established the company in 2007, at the ages of 25 and 28. We invested the little money we had and raised a couple of hundred NIS, we rented a place of about 400sq. m. in Yavne, and we hit the road based on the plan we had built for months.
The beginning was tough; no resources. You try to do everything with a minimum of money, so you end up as the leader, the producer, the manager, and through that you must remember to lift your head high and push the company forward.
However, there are many cases in which entrepreneurs enter into investments and raise money, but at the end of the day the project comes to a stop due to poor financial management.
By the way, the knowledge for wise financial management can come from gaining knowledge in a different field which may seem as unrelated, like learning history. Tzvi Stepak, one of the managers of a leading investment firm in Israel and who used to be a history teacher said: "Even today, when I work in financial education, my knowledge in history serves me as an investment manager because it gives me a perspective that not many people have."
An example of a successful business which was closed due to financial management failure:
A restaurant in Herzliya offered lunch and dinner. During lunch, the diners were offered a business menu, and during the evenings, they were offered a full price menu. Anyone who came to the restaurant during lunch time saw a most successful restaurant, fully packed and a long line at the entrance.
One day, the owner, who by then knew most of his clients, announced that by the end of the month he'd be closing the place. The reason: financial losses. The explanation: the business meals were not profitable and, during the evening, the place was empty.
There are also many examples of entrepreneurs who raising funds, but had to stop their actions, even before starting to sell, because they were running out of money as with the example of the electronic brokerage. The company's employees got exceptional terms at the expense of raised funds.
An example of sensible financial behavior in the field of entrepreneurship:
Some entrepreneurs provided generous wages and employment conditions for their employees, but, unfortunately, are no longer operating because of the resultant cash flow problems. You should specify sensible financial conduct. Consider the example of Mirabilis, ICQ, who developed the world's first software to send instant messages.
When the company's founders developed their product, they were working under very modest conditions, said one of the partners, Yair Goldfinger in an interview with Ma'ariv: Our office was in Silicon Valley, in Sunnyvale, and we rented an apartment for six months in San Jose, a very cheap crime neighborhood. The apartment had nothing. We slept on the floor, on mattresses bought from the Salvation Army, and ate only one meal a day, usually cheap fast food, because we had no utensils. We also had a car, which cost $300, and whoever had to sit next to the driver had to sit with their feet apart, because of a big hole in the floor.
Teaching kids skills to manage financial resources effectively:
When our kids want to buy something, even if we can afford it financially, we must teach our kids to appreciate a purchase, After all, if we give in to his/her every whim, he/she won't achieve financial responsibility and appreciate what he/she gets.
You should also ask questions such as: Does the child really need this? Does price pay off? What will he/she do with it? What would he/she have to give up in return? And more. The intention is to make the child make an informed economic decision before making the purchase.
Education Manage Expenses According to Priorities
Usually, the amount of money in the hands of the entrepreneur is limited, as are the options to raise money, and these come with a price, Therefore, the entrepreneur is required to use the money wisely and in a way that will maximize his project potential.
One of the budgetary sections constituting an obstacle to the entrepreneur is the marketing and advertising sections in particular.
Many officials try to persuade the developer to advertise through them, each one promising high exposure and rapid return on investment. These applications pressure the entrepreneur, but only he has the financial responsibility and the responsibility for the success of the enterprise.
Fresh, successful entrepreneurs withstand these pressures, learn about the marketing and advertising options available today at a very low cost and the targeted audience, and compare this to the mass advertising medium.
An example of specifically low-cost effective advertising:
Wright & Dickson is a company who specializes in blenders. The blender market is very competitive and Wright & Dickson didn't have enough money to invest in a mass advertising medium.
The owner of the company had a hobby: He used to check how good his blenders were by shred different objects.
The company decided to upload a short video to YouTube - where you can see the owner of the company shredding one of the odd things he used to shred.
Because the internet community enjoyed these videos, the company produced a line of videos called will it blend? - These videos show examples of the owner shredding objects in the blender such as magnets, an iPhone, Gold balls, credit cards, McDonald's meals and more.
The videos were taken with a home video camera, and some were watched by millions.
Those videos increased the company's sales by 700%!!! And flooded the company with applications to collaborate.
Prioritize expenses when it comes to children
Education for calculated economic management starts at an early age.
Children can learn about the value of money if given an allowance.
You can also teach the child to prioritize expenses by defining a budget before going to a store, and suggest that the child sticks to his budget while he/she chooses what to buy.
Entrepreneur skills & entrepreneurship education