Risk versus reward
A copy of the movie “Field of Dreams” starring Kevin Costner
Young children need to understand that taking chances is a dangerous thing and before anyone takes a chance they need to understand what they are risking and whether or not the reward for taking the chance is worth it. This will help them see that they should carefully consider what they do with their money and understand the old saying that “if a deal seems too good to be true it probably isn’t.”
- Arrange for a family movie night and rent or otherwise obtain a copy of the 1989 movie “Field of Dreams.”
- Watch the movie with your child and, once it is over, ask if he or she thought that Kevin Costner risked too much in trying to achieve his dream. What did he risk? What was his reward? Talk about the fact that a reward can be something other than money.
- Talk to them about the kind of rewards they have received or might hope to receive some day. Talk about the fact that when one hopes for greater rewards, that often means investing more—including taking on more risk. Talk about the types of risks there are—and that risk doesn’t mean “danger” in this case—it means, for example, that you may invest a great deal of time trying to achieve something—and the risk is the time invested that could have been used for other things. Talk about the fact that many things in life involve thinking about the possible risks and rewards—what you will put into something in the hopes of what you will get out of it.
- Apply the concept of “risk and reward” to money decisions that are made. The risk is what you give up or could lose when you use money for one purpose—and the reward is the benefit you get from what you decide to do with your money. At a young age, children are not likely investing money and running the risk of losing some or all on an investment. The risk is more the loss of their alternatives—and what could have been the result from a different decision.
- Talk about how the fact that most people take all kinds of risks all the time in the decisions that they make. The key thing is to be able to recognize the risks, think about the risks, and decide if the potential “reward” or “return” is worth the investment. Pretty well everyone has to take some risks. The key is to make good risk-reward decisions.
FOLLOW UP IDEAS:
- Find other examples of “risks” that you or your child have taken—that is, investments of your time, interest, money, etc.—and whether they ended up being good decisions.