Credit Canada has an annual essay contest for grade 12 students that asks the questions, “What is the dumbest thing I have ever done with my money and what did I learn from it?” The contest is part of Credit Education Week (cewc.ca).
1. Read Riviera Lev-Aviv’s essay “The Lemonade Debacle of 2001”. This essay was the winning essay from the Credit Canada contest in 2010. 2. Write your own original essay. Write an essay that describes the dumbest thing you’ve done with your money and what you learned from it. Your essay must be between 400 and 600 words.
3. Your essay will be scored on the following criteria:
Knowledge of savings and money management (20%)
The Lemonade Debacle of 2001
By Riviera Lev-Aviv
When it comes to stupid money-related acts, let’s just say I have a vast repertoire of experiences from which I may draw. There’s that time when I left a $10 bill in the pocket of my jeans, which I proceeded to throw in the wash – not technically considered money laundering, I was relieved to learn. Or there was that time when my little sister and I attempted to raise money by selling bouquets of dandelions. (As it turns out, there’s not much of a market for that.) And then there was that time when I spent an obscenely large sum of money on a fancy-schmancy blender, just because the infomercial promised that it was “the ultimate party machine.” (It isn’t; it is currently sitting in my basement next to my giant stuffed gorilla, accumulating dust.)
However, my dumbest venture to date has to be my first entrepreneurial endeavour, at the ripe age of eight. As a business-savvy kid, I did not want to spend my summer merely sitting at home watching cartoons or playing with astronaut action figures. I wanted to get my feet wet and delve into the exciting and perilous world of entrepreneurship. I wanted to create an empire, a lucrative business that would earn me enough cash to buy all the candy in the world! I wanted to get rich quick.
I promptly arranged a meeting with my associates (my three sisters) and we established a plan of action. We decided that the best way to rake in the big bucks was to construct a good old-fashioned lemonade stand. But, as all business moguls know, you gotta spend money to make money. So, we cracked open our respective piggy banks and gathered the coins that spilled out. Seeing as our only sources of income were our grandma and the tooth fairy, there wasn’t much funding to speak of. But nonetheless, we pooled our limited resources together and collected $13.28 in seed money. We made a trek to our local grocery store, only to realize that we would need to take out a loan from the Bank of Mom to cover start-up costs. We secured said loan and promptly assembled a booth, complete with hand-drawn signage. We sat out all day under the beating sun and made a grand total of $3.25. In retrospect, I realize that this mostly came from neighbours and our dad, who got awful thirsty sitting out there keeping an eye on us. That evening, I spent my freshly earned cut of the profit in its entirety (a paltry 81 cents) on candy, without regard for the fact that this cash was owed to my mother. Despite my hard day’s work, I woke up the next day not only penniless, but in debt. It was time to declare piggy-bankruptcy.
As the reader may by now have surmised, I did not profit monetarily from the Lemonade Debacle of 2001. However, the wealth of wisdom I gained in analyzing it was of much greater value. I now know that poor money management was our fatal flaw and that learning to master it would be the key to my future financial prosperity. In hindsight, I realize that had my partners and I prepared projections, it would have been readily apparent that we had set ourselves up for failure. Our three pitchers of lemonade (each holding approximately eight cups) priced at 25 cents a pop, could at best have yielded a big fat $6 – this, had we not imbibed a significant portion of our inventory, which we did! It doesn’t take Fibonacci to deduce that $6 minus $13.28 (and a generous motherly loan) does not generate any profit whatsoever. We had neglected to budget or sufficiently plan how to earn back our initial investment. The Bank of Mom decided to let the loan slide, which was a major perk of this particular establishment. I was very fortunate to make these money management blunders in a relatively forgiving environment, because the lessons I learned would prevent similar ones in the future.
As soon as I was old enough, I decided to get a job to start saving for University. I ended up with several jobs, some of which I worked simultaneously. I was a barista, a cashier, a camp counselor and a sales associate at a clothing store, a job I continue to enjoy years later. It was while working at a 70s-themed burger joint that I noticed something crucial that had escaped me during the Debacle of ’01: the restaurant actually charged more per beverage than it cost them to produce. This information would have been invaluable to me years ago!
In addition to my part-time retail job on weekends, I have once again established myself as an entrepreneur. I learned from my formerly flawed plan that I must be organized and financially responsible in order to succeed. I chose a low cost product to sell – my time and mathematical expertise -so that no upfront capital was required. As a Student Tutor, I earn $20 of pure profit each Tuesday and Thursday. In order to regulate my spending, I deposit 75% of my earnings into my University Savings Bank Account every Friday and leave the other 25% for my Mascara, Movies and Candy Fund. I have disciplined myself to use only cash for recreational spending, so that I’m acutely aware of every dollar I spend. I check my monthly bank statements regularly in order to monitor my progress towards covering my tuition – I intend to go through first year university debt-free. I’ve learned the simple lesson that you should only borrow money if you have a well-organized plan to pay it back.
I have come to the conclusion that when life gives you lemons, you should make lemonade, enjoy some now, and put the rest in the fridge for another day.