Blog | Entrepreneurship

How to Get Rich As a Kid

Surrounding yourself with the right people is a key to financial success; this is what the rich teach their kids about friendship

Summary

• Being rich is as much about mindset as it is about knowledge

• There are three types of education - only one will make you rich

• How to get rich as a kid: pick your people wisely

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When Robert Kiyosaki was a young boy, he had the privilege to learn from two men about money. His poor dad, his natural father, was a wonderful, hard-working man whom Robert loved very much. But he didn’t know how money worked, and he struggled financially most of his life even though he had a high-paying government job. If Robert had followed the advice of his poor dad when it came to money, he would not be rich today.

Robert’s rich dad was his best friend’s father. Rich dad was a self-made millionaire who built a hotel empire in Hawaii from nothing. He learned lessons about how money works by working in his family store as a kid, and he applied those lessons to his own businesses to great success. He taught both his son, Mike, and Robert, many things about money. Today, Robert is rich because of the lessons his rich dad taught him about money.

How Robert made money as a kid

When Robert was just a young boy - about 9 - he and Mike came up with an idea to rent out comic books that would otherwise be destroyed. After they had a collection of comic books to rent, and a location to use as a library, they hired Mike’s younger sister to be the head librarian of their comic book library.

They charged each child 10 cents for admission to the library, which was open from 2:30 p.m. to 4:30 p.m. every day after school. Their customers could read as many comics as they wanted in two hours. It was a bargain for them since, at the time, comics cost 10 cents each. Many of their readers could finish five or six in two hours.

Mike’s sister would check the kids as they left to make sure they weren’t borrowing any comic books. She also kept the books, logging how many kids showed up each day, who they were, and kept track of any comments they might have.

Robert and Mike averaged $9.50 per week over a three-month period. They paid Mike’s sister one dollar a week and allowed her to read the comics for free, which she rarely did because she was always studying. Robert and Mike kept their agreement by working in the store every Saturday and saving all the comic books from the different stores. They even tried opening a branch office, but could never find someone quite as trustworthy and dedicated as Mike’s sister.

Eventually, they closed the business. However, that business taught them how to make money work for them, even at such an early age.

By starting the comic book library, they were in control of their own finances, not dependent on an employer. The best part was that their business generated money for them, even when we weren’t physically there.

The three types of education

The world has changed drastically since Robert first opened the comic book business with Mike back in the 1950s.

For example, the methods we use to teach children in school are far different than they were at that time. Where students previously used slide rules for math class and lugged around armfuls of books, kids now have everything they need at their fingertips in a smartphone.

But while the methods for how we learn have changed, the subjects haven’t.

Why not?

Rich dad taught Robert that there are three types of education: academic, professional, and financial.

Academic education encompasses what we learn in grade school. This includes reading, writing, and arithmetic. Knowing these basic skills are vital for anyone living in a modern society.

Professional education includes the knowledge you learn to hold a job. Whether you stock groceries or manage the grocery store itself, each job requires a different set of skills. Most people learn these skills on the job or attend a post-secondary educational institution like college or a trade school.

Though both academic and professional educations are important, how well you excel in either will have nothing to do with your financial education.

Regardless of your grades in school or how much money you make, it’s your level of financial education, or your financial IQ, that ultimately determines your level of success.

How to get rich as a kid

Before we dive in, here is a brief history lesson.

When Robert was growing up, his poor dad always said, “go to school, get a safe, secure job with benefits and stay there for 20 years. When you retire, the company and government will take care of you for the rest of your years.”

That is no longer the case. Graduating college no longer guarantees landing a good, high-paying job. If you are fortunate to get a good job, you won’t be with them two years from now, let alone twenty.

Pension plans are all but extinct. Along with the death of pension plans, has risen the company sponsored retirement plan, or 401(k).

Robert has written about these many times before. These plans were implemented to help companies save money by deferring those benefits to their employees. So now, the employee is responsible for investing their money, not the company.

But what are employees to do? How can they invest without any education?

As discussed earlier, academic and professional educations never included anything about financial education in their curriculums.

So while someone may be great at remembering facts and figures in high school, or go on to become a tech wizard in Silicon Valley after graduating college, at no point are they taught how to invest. At no point does anyone show them what to do with all that money.

The power of financial education

Today, Robert is passionate about financial education because he knows how much it can change a person’s life. And he has spent most of his adult life working to teach those who are willing to learn the secrets that the rich teach their kids about money. And the work is never done.

Several years ago, he shared how most millennials have been grossly under taught about money from their baby boomer parents. At the time, close to 80% of millennials had not invested in the stock market. The reasons why were telling; 40% said they don’t have enough money. 34% said they don’t know how. 13% blamed student debt.

While at Rich Dad, we’re not huge fans of investing in the stock market and prefer things like real estate and commodities, tracking if people do invest in the markets is a good indicator of whether they will invest in anything at all. And as Robert wrote, the reasons millennials gave for not investing were symptoms of a lack of financial education and old beliefs about money being handed down from generation to generation.

If you don’t have enough money it’s because you have never been taught how to make money outside of getting a good job—old money advice.

If you don’t know how to invest it’s because you weren’t taught how money works and were probably told to save and buy a house—old money advice.

If you have so much student debt you can’t afford to invest, you believed the lie that you needed to go to a good school to be successful—old money advice.

As an antidote to this thinking, Robert gave three action items for millennials to take: invest in financial education, stop saving for retirement (and start saving for investments), and learn to delay your gratification (millennials love to spend).

Today, however, let’s talk about a foundational element that the rich understand and teach their kids that enables them to do the action items listed above.

The rich understand that in order to change your life, you must change who you spend your time with.

 

Now we have an entire generation of kids going to school (because that’s what their parents told them to do), who graduate college with a mountain of school loans to pay off , and little chance of landing the dream job their college counselor promised them when they first walked onto campus.

So, what should we be teaching our children about money? How can we better prepare them for life?

Much like what rich dad provided for Robert, we can offer them a different perspective.

We need to let our children know that there are many roads to riches. They need to understand that they no longer need a college degree to become successful.

But if they decide not to go to college, what can they do?

How to start a business as a kid

Like Robert did when he was a child, they can start a business.

Running a comic book library probably isn’t going to work as well for your children as it did for Robert and Mike. There are almost an unlimited number of ways for children to learn the basics of running a business with real-life experience by doing just that, starting a business.

To help you and your children consider downloading a free copy of Robert’s eBook, How to Make Money As a Kid.

It’s also critical that kids are wise about the company they keep; as the old saying goes, “Birds of a feather flock together.”

Choose your friends carefully

As a kid, Robert was lucky enough to have Mike - and, especially his dad - while navigating entrepreneurship.

He would see again later in life how important it is for one to keep their circle limited to like-minded people.

When Robert and his wife Kim were at the beginning of their financial journey, they knew that their friends who didn’t have money or who weren’t interested in money couldn’t help them on that journey.

People started spending less and less time with them; and while some of them are still their friends today, the friendship has changed since before they were rich. Others were jealous of their success and that caused friction. Those friendships naturally faded.

On the contrary, the Kiyosakis have several friends who have made billions of dollars in their lifetime. Three of them have told Robert the same thing: their friends who have made no money have never come to them to ask them how they did it. But they do come to them to ask for one of two things, or both: a loan or a job.

If you want to be rich, it’s important to be friends with the right people. Many people will find that, as they get richer, the friendships that they had before also change. If you’re rich, it’s harder to be friends with people who are adverse to money, business, and investing. It’s simply a matter of different focuses in life.

While you can’t control your friends, you can control who you’re friends with. And if you want to be rich, it’s important to choose your friends carefully.

Choose friends based on what you can learn

Be careful not to choose your friends based on their financial statements. Focus instead on what you can learn from them.

If they happen to be rich, listen closely to discussions concerning the subject of money; particularly how to make it and keep it.

Other friends may be of value because they offer spiritual wisdom, among other things. Either way, be clear on what knowledge each friend has to offer.

Simply put, if you want to be rich, be friends with people who have something to teach you.

Avoid Chicken Littles

You will also come across people who will try to talk you out of strategic investments because of their limited financial intelligence.

Don’t listen to poor or frightened people. Being rich is as much about mindset as it is about knowledge. Poor and frightened people have a poor mindset and are always complaining about how the sky is falling. They are Chicken Littles who will always tell you what is wrong with your business or investment idea. They are motivation killers.

If you think about it, you can see how the friends you choose directly impact your ability to invest in financial education, start saving for investments, and learn to delay your gratification.

If you hang out with people who prefer to talk about Netflix and sports, you’ll find yourself spending time on those things rather than on learning about money. If your friends are Chicken Littles, they’ll reinforce that you should save your money in a savings account and that investing is too risky. And if you're surrounded by people who love to spend money on experiences, you’ll never learn the discipline to delay your gratification so you can invest later.

Share the eBook How to Make Money As a Kid with your child to become a kid entrepreneur.

But before getting started; ask “who are your friends?”