Blog | Entrepreneurship

How To Make Money 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

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When I was a young boy, I had the privilege to learn from two men about money. My poor dad, my natural father, was a wonderful, hard-working man whom I 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 I had followed the advice of my poor dad when it came to money, I would not be rich today.

My rich dad was my 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 me, many things about money. Today, I am rich because of the lessons my rich dad taught me about money.

How I Made Money As A Kid

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

We had her charge 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. Our 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 our 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.

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

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

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

The three types of education

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

For example, the methods we use to teach children in school are far different than what I experienced. Where we previously used slide rules for math class and lugged around armfuls of books, students 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?

My rich dad taught me 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 make money as a kid

I will explain how to make money as a kid shortly, but first a brief history lesson.

When I was growing up, my 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).

I’ve 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 we 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

I’m passionate about financial education because I know how much it can change a person’s life. And I’ve spent most of my 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, I 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 I’m not a huge fan 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 I 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, I 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, I want to talk about a foundational element that the rich understand and teach their kids that enables them to do the action items I just listed above.

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

Becoming A Kid Entrepreneur

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 payoff 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 my rich dad provided for me, 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 I did when I 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 Mike and me. 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 get started, I suggest downloading a free copy of my new 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, I was lucky enough to have Mike - and, especially his dad - while navigating entrepreneurship.

I saw again later in life how important it is to keep my circle limited to like-minded people.

When Kim and I were at the beginning of our financial journey, we knew that our friends who didn’t have money or who weren’t interested in money couldn’t help us on that journey.

People who we had spent much time with in the past started to spend less time with us. Some of them are still our friends today, but not in the same way they were before we were rich. Some of them were jealous of our success and that caused friction. Those friendships naturally faded.

I have several friends who have made billions of dollars in their lifetime. Three of them have told me 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. I’ve found this to be true in my life as well.

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

Personally, I don’t choose my friends based on their financial statements. I have friends who have taken a vow of poverty as well as friends who earn millions every year. At the end of the day, the way I choose my friends is based on what I can learn from them.

There are certain people I’ve become friends with because they had money. I wasn’t after their money. However, I was after their knowledge. My friends who have money like to talk about money. They don’t brag about it, but they do like to discuss the subject of money: how to make it and how to keep it. I learn a lot from these friends.

Other friends, like my sister who is a Buddhist monk, have different lessons to teach me. I learn about spirituality and other things from them. But I never talk with them about money because they have nothing to teach me, and often, they aren’t interested in discussing money.

Nevertheless, they are my friends because they have knowledge, and that is valuable.

If you want to be rich, be friends with people who have something to teach you.

Avoid Chicken Littles

I know people who will always try to talk me out of a deal. Many years ago, a man I know told me he was excited because he found a 6 percent certificate of deposit. I told him I earn 16 percent from the state government. The next day he sent me an article about why my investment was dangerous. I have received 16 percent for many years now. He still earns 6 percent. His fear holds him back, and if I listened to him, his fear would hold me back too.

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.

I look forward to hearing how your child used How To Make Money As A Kid to become a kid entrepreneur.

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

Original publish date: May 21, 2019

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