I hate to be the one to break it to you but…the cost of your employment taxes and benefits have already been factored into your salary.

My folks encouraged me to self-employ when I was a kid, but I didn’t do too well – selling Christmas cards door to door just didn’t take off!

I’d like to try to do a better job helping my young grandkids learn to be self-employable than I did with my kids. I’m trying to start early and help them learn about money and finances and give them practice doing different kinds of jobs and businesses to earn money.

I’m taking some inspiration from a book I read called “Young Bucks – How to Raise a Future Millionaire” by Troy Dunn. It isn’t so much about being a millionaire as it is about learning to look for and fill opportunities. Dunn has lots of good ideas on businesses to start at various ages, for those of us who need them.

http://www.lemonadefreedom.com/

http://savannahnow.com/news/2011-02-26/savannah-rule-bans-cookie-sales-girl-scouts-home

Free commerce restrictions are often “selectively enforced” so you may get fined for doing something the neighbor’s kid did last week:

“Jennifer Hughes, the director of permitting for the county, SAYS IT’S TECHNICALLY ILLEGAL TO RUN EVEN THE SMALLEST LEMONADE STAND IN THE COUNTY, but inspectors usually don’t go looking for them.”

http://www.wusa9.com/news/article/155167/158/County-Shuts-Down-Kids-Lemonade-Stand-500-Fine

If your kid tries to fly under the “need a permit to sell anything radar” then she may run into a problem with school officials if she gets too entrepreneurial:

http://www.thesamohi.com/feature/candy-dealers-samo%E2%80%99s-underground-entrepreneurs

In CA and NY among other, bake sales are generally illegal so be sure to check your local cottage food laws as well as your school vending laws:

“Bake sales are banned”
http://www.nytimes.com/2009/10/03/nyregion/03bakesale.html

And then there is the liability that comes from just living amongst the dredges of the Darwin pool:

“Cookie klatch lands girls in court” (neighbor wins $900)
http://www.denverpost.com/ci_3347961?IADID=Search-www.denverpost.com-www.denverpost.com

Selling anything second hand for cash is now illegal under most conditions in Louisiana under House Bill 195, so don’t let the kid sell his bike or old GI Joe figures unless your kid can process a debit/credit/money order payment or wants a life lesson in record keeping:

http://www.klfy.com/story/15717759/second-hand-dealer-law

And if you or your kid make more than $600/year on alternative income, you have to claim it on taxes. And if you made money off of ebay “arbitrage” you have to report the profits on individual items, not just anything over $600, because the IRS considers that a for-profit business. If you sell “collectibles” (art (figures and pictures), rugs, antiques (toys, figures, anything 100 years or older), metals (such as gold, silver, copper and platinum), gems & jewelry, stamps (baseball and Pokemon cards), coins, or alcoholic beverages that you’ve held more than a year) the IRS considers money received as liable for capital gains.

Your under-age kid must file if his net income from self-employment is more than $400/year and you are responsible/liable for the filing while said kid is a dependent.

Not getting caught because of selective enforcement does not make a practice legal. How many of you check to see if your town requires a permit to hold a yard sale before holding one?

A minor age 14-17 must have a work permit for all work except: a farm laborer, domestic worker, golf caddie, newspaper carrier, performer/actor/model, or if the minor is legally emancipated, a high school graduate (or equivalent) or employed by his or her own parent who is the sole proprietor of a business. No one under 14 is technically allowed to work accept 12-14 year old agri workers (crops, tobacco pickers, etc.) with work permits.

That means your kid cannot “technically, legally” hire out for a lot of jobs and you’ll need to check your local enforcement as everything depends on the definition of “farm” and/or “domestic”. Some areas classify yard work as farm, others do not and it is technically illegal to hire a kid to mow the lawn or wash a car.

Gotta watch that “technically illegal” thing…

Too often this site recommends practices that were legal, non-taxed, or unprecedented when we were young…all that is changing, and not for the better. Giving a “check your local laws” is doing a disservice to readers who do not realize how invasive those local laws regarding free commerce have altered.

Great article. As a soon-to-be law school graduate, I completely understand how outdated the old model of employment really is. For instance, many people don’t realize that only a small fraction of students will find jobs that most lay people tend to associate with the life of a “lawyer.”

I really think you hit on the entrepreneurial skill set that needs to be taught to children, students, and adults alike. Our education system is a large part of the problem — it mainly encourages and reinforces the worker bee mentality. Rarely are students taught creativity and critical thinking skills.

I think some people people are misreading Tim’s article. He is nowhere advocating the lifestyle of Mark Cuban for your children. All he is saying is that entrepreneurship is part of any kind of financial literacy these days.

Whether you work for someone else trying to make money in business or whether you supplement your income by running a small laundromat, you need basic entrepreneurial literacy in order to function properly in society.

Unlike the days of yore, you no longer sign to a company for life, unless you work for Amazon or perhaps (just perhaps) some sort of future Microsoft (the IBM of 2040).

If Reed Hastings has taught us anything, it’s that no company can last forever if it treats its customer like jackasses. Therefore you job is never guaranteed. You cannot control everything.

Learning to cost a process, learning to reach a market, learning to clear a profit are goals that everyone should comprehend and keep in mind. Even your local fire department. If you run a non-profit (big industry in my state) you still need an entrepreneurial mind. If you run a small department in a big company you likely can benefit your company with an entrepreneurial mind. If you run any kind of anything, you can benefit from an entrepreneurial state of mind.

For those here who criticize Tim, notice that isn’t receiving economic outpatient care from his parents. For a recent college graduate from a liberal arts degree, that is pretty good. He writes, he works out, he lives like a philosopher and manages to make a buck. His future is his to decide. Some people here sound like they are… jealous.

I say learn what you want from his example and hope your own children don’t become a burden to you.

TMND DOES say that a huge number of millionaires are business owners / entrepreneurs.

But I do agree with you, at heart. What was wrong with ’30 years and a gold watch’, or whatever the paradigm used to be? Shouldn’t a regular job be enough to support you in a comfortable life? Why should we all have to kill ourselves trying to bring in extra income just in order to live a decent life? (at least, that’s how I feel it is in NYC)

Or is it that we all expect more these days?

On a related topic, there is a good book on entrepreneurs for parents to pass on to their kids called Lawn Boy. I wrote a review on it here:
http://www.headhunterdad.com/2011/09/book-recommendation-lawn-boy.html

The background you provide is useful, and probably applies to a majority of people. In my case, not so much. My son is a great kid but definitely quirky and has mild Asperger’s. We took exactly the same approach you did about his allowance covering the “extras” (fancier clothes, swankier toys). In a few cases, we’ve run into the “that’s what your allowance is for” thing, mostly over comics, and he’s had to make choices, which is good. Most of the time, he couldn’t care less. He’ll wear high-water pants because they’re comfortable, socks that don’t match in style or color, and used to wear undershirts on the outside until he switched to a school that has a uniform (he’s 14 and couldn’t care less about peer pressure, thinks the kids who do are idiots; amazingly, he’s popular because he’s so much his own person that the other kids think he’s cool). Usually he wants me to buy his clothes “because, Mom, you know how to pick good stuff for cheap.” He knows he could earn extra allowance for doing chores but isn’t at all interested (“$8 a week is all I need”). He won’t eat school lunches and packs the exact same lunch every day. Sometimes I think he must be Howards Hughes’ love child. Admittedly, he does save me a lot of money!

I point this out only to say that while Tim’s post was interesting and probably useful to some, it’s by no means universal advice applicable to everyone. Mileage varies, depending upon personalities as well as tastes. (I’m sure Tim knows this, but this point didn’t come through so strongly in his post.)

I remember putting up lemonade stands in my neighborhood, but it was never serious enough for me to learn how to create money. My childhood was so focused on sports, that it taught me to be a team player obviously, but also taught me to learn from my failures as well. Which is one entrepreneurial trait that is essential to success!

First of all, transparency: I had three children, the author Tim being the youngest. I am the scrooge that encouraged self-reliance in all three of my kids, each one reacting differently in accordance with their own personality. I was please to see Tim intuitively absorbed and reflected on some of the lessons I had hoped to teach my children. (They never actually tell you at the time.)

Since he has joined getrichslowly, I have come to respect the incredible level of insight of this online community and the questions that are raised. I find the community very sharing and the insights very exciting.

So, speaking as a parent, a few thoughts about teaching money management to our kids, most of which Tim talked about, some of which he will say, oh, yea, I forgot about that one.

I am complete believer in allowances for kids, with an understanding of what it covers Parents have a responsibility for healthy food, shelter and some degree of respectable clothing. Beyond that the marketing world spends millions on enticing our kids to buy the coolest, in-est, grooviest product around. That’s what allowances are for. When confronted with the desperate pleading of “I really need this,” it takes parents out of the bad guy role, with a response of “that’s what your allowance is for.”

Somewhere around age 7, my oldest child, Tim’s big sister, saw the coolest, softest stuffed bunny at a stuffed animal shop and it was love at first sight. “I NEED this bunny.” And, no doubt, parents agreed, it was a really cool bunny. With the response of “that’s what your allowance is for,” you could see the look on her face of “I have to make a CHOICE!” Whether to spend a month’s worth of allowance on a stuffed bunny she really loved became an excruciating teachable moment. That day at least one parent returned to the store three times while she decided and re-decided whether the coolest stuffed bunny in the world was worth a month’s savings in allowance. In the end, she decided not to buy the bunny. She saw the value of other options.

In guiding their decision-making, we had a family standard of “what’s the play value.” How much time are you actually going to “play” with this purchase, or is it a one-time fun thing that gets discarded (which kids do all the time because of our marketing culture). It did bring a little bit of long term decision making into the choice. Even now, as adults, my kids joke about the “play value” of some purchase.

By the way, I am not a believer in allowances being for chores. Allowances are for money management. Chores are assigned based on being a member of the family. But I also support payment for extra projects and a child suggesting project possibilities that contribute to the household environment, for which payment is available – but also becomes an opportunity for parent and child to work together. Double teaching going on.

Next parental issue: school lunches. Many schools, from grade school to high school to college offer lunch and food plans, as opposed to brown bagging it. Somewhere around second grade, brown bag lunches become so uncool. While the cost of the (often nutritious) school lunch is not a big deal, here a money management decision opportunity. Here’s the deal: you are welcome to take brown bag lunch (which you prepare, with some guidance) – and half of the school lunch program cost gets added to your allowance to do what you want with it. Another money management choice, another teaching opportunity. By the way, Tim in college strongly preferred his own meal plan at the local grocery than the ease of the college food plan.

Finally, high school teen clothing. Pure agony for parents, as the latest style, the in-designer becomes incredible important for self-image and social acceptance. The pressure on parents by teens for looking good is incredible – and potentially very expensive.

But it’s the same lesson as buying the stuffed bunny. This is not an allowance, but a clothing budget. Once in high school my kids – more than ten years ago – were given $600 in September (it probably needs to be more now) at the start of the school year strictly for clothing, including clothes, sloes, and winter coats. I didn’t give them $600 in cash, they were just notified of our bookkeeping arrangement. They could spend it all at once or pace it out through the year. They could buy $150 shirts and $250 “kicks” if they wanted to, but it had to last until next September.

I’m not saying all the choices were great, but the teaching opportunity was very successful. I am proud to say that all three of my children quickly found the value – and still maintain it – of Salvation Army retro clothing – and were considered cool in their retro-ness – so they could buy the really expensive and cool stuff (with more “play value”) they wanted. Another money management choice and opportunity.

Like any parent, I am pleased to see that some of the values I taught my kids have been passed on. But if you wanted a parent’s perspective of someone who has been through it, these are my helpful hints.

I knew nothing about the author until it was mentioned that he didn’t have children. I certainly think those who are not in a situation can contribute to a discussion. But honestly the article rings hollow now that I know he doesn’t have children. I appreciate J.D. trying to bring in articles about family life, even though that is not his expertise, but why not have Brokamp or someone with direct experience write the article?

I realize that being an entrepreneur is the trendy thing to do nowadays (just like it was to be a business executive in the 1980′s and to be part of a dotcom startup in the 1990′s), but IMHO one doesn’t need to follow the trends. If you want to be an entrepreneur, that’s great; if you want to be part of a dotcom/start-up, fine; if you want to get your MBA and become an executive, o.k. And if you just want to work for somebody else, I think there’s nothing wrong with that, even if it’s not flashy.

J.D. says that one should spend their money on what brings them value. I think the same goes for time spent earning money – as much as one is able, work the kind of work you want to do in the manner that you like most or that makes you happiest. (For me, it’s working for a large company that treats its employees decently and that allows me to go home and not think about work in the evenings.) That’s better than following trends.

Anyone who has ever had vacations interrupted because something went wrong in your father’s business would tell you being self-employed isnt always sunshine and freedom.

And forget about no longer taking orders, because you will need customers and they will be far more bitchy and bastardly than any boss.

In order for it to be worth being self-employed, you have to be far more successful than you would have otherwise. For a well-educated person making far above median wage, its impratical unless you are very committed to it.

‘Good’ employees may gride out a day’s worth of work every day, but ‘GREAT’ employees question what they are doing and if there is a better way to do it. That is the same ‘spirit’ or ‘skill set’ that entrepreneurs use.

In the end we are ALL working for ourselves because if we aren’t getting what we need from our employer (security, money, fulfillment, what ever) then we change jobs.

Raising kids to know that they can’t just depend on thier one paycheck is a valueable thing. Most people I know even if they work “for the man” have a secondary source of income, or wish they did!

This is patently not true. His choice of professions has everything to do with his ability to make and save money.

entrepreneurial spirit that you’re doubting…
I am not doubting his entrepreneurial *spirit*, I am doubting his entrepreneurial *accomplishments*. His sole-proprietorship yoga teaching business is a start, which is good for him, and I’m glad he’s doing OK with it. And it’s not like I know that much about how it’s going, but it sounds like it’s too early to call it a success. I hope he does well, but he hasn’t proven himself yet.

allowed him to not only move to Europe but pay off his undergrad debt simultaneously.
That’s fine and all, but everyone I work with at my non-entrepreneurial job paid off all their student loans a long time ago. That is not a selling point for entrepreneurship for me.

Now he’s living comfortably on purely his own ability to learn new skills and transform them into viable pay
So am I.

If that’s not demonstrating his ability to make entrepreneurship work for himself (and others), I’d like to know how you define it.
The last guy I worked for before my curent employer sold that company for 15 million dollars. He started another company that currently has 35 employees and is probably worth more than the previous one was when he sold it, and it’s only a couple years old. If I want advice on entrepreneurship, I’d rather read it from my old boss than from the owner of a (very new) sole-proprietorship yoga studio. Maybe Tim will get there someday, but so far he hasn’t. That doesn’t mean that everything he writes is wrong, but it means that much of it will be unproven.

You’re assuming that his kids being able to make a million dollars is the supreme test of his ability to teach them financial skills
No, I’m saying that the test of whether he knows how to teach kids to be entrepreneurs is to watch those kids and see if they become successful entrepreneurs, just like the test of whether someone’s a good baseball coach is to see if the players he coaches are winning lots of games. He may be a *happy person* because he knows his values and tailors his lifestyle to his desires or whatever, but he’s a good *baseball coach* if his players win. If you’re writing about entrepreneurship you’re talking about building businesses. If you want to talk about being happy, that’s fine, but it’s a different thing. You can give entrepreneurial advice or happiness advice and either could be good or bad, but they’re not the same thing.

My sole contention is that most everything he advises is completely unproven. It may be interesting to read his story as he progresses along that path, but for now, he has zero parenting experience and not that much entrepreneurial experience, so I’m going to take any advice he gives on those subjects with a grain of salt.