Over the holidays, I played Robert Kiyosaki's "Cashflow" game with my 9 year old daughter. It's a great game and I highly recommend it. The game teaches kids the importance of passive income. To win the game, you must create more passive income than you make from your job.
I'm happy to report that she beat me!
This was a big break through because I was able to see that she really understood the importance of investing. I decided that it was probably time for her to play the Cashflow game in real life. Here were the challenges we faced with this big step:
1. She doesn't have a credit score and cannot qualify for a loan.
2. She only works part-time and doesn't make very much money.
3. She only had $5,000 to invest.
Actually, she works for me. I use her in marketing and pay her accordingly. She has decided (didn't really have a choice) to contribute 100% of her earnings into a Self Directed Roth IRA. Over the last two or three years, she has accumulated $5,000 in this Self Directed IRA.
What could she possibly invest in with these challenges that would create monthly positive cash-flow? I'm glad you asked. Here is a picture of her 1st investment:
We just finished processing the paperwork with the IRA company to buy this mobile home. Our plan is to sell this mobile home to a buyer with financing. We will offer this mobile home for sale at $9,975. The buyer, if approved, will pay a small down payment and then will make monthly payments until the loan is paid in full. We will charge interest on the loan, which will create additional income. We estimate that this investment will generate a monthly cash-flow of $250 for 4 years.
When we went to walk through this investment opportunity, she was really excited. She asked a lot of questions. We brought a calculator and ran several different "What If" scenarios. We finally locked on to the numbers I shared above. She totaled these numbers on the calculator and then asked:
Can I buy another one?
This was music to my ears! Another investor in the family!!!
I explained that we can save up again inside her IRA and maybe buy another mobile home when she has accumulated enough money. We still have a long way to go with this first investment, but I'm very excited in what we have accomplished so far. She has learned:
1) How important it is to save.
2) How to generate monthly income as an investor.
3) That she must know what she will get back before she invests any of her money. This lesson was taught through the "What If" scenarios.
4) How to leverage one investment into additional investments. I think she learned to use the income generated from this investment to save for future investments.
On a big picture, these lessons are more valuable to her than any profit made on the actual investment. I don't think she would have learned any of this in school. It's sad, but true.
If you're a parent, you cannot rely on someone else to teach your children how to invest and manage their money. Their future financial well being is in your hands. Don't take this responsibility lightly.
Earlier in the year, I gave a presentation about teaching children to become financially independent. The presentation was recorded. The recording quality wasn't the best, but the content delivered was very good. You can watch this video for free right now at:
What I'm trying to teach my kids about money
If you would like to learn how to invest in mobile homes like we did with this investment, you should consider applying for membership in Income for Life. As a new member you'll receive a special guide on how to create monthly income through mobile home investments. You'll also have access to different mobile home investment opportunities.
Rob Minton
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