The Minimum Wage Millionaire: Author Q & A

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As teens across the country earn their first paychecks through summer jobs, they have the chance to lay the foundation for a successful financial future. Or, if they’re like many teens (myself included, back in the day), they may blow that money on designer clothes, tech toys or other impulse purchases. That realization inspired Illinois father Bill Edgar to write “The Minimum Wage Millionaire: How a Part-Time After School Job Can Change Your Financial Life,” showing teens and their parents how to put those early paychecks to work. We talked to Edgar to find out more about how teens can start investing for their futures. Excerpts:

How did you become interested in this topic?

Bill Edgar: I realized that I’ve made quite a few mistakes, financially, over my lifetime. Through a process of reflecting on those early days when I was still in high school, or even before high school when I had a paper route, I started wondering where all that money went.

When I learned about investing and how money multiplies over time, I thought, “Wow, this would have been really powerful information to have when I was just starting to earn my first paycheck.” So that became the catalyst for the book.

What do you think is the biggest reason some young people don’t save or invest for their future?

Edgar: Certainly a lack of knowledge has to be high up on that list, because if you don’t know what you don’t know, then it’s hard to take a different path. Some kids are savings-minded, but not many kids are investment-minded. When you invest, your money actually goes to work for you.

A lot of times as kids, we don’t see the future because it’s so far out there, it’s not even something in an adolescent’s consciousness. But adolescents have parents and have grandparents, and we know that if everything goes according to plan, we’re going to live to be that old, too. And if we had some mentors in our life who could guide us toward preparing for that future, not just through a career but through good sound financial sense, that could make a tremendous difference in somebody’s life.

What role should parents play in this process?

Edgar: I think parents are still very influential in a 16-year-old’s life. Teaching them about investing and about how money works could be the most important lessons that their kids ever learn. Every parent wants their kids to have better opportunities and a better life, and one of the ways that kids can almost guarantee that type of future is to start investing early.

How can parents kind of help their kids understand the value of delayed gratification?

Edgar: I’m not suggesting that somebody put a hundred percent of the money that they earn away and not spend any of it. But certainly I think that through teaching, they can learn how the value of the dollars that they put to work for them today are going to be the most valuable dollars that they can put to work for themselves.

And when you get to be in your forties like I am, the dollars that I put away at a reasonable rate of return are only going to multiply maybe twice before I retire. But somebody who’s that young, those dollars can multiply five or six times before they retire.

Do you recommend that young people set up like an IRA or use some other investment vehicle?

Edgar: I definitely recommend the Roth IRA. Teens are in the zero percent tax bracket, and the chances are that when they get to be older, they’re going to be in a higher tax bracket, so taking advantage of Roth IRA at a young age is fantastic. All the gains made in their account are going to be income tax free, so that definitely is a very powerful tool for a kid to be using.

And then I suggest an indexed mutual fund because it gives somebody the opportunity to really kind of dip their toes into the waters of investing in a very diversified way. There’s less risk than trying to pick a hot stock.

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