• Skip to main content
  • Skip to primary sidebar
  • Skip to footer

  • About
    • About us
    • Why SeedTime?
    • Our Beliefs
    • The Story of SeedTime
  • Podcast
  • Free Book
    • Get your 1st copy free (+S&H)
    • Order multiple copies here
  • Programs
    • Login
    • Mission-Driven Millionaire
    • True Financial Freedom
    • The Real Money Method (unbudgeting) course
    • The 10x Investing course
  • Churches
  • Blog
    • The 14 Financial Tools We Actually Use
    • Our strategy for giving away millions
    • 5 Bible Verses You Should Know (Free PDF)
    • 25 Ways to Save Money
    • Why we began giving our age as a percentage
    • My Checklist To Financial Freedom (Free PDF)
    • Tithing: an honest look and what we do
    • Why I took a Sabbatical YEAR (and how I did it)
    • How to travel for FREE [161 hotel nights and 103 flights all free]
    • 4 Financial Lessons from Solomon: The Richest Man Ever
    • How to become a millionaire by turning $2k into $1 mil
    • How to get out of credit card debt (Free PDF)
    • How I made $2,145 Last Month by decluttering
    • How I Broke Free From the Rat Race (in less than 2 years)
    • We just checked off the biggest goal in our life
    • Our Honest Medi-Share Review after 14 years
    • 4 Money Habits To Start (that basically guarantee financial success)
  • Email

How to make your kid a millionaire [by employing them in your business]

written by Bob Lotich, CEPF® | Investing, Career & Work, Managing Money

(The following is an abbreviated transcription from a video Linda and I recorded. Please excuse any typos or errors.)

How to make your kid a millionaire

What would you say if I told you that you could set your kid up for millionaire status? You can. Especially if you own your own business.

In this article you will see how you can take your kid, get them to work in your business, and help them become a millionaire by age 60. All without them even knowing about it.

We also will go over Linda”s eye twitch, why you might not want to save it all up for a huge inheritance, and the most important things we should be leaving our kids with. All very interesting topics!

Now before we get into all the details and give you a strategy for employing your kids in your business, I recorded our discussion that you can listen to on our Podcast below. But, if you would rather read the full transcription, you can do so here in this article!

How to make your kid a millionaire

Bob: We posted something on Instagram (actually a repost from the account “worthlifebalance”) and a lot of people were asking about it. So I wanted to share that. Basically, it’s about how to make your kid a millionaire. Even if they’re not going to do anything. You can kind of force millionaire-ness on them. We’re going to talk a little bit about how to do this. And it’s actually really simple. 

11 year old Ava

I’ll just read this to you. It states: “Ava is 11 years old when her mom learns that she can hire Ava in her business. Then, deduct her salary as a business expense. Ava does office work and social media marketing and earns $7,500 for that year. Ava’s mom then invest 75% of that $7,500 into a Roth IRA earning 8% annually. And then she stops when Ava turns 18. Without investing another penny, when Ava turned 60, she will have $1.2 million.”

Linda: Wow. 

Screen Shot 2022 06 13 at 7.07.05 PM

Bob: And I shared something about this not too long ago. But I want to talk to a little bit more about this because people kept on asking questions. Like, “oooh, how do you do this? What, what, wha, wha…Tell me, tell me, tell me, tell me! Is this legal? “

Linda: Yeah. Somebody asked, “how do we do this legally?”

8 year old Alden (our son)

Bob: So we’ve begun doing this with our eight year old. But giving you the high level of what this actually looks like. So your child can work in your business. And then you can pay them out of the business. And that’s beautiful. It’s really, really nice.

The catch here, where I’ve seen some people take this to a little bit of a shady level. And maybe go a little bit too far with it. And possibly getting themselves in a gray area is when you have a three-year-old that you were paying a hundred dollars an hour to do something in your office. Like pick up trash, or whatever.

Linda: Well, I was thinking more child labor laws, too. 

Bob: Yeah, I how much of an issue that is. But in terms of this, the IRS says it has to be a reasonable salary that you were paying your child. So you need to think like, what would you pay someone to pick up trash in your office? 

Linda: Right. 

Bob: And that is a salary.

Learning a skill while earning

Linda: So we gave Alden the job of being our cameraman. 

Bob: Yeah. So Alden actually was… 

Linda: This is our oldest son, he’s 8. 

Bob: He was manning the B cam on one of the videos that we shot, actually our book trailer. And I’m going to start having them do this more often. But I figured that’s something he could actually do. And he actually hold that camera for us.

Linda: And it’s a skill he can learn. 

Bob: Yeah. And it’s something that I want him to grow in. It’s a skill he can learn. And so we paid him, just like we would pay a camera man to help film a video.

Linda: We paid him $10,000…

Bob: No. It definitely wasn’t that amount. It was an hourly rate, a reasonable hourly rate. I don’t want to get in trouble with the IRS. I don’t want to have those conversations.

Investing earned income

Bob: But, what’s great is that Alden now has earned income. As soon as your kid has earned income, that they earned money from a job (at a reasonable rate), they can open a Roth IRA. Which is awesome. We go more into depth, as deep as you want to go, in our 10X investing course.

Linda: Okay. I have a question. So let’s say we get Alden a Roth IRA this year. That he works enough hours to do that. If he does no work next year, can he still contribute? Do you have to keep working in order to contribute?  Or could we contribute for him? Do you know what I’m saying? Even if he’s not technically doing any work? 

Bob: I need to look into this, but I’m pretty confident that it has to be out of your earned income. 

Linda: Gotcha. 

Bob: He has to earn the money and then a percentage of that… 

Linda: So it has to be his money. 

Bob: Yes. That’s what I understand. 

Linda: We can’t just throw money in there. 

Bob: No. That’s what I understand. 

Linda: Interesting. Okay. 

We homeschool. And so this makes it something really doable for us to do with our kids, because this can be part of school for them. They can earn an income at the same time. 

Bob: Double duty.

Seedtime’s 10x Investing Course

Bob: Since we’re discussing investing, we’re actually going to be updating our 10X investing course.

We received a lot of requests for different lessons (etc.) to add to the course. And so we’ve already did a decent sized update in it, but we’re going to do a really significant update soon that we’ll probably call our 2.0 version.

The price is going to go up once we update. But if you do decide to join, you can get in right now at the current price. I’m not sure when this is going to be, but probably in the next couple of months. So anybody who buys our courses to this point, every update that we’ve ever done has always been free for anyone who’s ever bought our courses. We’ve never charged anyone for an update. And I’d love to keep it that way. And as long as we can, we’ll keep doing that.

The point is, you can get the course now for a cheaper rate. And we will be having a lot more of this content coming in. So if you’re interested get this course now before the price increases!

Calculating the numbers

Bob: In Ava’s story, she was earning 8% annually. And that’s very exciting! With what we talk about in a 10X investing course, honestly, I would expect a little bit higher return. And that might be somewhat optimistic. But generally speaking, over the last a hundred years and maybe with the stock market dipping down, it might be closer to a 9% average return for the S&P 500. But I typically see estimates of somewhere from 9-10% on that. And that makes a big difference over this amount of time. 

Linda: Right. 

Bob: I actually ran these numbers. This $1.2 million is based on Ava’s mom contributing Ava’s money for seven years, from age 11 to 18. And it was an amount of about $5,600 she was contributing for those seven years annually. And again, she never put another dime in after those seven years. At age 60, the money Ava invested will have grown to $1.2 million.

I pulled up an investment calculator and we’re going to just pretend. What happens if all these good lessons that we teach Ava, just sink in? “Hey, this is what we’re doing. We’re contributing $5,600 annually.” What if we got her to actually continue with it from age 18 until she was 60, and she just continued to contribute $5,600 a year? We teach her to invest and then she’s continued to do invest. Let’s just show what this looks like.

Okay. So her starting amount, I’m ballparking it here, let’s just say she started with $40,000 at age 18. And this would be after another 42 years of investing $5,600 a year, if she continued that.

Linda: Wow. 

Bob: So this would be better if we did…

Linda: A monthly contribution?

Bob: Yes. Very much so. 

Linda: Okay. 

Bob: Let’s just go with $5,600 and a return rate of 9.5%, because I would expect the rate to be somewhere from 9-10%. And we’ll contribute at the end of the year. Now, if we were doing this monthly it would be considerably bigger, but let’s just go with an annual contribution. When we calculate this, the investment grows to being four and a half million dollars!

Screen Shot 2022 06 13 at 7.48.33 PM

Linda: And that’s not even doing anything else.

Bob: Well, that’s with a contribution of $5,600 per year. 

Linda: No, I know that. I’m saying that’s the only thing is she’s contributing to is her Roth IRA for this. 

Bob: Yeah. 

Linda: I mean, that’s pretty great! 

Roth IRA and taxes

Bob: Yeah. And what’s great about the Roth is that a tax-free? And so all of these contributions they grow in when she pulls out this four and a half million dollars or so at age 60 she doesn’t have to pay taxes.

Linda: I am going to call my parents right now and be like, “why didn’t you do this for me?”

Bob: I don’t think that’s a good idea. 

Linda: I’d be so close. 

Bob: I don’t think that’s a good idea. Don’t do that. Just don’t do that. So, anyway investing early (and often) is pretty powerful.

Linda: It is amazing. 

Bob: Yeah. It’s a pretty cool thing that is available. 

Inheritance: a weapon or a blessing?

Linda: Do you think it is a good idea… and I don’t even know how to answer this. But my eye is twitching so bad right now. And it just stopped as soon as you looked at it. Do you see it? 

Bob: Nope. 

Linda: Really? Gosh, I can’t get him to see it. It’s so frustrating because to me it feels like I’m blinking, anyway.

I was just thinking, let’s say my parents had done this for me as a kid. It would have been better for them to have not told me about it until I was much older. 

Bob: How much older? 

Linda: Well, now it would be fine. I think we could handle it at this point in our lives. Knowing that I married you… they’re like “she married Bob, it’ll be fine.” 

Bob: So keep your kid’s investing a secret until they’re 40?

Linda: If someone doesn’t have, I don’t know….

Bob: The maturity?

Linda: The maturity, the forethought, the foresight, whatever… to save for themselves for retirement. Do you think that this is a weapon or a blessing? 

Bob: That completely depends. It depends on the kid, you know that, but… 

Linda: Well, but they won’t be a kid by the time they can receive their inheritance. They will be an adult. 

Bob: That’s true. 

Linda: But that means there’s plenty of adults winning the lottery and not able to hold on to it. You know what I mean? And I think that was my thought. 

Parenting money management

Bob: But that’s part of our job. 

Linda: Like, is this a good idea? I don’t know. 

Bob: That’s part of our jobs as parents though. 

Linda: True. 

Bob: That’s part of our job, helping our kids… 

Linda: Yeah. If we’re doing this, if we’re starting them a Roth IRA as a child. 

Bob: It’s not just about money. Like we’re teaching them how to handle and manage it. Because that’s what’s so important. Because it doesn’t matter how much we leave them, they can blow it and it can destroy their lives. But we have to teach them how to manage it and how to do manage well. 

Why you might not want to save up a huge inheritance for your kids

Bob: I was reading a book not too long ago and I don’t remember which one it was, but it was talking about this idea of arguing for giving money to your kids earlier. Rather than waiting till you die and then passing on a significant inheritance. 

Linda: Was it the halftime book?

Bob: No it wasn’t that one. I’m not sure which one. But anyway. And so his argument was for a lot who ended up dying in their eighties, you likely have a kid in their sixties or at least their late fifties. When you leave them money, at that point, they probably don’t need it. Or probably not nearly as much as they might have 20 or 30 years earlier when they were in their twenties or thirties. 

Linda: Yeah.

Bob: Because that’s the season where you’re trying to buy a house. Trying to raise kids, that are really expensive I might add. Your own salary probably hasn’t reached its peak yet. You’re probably not at the peak of your career. And so he made a good point. 

Generational wealth

Linda: It’s something that makes sense, too. If we’re building generational wealth to give to your grandkids. You know what I mean? Divide it up so that your grandkids can have money towards their starter home or whatever. To give them some good footing to step on. Especially now with student loans, being just astronomical it’s hard to be in a good financial position if you’ve gone to school. Unless you’re a lawyer or a doctor or something, making a really good salary right off the bat.

But yeah, if you’re 50 and your 20 year old kid is like, “can I have some money to, to buy a house?” It almost makes more sense for the grandparents to pass that money down to their grandkids a little bit more. Because by the time you pass money on to your kids, they may not need it.

Like your dad in particular. We’re always asking him “what do you want for Father’s Day? What do you want for Christmas?” You know? And he’s like, I have everything I want. I don’t need anything. You don’t need to buy me anything. And of course we want to bless him, but he’s not at a point where he’s like, “oh man, I just really need …,” you know? 

Bob: Yeah. 

Linda: And he also views money completely differently. 

Bob: Yeah. He’s in a different season of life. Money is viewed differently. Necessities are different. All of those things. 

Linda: Yeah. Whereas when you’re just starting out in your twenties and thirties, you need to furnish your entire house. But then also you got kids coming and it’s just expensive. 

The most important things we should be leaving our kids with

Bob: Back to your original question of, “can inheritance be a weapon?” And I think absolutely it can. Again, I think that leads to the more important point. The lessons that we teach our kids about managing money. How to do it and how to do it with the right heart. Understanding that money is a tool and it’s not a goal. Like all of these different things.

I think that is far more valuable than the 1.2 million or $4.4 million that we can help our kids accumulate, you know? Because at the end of the day, like that’s what I want for our kids. 

Linda: Yeah. 

Bob: If we’re going to help them grow their investments and do something like this, I want them to be not running out and thinking, “all right, how many Lambos can I buy? How many yachts can I buy?”

I want them to be Kingdom minded with it.

Yes, I want them to obviously be able to take care of their own needs. But I want them to be thinking like, “how can I impact the Kingdom with this?”

Linda: Yep. 

Bob: “What can we do with this? This tool that we’re entrusted with?” You know? I want them to have a stewardship mindset. So yeah, so I think wrapping all this up, I think that’s the real value here. 

Inheriting when you are over 60

Bob: If you’re in your mid sixties and you have kids in their thirties, it’s something to consider. Like not just saving it all up until you die, you may want to bless your children sooner at a time when they may need that money even more.

Linda: Yeah. Especially you’re in this position of having four and a half million dollars.

Bob: Yeah. If you’re just accumulating this massive nest egg, just because you want to dump it on your kids when you die, you might not die for awhile. You might get to your nineties and then you’re passing your money along to your 60 or 70 year old kids. 

Linda: Yeah and they just don’t need it as much. 

Bob: And what are they going to do with the money at that point? You know? So it’s almost… I don’t know. 

Linda: Live it up! That’s what they do.

Bob: And they’re seventy years old. 

Linda: They may think “I only got a few years left.” Live it up!

Bob: Yeah.

Linda: I’m going to get my Lamborghini now. 

Bob: So funny. 

Linda: Wouldn’t that be awesome? 

Bob: Would it? 

Linda: I don’t know. Just seeing 70 and 80 year old people driving around… 

Bob: In Lambos? 

Linda: …in their Lamborghinis that were their inheritance money for their parents. 

Bob: That’s a pretty funny thought.

Linda: I do think that’s funny. 

Bob: Anyway, so that is all we have for you today. Hope you have a great one.

Linda: Lots of food for thought here. 

Bob: Lots of food for thought. A

Advice wanted for Linda’s eye twitching

Bob: And if you figure out Linda’s eye twitching issue… 

Linda: Please. 

Bob: …send us a message. 

Linda: I’ll do anything. 

Bob: And if you haven’t yet… 

Linda: Except diet and exercise, I’m just kidding. 

Bob: That’s not true. Anyway. If you haven’t yet, come say hi to us on Instagram. We’re @seedtime. Just say hi. Send us a note, we’d love to connect with you. You’re awesome. Take care. Have a great one. 

Linda: Have a great day.

Related posts:

  1. How to hear from God with your giving
  2. How to use a no-spend challenge to pay off debt and save (with Frugal Friends)
  3. A Biblical formula for paying off debt miraculously fast
  4. The Bubble Taurus & the lessons learned

About Bob Lotich, CEPF®

Bob Lotich, CEPF® is a Certified Educator in Personal Finance and has over 15+ years experience writing about Biblical personal finance. He is the award-winning author of Simple Money, Rich Life and has been named a top 20 social influencer in personal finance. Check out his on-demand Christian financial class for couples, small groups and churches called True Financial Freedom.

IFCFH Book of the Year
"The best combination of personal finance and the Christian faith that I’ve read"
– James T. (SMRL reviewer)

In this biblically sound and grace-filled money book, you'll discover the NEW rules of money that will transform your financial life. Say goodbye to outdated advice and hello to a simple, automated system that helps you achieve better results with less time and effort.

"The best combination of personal finance and the Christian faith that I’ve read"
Learn more
We earn a commission if you make a purchase, at no additional cost to you.

Primary Sidebar

Bob Lotich

Hi there! We are Bob & Linda Lotich. Jesus followers, authors, podcasters, and undying fans of Michael Scott.

This site contains the lessons we learned on our journey from being stingy, debt-ridden fools, to being able to reach our biggest financial goal of giving $1 million by age 40, having zero debt & a paid off house by age 31, and peace with money in the process.

Now we share our best lessons with people like you, groups, and churches with our Award-winning book Simple Money, Rich Life and our 6-week video course True Financial Freedom.

Grab our book!

Simple Money Rich Life

Legal Disclaimer

The articles on this site should not be taken as financial advice. Please contact a financial advisor (or coach) for specific advice regarding your situation. Any references to interest rates, giveaways, deals, products, and websites are subject to change without notice. We try our best to keep the information current, but things are always changing so it may be different now than when it was first published. Also, all the pages on SeedTime help us pay the bills by using affiliate relationships with Amazon, Google, eBay and others but our opinions are NEVER for sale. Find out more here.

Footer



SeedTime is a 2x Plutus award winning website.
seedtime money logo



SeedTime BBB Business Review
seedtime instagram seedtime money youtube channel seedtime money twitter with Bob Lotich


Our book Simple Money, Rich Life was named 2022 book of the year!
  • Home
  • About
  • Beliefs
  • Blog
  • Courses
  • Shop
  • For Churches
  • Press
  • Affiliates
  • Login

Privacy Policy | Terms | Reviews | Earnings Disclaimer | Contact | 636-344-0438
625 Bakers Bridge Ave Suite 105-134 Franklin, TN 37067
©2007-2025 · SeedTime (Formerly ChristianPF)