Dear Daughter,
This is where it all begins. Income, in its most simple form, is money you receive for doing work. That’s it! Memo complete! Move on.
Okay, I’m pretty sure you know that an explanation from me is never that short……sorry about that but listen up.
While that definition is accurate, it does not go far enough. You can receive Income in many different ways and not all of it requires you to do the work.
Now, wouldn’t it be cool to have people or things doing work for you and giving you all the money they make?!?! That’s even better right? Well guess what? If you take some of your income (money) and then put it in the bank, your dollar bills instantly become employees doing work for you and giving you all the money they get for it.
Let me give you an example:
- Let’s say you work really hard for a month and you make $100. Not bad right?
- Now, because you are good with money, you put $30 immediately in your savings account and set aside another $10 for charity. Now you have $60 (100 – 40) left to last you through the next month until you get paid again.
- You think long and hard about what to do with that sixty bucks. What do you absolutely need? You look in your closet and remember that your boots have a hole in them and no longer keep your feet warm at recess. After you and mom do some research online, you make the decision to buy a pair of cute boots for $40.
- You now have $20 (60 – 40) left for the month. Because you are 11, you have no other requirements for that money. You don’t have to pay for your room…..although that is a thought
then there’s the food, again 
- After a lot of guilt, and encouragement from your father, you decide to save the remaining $20 as well. This brings your total savings for the month to $50 (30 + 20). That $50, when put in the bank becomes 50 employees that you saved from doing things they didn’t want to do.
- At the end of the year you go and check on your employees and they are doing great. In fact, because you saved them from doing something they didn’t want to do, like buying things you don’t need, they give you all the money they made!
So there you have it! You just earned Income for doing almost nothing! The Income you get from keeping your money in the bank; and many other places, is called Interest. I don’t know about you but receiving Interest (or new employees) for doing almost nothing sounds pretty cool! I use the words “almost nothing” for a reason.
You have to make the decision to save your money and then let it grow. The “almost” is you making that decision. The “nothing” is you letting your money grow without withdrawing it.
Guess what? It gets better! Your employees can do many different jobs that pay them much better than what they make just working away earning Interest in a bank. There are so many jobs out there for them that it might take a blog to explain it all. Hey……..you are in luck little buddy!!
Love, Dad
