What I Learned About Money In The 6th Grade…

Thanks for all the diverse and interesting insights on teaching kids about money, I learned quite a few things myself. As I was trying to think back and remember what I personally learned – or wish I learned – about money in 6th grade, a couple of amusing stories came to mind. They may not be all that helpful to young folks (quite possibly the opposite), but I’ll share them anyway since I am curious to see if others had similar experiences.

Flips and Underage Gambling
The allure of gambling knows no age limit. For those that haven’t heard of it – I have no idea how widespread it was – “Flips” is a simple game where first one person flips a coin, and then the second participant flips another coin of the same type. If the coins match, either both heads or both tails, then the 2nd person wins both coins. If the 2nd coin does not match, the 1st person wins both coins. Quarters seemed to be the coin of choice. For a while I was regularly losing or winning a few dollars each day playing Flips, which was a lot of money to me at the time.

The main idea was for the 2nd person to be able to control Heads or Tails, with each us having a secret flipping “method” much like craps players have when throwing dice. As the game got more and more popular, people would start to create their own cheats. One kid brought a double-sided quarter with heads on both sides to school. He was promptly beat up and the quarter was stolen, never to be found again. After that, we started to check coins. :) In addition, the more adventurous kids would even play with dollar bills, and people quickly found that folding the bills a certain way would help the bill land on a certain side. Lots of new ground rules were made up on the fly.

Lessons learned? During a particularly bad losing streak, I was unable to eat lunch for a couple days. I stopped playing cold turkey. What did I learn? Gambling is a rush, but that’s not always a good thing. Someone else is always trying to gain an edge, fair or unfair. Don’t bet what you can’t afford to lose.

Pre-teen Candy Mogul
My second memory was of a 12-year old entrepreneur. Chip was a kind of a big kid, he looked like he had been held back a grade once and could have easily been the school bully. Instead, he sold us candy. I remember in particular he sold Charms Blow-Pops for 25¢ each and Crybaby Extra-Sour Gum and Atomic Fireballs at 10¢ each. I was a regular customer, as was most of our school. His backpack was 80% candy and 20% books.

I remember thinking he was pretty smart back then, but as an adult I am even more impressed.

  • He had a monopoly. Who else could sell candy directly to kids at school? Competition is also rare when you weigh 20lbs more than everyone else. Besides, it was against the rules, and I was too scared to try and pull something like that off.
  • Smart pricing. He chose simple pricing, and at about the same price as 7-11 convenience stores. He even gave discounts for bulk purchases – instead of 10¢ each, you could get 3 for 25¢. Instead of 25¢ each, you could get 5 for $1. Even us slower folks could figure out that was a better deal.
  • Smart buying. I even recall running into him at Sam’s Club buying candy. I would guess that’s as close to wholesale as you can get as a 6th grader. This also meant that his parents were in on the scheme, or even encouraged it?! Ethicists would go nuts.

Running rough numbers in my head, I would say he maintained a 100% profit margin markup on all his candy. That gum couldn’t have cost more than 5 cents apiece. He probably made around $10-$20 a day in net profit, tax free! Sure, this was probably illegal in various ways – no business license, on school grounds, too young, non-existent tax reporting – but I like to imagine Chip as the CEO of some huge multi-national corporation now.

Is it bad that both of these stories involve illicit activities?

Comments

  1. Flips, ha! We had a similar thing, except with trading cards. We called it Flipsies, two kids would each hold a trading card about waist height and flip it toward the ground, as you said, pairs would go to one person, mismatches to the other. That’s about inherently 50/50 so you never lost or gained much that way. We eventually starting playing Knocksies, where you each set up a row of cards leaned up against a structure, and flick cards at them from 6 or so feet away. every card you knock down, you get to keep, each person taking turns.

    Of course, in retrospect, this was a horrible way to take care of our cards, but this was in 4th grade, so what did we know?

  2. Those lollipop pimps were at my school too! There were 2 big rollers, and were also intimidating enough to squeeze an extra nickel or two from me if i dared to ask for a different flavor :)

    ahhhh, the good ole’ days.

  3. Matt Good says:

    Flips is essentially a coin toss with leverage. You’ve got the same odds of winning or losing as tossing one coin, but double the profit/loss. Throw in an interest rate drag of a nickel a flip and there’s a lesson right there… They’ll learn that the house (be it a casino or brokerage firm) always wins, whether or not you do. ha!

    That actually is pretty close to one of the stories that Buffett talks about in “The Superinvestors of Graham-and-Doddsville,” which may also be useful for this sort of illustration (avoid unnecessary market participants for lower fees).

  4. We used to play it different in school. Each person would flip their own coin at the same time and cover it on the back of their hand. One person would then call “even” or “odds”, even being that both coins landed the same, odds being that they were different. If he was right, he won. Wrong, and the other person won and then got to call the next flip.

    I also used to sell candy that I bought at Sam’s club too. I didn’t make alot of money, but it was ok.

  5. “Is it bad that both of these stories involve illicit activities?”

    In today’s uber-regulated society there is no way for a child to legally work for money outside of his family. The quintessential example of a lemonade stand could be shut down in a second if it wasn’t so cute. Many roadside food or shopping stalls deal with the law on a regular basis when adults are hawking the goods. Child labor laws (not a bad thing) make it so that a kid can’t get employed anywhere in a legitimate job.

    Almost by definition, any money making activity that a child participates in will be illicit.

  6. Too funny. This post definately brings back the memories from middle school. My buddy and I also sold blow pops and jolly ranchers (bought from Sam’s Club). We weren’t able to intimidate anyone, but we were still able to make a good profit. I remember coming home each day and ironing all the $1 bills we would receive that day. Our downfall was when another student entered the business and undercut our price. Ahhh….our monopoly was no more!! In an attempt to expand our customer base we sold to a younger student who spent all his lunch money for the week. His mother subsequently told the principal about our business and we had to be shut down. A great lesson learned about economics and capitalism.

    Thanks for the trip down memory lane!!

  7. robellie says:

    I really got a kick out of this post. I remember playing marbles and tops, but never for money. However, there was that enterprising kid that always sold goodies and seemed to try to make money on everything he could.

  8. I think the kid was admirably entrepreneurial. In my book that’s like a lemonade stand…probably not legal in the technical sense, but it’s not like he was pulling in massive profits.

  9. Those are some great stories. I can’t remember anything like that when I was in school…I was too busy watching CNBC with my grandmother. If only my dad had listened to me and bought Yahoo! and AOL….we could have been multi millionaires…

  10. That’s a 50% gross profit margin, not 100% ({$0.10 – $0.05}/$0.10 = 50%). The only way to get 100% gross profit margins is to get your product for free.

  11. I wonder what Chip’s doing now…

    Has Sam’s Club really been around that long? I remember when Costco was Price Club. We always loved the family outings to the warehouse, and all of the delicious samples that we were greeted with.

    Not much has changed with Costco since then, except that now it seems like half the store is Kirkland, you can’t rely on them always carrying your favorites and they have become experts at the bait&switch scheme.

    But i still enjoy going there with the family. Although nowadays that consists of my wife & kids instead of my parents & sister.

  12. [quote]Running rough numbers in my head, I would say he maintained a 100% profit margin on all his candy. That gum couldn’t have cost more than 5 cents apiece. [/quote]

    Of course as we all learned in Econ 101, there is no such thing as 100% profit….(unless the items were free originally). But the idea is great.

    I recall buying those “Bike’s” brand chocolate bars from a guy in high-school who had a massive book bag (like a freakin’ tennis bag) FULL of those things. Those super-soft, gooey caramel bars were da’ bomb come about 10am!!

    :)

    As for myself……….I recall my dad getting me a savings account w/ his teacher’s credit union…..(I can even still picture the little register book I used to record in)…….and I do recall enjoying to see the numbers grow (I think I had $30 in there originally). But nevertheless, I thought it was cool to GROW money just letting it sit somewhere besides my dresser or piggy bank!!

    So, I think savings accounts of ANY kind (now somebody needs to come up w/ iPiggy “JUNIOR” to allow kids to open a $1 min acct. w/ $1 added monthly minimum to TEACH them how to save!) is a great idea for kids.

    ???

  13. I guess sixth graders didn’t realize that having a double-headed quarter had no advantage in the game of Flips.

  14. Did you alter the name of the kid in this story? Because otherwise I would say you were describing me when you mentioned Chip. I used to sell candy in school, with blow pops being the big mover and I had the same pricing model.

    I was buying the boxes of candy at Sams Club and would usually double the cost of each box. Sour Apple was the big seller.

  15. Ha, this was a cute post. I remember peddling home-made (ugly ’80s) jewelry and some random office supplies during recess in elementary school. I wonder what that says about my business skills… :)

  16. Phoenix – I looked it up, and Sam’s Club started in 1983. This would be… around 1990 for me.

    Kimberly – A two-headed coin does help when you go 2nd. (You don’t flip at the same time, you take turns going 1st or 2nd.) If it the 1st coin is heads, your goal is to flip heads…. a much easier task if both sides are heads!

    Derek – Where did you go to 6th grade? ;) I find it quite amusing that several of the readers of this blog were the “lollipop pimps” of their school.

  17. LargeTalons says:

    Ha! I too was a candy pusher in the 6th grade, funny how those personality traits start to emerge at around that age. For me though it was all bubble gum. My downfall was overpricing I think, as several students eventually formed the sixth graders version of a consumer advocates group and convinced everyone to boycott me. I remember receiving at least a few notes explaining that what I was doing was wrong by taking advantage of people. I’d like to think that those kids are somewhere suing some big corporation now :)

  18. Jonathon, I went to Madison Junior High. Was it me? :))

  19. LargeTalons – LOL!

    Derek – Sorry, but no. I’m pretty sure his actual name was Chip, but being 18 years ago I could be wrong.

  20. We used to play Pogs at my school… I’m not sure if this was a widespread thing or not but it was certainly popular in my area. Does anybody else remember these? They were little round discs that you stacked up and then hit with a “slammer,” and the way the Pogs landed determined whether they went to you or to your opponent (to keep). The game was eventually banned at our school because it was felt that kids would lose collectible Pogs which were worth money and they’d get upset and their parents would call the school, etc. Rare Pogs might have been worth something in like 1994 but I don’t think they’re worth the paper they’re printed on now. :(

  21. Great story about the lollipop vending kid.

    If he took home $10-$20 every school day, that’s huge for a kid his age.

    A lot of PF bloggers report extensively on such amounts of side income.

  22. was the fat kid good in studies too?

  23. Seadog Says:
    April 18th, 2008 at 9:12 am

    That’s a 50% gross profit margin, not 100% ({$0.10 – $0.05}/$0.10 = 50%). The only way to get 100% gross profit margins is to get your product for free.

    *************************
    If I had $1, and made another $1 out of it, meaning now I have $2, isnt that 100% growth?

    I am konfused!!

  24. OMG!

    I sold Charms Blow Pops in Jr. High (that’s what it was called when I went). I remember supply was so constrained. I used to go to the drug store after school and wait for the delivery guy to come. Then I would by all the Blow Pops. There was no Sam’s Club or Costco in the 1971!

    I also remember flipping. I’m older, I think we used dimes.

    We also played blackjack in my hood! (-:

  25. If get get a product for free and sell it for even $0.01 that is an infinity percent return.

  26. This is kind of off subject but I thought this was a good deal to pass along. I just saw an offer by american express to subscribe free to travel and leisure for 2 issues($2.99 processing) and receive a free airline companion ticket. All you have to do is call within the 2 month trial period and cancel and you get free ticket. I think they are counting on people forgetting to cancel but even then it is only 19.99 which I would say is pretty cheap for a plane ticket. I am not sure of the restrictions on the ticket but I am leaning towards trying it.

  27. Children are learning more and more these days soon we ill have more preteen millionaires, because they know more about whats is going on in the world then we do.

  28. Pogs! I remember them! They were huge in the 7th grade. I spent much more than I should have on them and now have a shoe box of Pogs. I probably can’t give them away now! I did, however, learn that trends come and go and I did regret spending so much of my allowance on something so trendy and frivolous. For me, pogs were an important life lesson and something that I wouldn’t have learned without trial and error. I wonder how we can teach this in schools, especially since I see neighborhood kids spending so much money on i pods, designer handbags, and fashionable (read: really expensive) clothes. I wonder if it’s even possible to teach the value of money in schools… now I’m getting a little off topic…

    On the flip side, my dad told me that they were a hot game when he was a kid, so hopefully, in another 30 years or so, I’ll be able to sell off my shoebox of pogs as “vintage”! ;)

  29. Kimberly says:

    So you’re saying that he would switch in the double-headed quarter when the first flip was heads? Then yeah, that’s totally cheating.

  30. I was a bubble gum pimp. I sold bubbalicious in a variety of flavors. I bought the five packs at the store (not labeled for individual sale) and sold them individually. I think I sold them for 40 cents or 3 for a 1.15. My odd pricing was to undercut the gas station outside of school. This was 6-7th grade.

    Every night I would load up two cigar boxes and my “tender pouch” and get to school early to sell at breakfast. After lunch classes were also a hit if I broke up the packs into individual pieces for spare change at 10 cents a pop (50 cents a pack).

    I think I paid 1.20 for 5 packs, so 20 cents retail a pack and 40 cents to sell. This was in the early 90s. I remember having my mom drive me around to all the grocery stores one night a week to load up!

    My favorite memory is one class at the end of the day where there was a big rush before the bell rang. I looked around about halfway through class and nearly everyone was chewing and blowing the occasional bubble. There’s nothing like seeing a group of very satisfied customers paired with a lot of coin in your pockets.

    Of course, an old teacher eventually caught on and got me busted with the principal. He gave me some speech about tax evasion and I stopped. By then the copycats had risen anyhow.

  31. man i feel like we went to the same school! it is shocking how it looks like this went on at every school. but yea we had quarters and some of us sold airheads, great sugar candy. i wasnt a main seller but i would buy say 10 from the seller and then either eat them myself, or re-sell to others for slight markup.

  32. Ahhh… memories. I remember going to Pace Warehouse (later sold by K-Mart to Wal-Mart) with my parents and buying bulk candy and baseball card cases (the ones with the smaller packs inside). I would under-cut the local stores by a few cents and still make a nice profit. While I didn’t sell anything at school (why didn’t I think of that then?!), I had all the kids in the entire neighborhood buying from my little “store”. Why not? It was convenient, cheaper, and the local kids didn’t have to get permission from their parents. It’s funny to reflect on it now. I wonder if my parents secretly encouraged it? They certainly didn’t discourage it, and I’m sure I learned a lot while doing it.

  33. Lewismind says:

    Chewing Gum was one of the worst offenses in my Jr. High. I lived in the suburbs where there were no corner stores and I was bussed into the inner city. The city kids would sell Fortune Bubble and PAL gum for 5 cents each. They were buying at 1 cent each at the corner store.

    Now that I think about it we were participating in a black market situation. As the administration would crack down on the sellers the price would go up. Everyone had their own suppliers and knew the deal had to go down in secret. It was like drug dealing. We did not have any drugs that I know of in Jr. High but once your hooked on Fortune Bubble you have to have your fix!!!

    Funny post, brought back some funny stuff.

  34. soesbandit says:

    I recall flipping baseball cards years ago. This was a game of skill. You held the card sideways with two fingers on one side and your thumb on the other and flipped it side-over-side out onto the floor, the next guy flipped his card trying to cover part of your card. If he did, he got the cards. If not you flipped another and so on until someone covered one and took the cards. My brother and I pretty much cleaned out a kid that lived near my grandmother. We agreed ahead of time give each other back our cards and just keep his. And he had lots of old, more valuable cards while we flipped the junk cards we didn’t like anyway.

    At school we played a game with BB cards where one kid split a stack of cards between each hand and the other kid picked one hand and bet a certain number of cards (there was usually a max limit). The first kid turned over the stacks and the one with the highest card number won the number of cards bet. Then one kid glued three cards together with one on the front and two (one very low # and one very high #) folded in the back. Based on which side you bet on, he would flip the folded card to reveal the one with number that he needed to win. Pretty slick for a seventh grader.

    I used to sell rubber bouncing balls in grade school. The teachers sure hated it when dozens of them were bouncing all over the classroom. I also sold little plastic trolls one year….just because I was able to buy a bunch of them cheap.

    Outside school, my brother and I even sold fireworks. They were illegal in our state so we would load up every summer when we went on vacation and then sell them to kids in the neighborhood. A gross (12 packs of 12) of bottle rockets cost us about $2 and we sold them for $1 a pack ($12). Talk about breakin’ the law.

    I also sold homemade iced tea and lemonade to people waiting in gas lines in the 70′s. We rigged up a cooler to my Dad’s golf club pull-cart and pulled it behind our bikes up to the gas station. Business was great until another kid started selling Coke and Pepsi. We didn’t have the “working capital” to buy sodas so he essentially put us out of business.

  35. Was Chip’s surname Goodyear? Because you just may be right about how you imagine him now…

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