A common piece of advice I’ve heard is “Take risks while you’re young.” This is often applied to personal finance, in terms of trying to land a higher-paying job, starting a new business, or pursuing your passion. The thinking goes something like this:

• The older you are, the more likely you’ll have a spouse or partner that depends on your income, or at least they’ve become accustomed to how it makes their life more comfortable. They may not be supportive of having it disappear while you chase a dream.
• You’re more likely to have children, who will take up all your free time and you’ll (hopefully) be happy about it.
• You’re more likely to need to take care of your parents. Simple addition tells us that if you’re in your 30s and your parents had you when they were in their 30s, that means they’re in their 60s or 70s.
• Basically, as you get older the more likely you’ll have more responsibilities and less time.
• More responsibility increases the importance of income stability over income potential.
• Less time means you can’t go on crazy streaks like 100-hour workweeks on your startup (or 60 hours on your side start-up on top of your regular 40 hour/week job).
• On top of all that, older often means less energy.

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If you haven’t seen this film about 9-year-old Caine and how he turned loneliness and boredom into his own cardboard video game arcade and an inspirational phenomenon, you must watch it now:

There’s also now a follow-up clip with Caine, his $200,000 college fund, kids he’s inspired, and the Imagination Foundation the filmmaker started:

Finally, check out the Cardboard Challenge happening on October 6th at locations around the globe. Very cool.

Here’s a nice feel-good story about a financially-savvy teenager. 14-year-old Willow Tufano may be America’s youngest landlord. She bought a house in a short sale in Port Charlotte, Florida for $12,000. The 3-bedroom house is now rented out for $700 a month! (The house was on the market for $100,000 at the peak of housing bubble.)

More details – She put down $6,000 cash, her mom (a real estate agent) put down $6,000. She earned her share of the cash primarily from offering a service where she clears out foreclosed houses on behalf of the new investors. She then picks through the stuff and resells any goods or appliances that she can. She also spends her weekends looking for deals from garage sales and resells them for a profit on Craigslist.

I have to wonder about the whole nature vs. nuture thing about kids like this. Certainly having a real estate agent for a mother helped in this example, but so I doubt that in itself is enough. In my idle daydreams, I think it would be cool to start some sort of farmer’s market stand with my kids to show them some business basics. From the Ellen Show:

More: DailyMail, Inside Edition

I’ve gotten to the part in The Snowball that involves Charlie Munger. A very interesting person, although perhaps not someone I’d like to have a beer with (I’d feel stupid), he is probably best known as Buffett’s long-time friend, business partner, and vice-Chairman of Berkshire Hathaway.

Even before meeting Warren Buffett, Munger was wealthy according to most standards from real estate investing. Here is a quote from a Buffett interview in the book:

Charlie, as a very young lawyer, was probably getting $20 an hour. He thought to himself, ‘Who’s my most valuable client?’ And he decided it was himself. So he decided to sell himself an hour each day. He did it early in the morning, working on these construction projects and real estate deals. Everybody should do this, be the client, and then work for other people, too, and sell yourself an hour a day.

Now, I’m sure just being a successful lawyer would be plenty for many people. But if you aren’t satisfied with your current situation, why not work for yourself an hour each day? Instead of just idle dreaming, set aside specific time for action. Perhaps the key is small chunks of time, but at regular intervals.

Example. If you’re an administrative assistant making $10 an hour and you don’t want to be, don’t just sign up to work another hour for $10. Working longer is not necessarily the best idea. Instead, give up the $10 (or $8 after taxes), and improve yourself in some way or create something so you’ll be making a lot more. There is no one solution, look into yourself. Nursing school? Investment books? Finding a mentor?

Finally, another quote from Charlie Munger about the desire for independence:

I had a considerable passion to get rich. Not because I wanted Ferraris – I wanted the independence. I desperately wanted it. I thought it was undignified to have to send invoices to other people. I don’t where I got that notion from, but I had it.

I think I’ll be buying a copy of Poor Charlie’s Almanack the next time I run low on things to read, even though it costs fifty bucks.

Update: I bought a copy of Poor Charlie’s Almanack and will be reviewing it shortly. I still think this idea of working for yourself for an hour each day is great advice and timeless.