Making Money the P.T. Barnum Way

I missed teaching my kids how to make and manage money. I'm sure this was because I don’t remember anyone ever teaching me. Looking back, I suppose I was supposed to pick up this important skill by watching, listening, and experiencing. At least, that’s what I did.?

The watching was probably the most impactful. Watching my parents spend and save set stakes in my subconscious. How my mom shopped for the family, for herself, and for me. The gifts I would get for my birthdays and Christmas. The cars my dad drove. And then there were savings books. My mom would go to the bank weekly to deposit $5 or $10. The little book the Savings and Loan would give her showed each written entry from the bank teller of receipt plus interest accumulated. And then there were the saving stamp booklets which allowed for getting those household items she always wanted but never bought.

The learning from listening included the arguments over money. The more rational discussions between them of what our family could afford. The talk of saving for our annual two week vacation. The “we can't afford that” shaming when I asked for something as we walked through a store. And the brief and infrequent lessons on how to best manage my birthday money. The message was always on saving. It never seemed to be focused on making money.?

Finally, at eight years old, I learned how to make money by working. I learned early that when I worked, I was given money. Shoveling snow from driveways, delivering papers, and then working for a men's clothing store. The entry-level jobs paid, but paid poorly. This was motivation for me to find the next better paying job. Looking back, I repeated this pattern for the rest of my life. Simply put, trading my time and effort for a higher and higher reward. I was never satisfied.

Then there were the bad experiences that provided valuable lessons. My dad liked to gamble. I learned this by watching. And then I tried to do what he did. He seemed to have fun doing it. I learned through experience that losing money gambling completely overshadowed the thrill of the occasional win.?Gambling may have been fun for my dad, but it wasn’t fun for me. To this day, I don’t gamble—except in angel investing.

Angel investing provided me with the gambler’s excitement combined with using my experience to pick potential winners and help them win. I was an involved angel. I would reduce risk by staying close to the entrepreneurs I invested in. I would do anything I could to reduce my risk of loss by helping the entrepreneur succeed. It was a win-win, and that's why I did angel investing for thirty years.

Then I experienced how to lose money as an angel investor. This is called passive angel investing. This passive investing not only included following the crowd into angel deals, but also acting on hot tips and intuition on public stocks to make quick money. I still do this from time to time...and I always?lose money. It reminds me of the night I entered a poker game with my week’s pay and lost it all. I was sixteen when this happened. I worked forty hours and lost it all thinking I could make quick money. Chasing quick money is the fast way to lose money that took a long time to make.

Then there were the credit card lessons. Buying up to my credit limit and paying it off over a long period of time. It once took me over two years to pay off a $2,200 balance for suits for my first professional job.

There were the real estate lessons of buying high and putting too much into home improvements. Only to sell?years later and be lucky to get my money back with zero return. Then watching the guy I sold to double his money in seven years doing the exact opposite.

The lessons continue to this day. And to this day, I am still burdened on not really doing a great job of teaching my children how to make, invest, and manage money.?

And then I recently picked up a book that captures all these principles. It is a forty page book written over one hundred years ago. I've already read it twice. And I know I’ll read it again and again. It is rich in principles and thoroughly entertaining.?

The book is The Art of Money Getting: Golden Rules for Making Money by P.T. Barnum. Yes. That's right. The man of circus fame. In this book he captures all he learned about making money and building wealth. I wish I had this book when I started the art of money getting. I wish I had the book when I started my angel investing career. It would have been like having the Ten Commandments for getting money. This doesn't mean I would have kept all the commandments all my life. But at least I would have known when I was breaking the rules.?

P.T. Barnum begins the book with the definition of economy. He says many people don’t know what this is. Many do and still ignore it. Economy is spending less money than you make. He says the person who does this is happy and the person who doesn't lives an unhappy and anxious life. Is this obvious? Yes. But with easy credit everywhere, the temptation is too great to overcome. I know. You learned this lesson the hard way, too. It’s ok to admit it.

The principles he shares are of ever-increasing complexity. He speaks about being too miserly and missing opportunities. Should you lend money and to whom? Even investing in other people's businesses. These are excellent angel investing rules, by the way. And for those who embrace these rules and make money in angel investing, he goes on to tell you how to hold on to it. P.T. is not miserly. He speaks of the importance of giving money to help others. It is a book about living a rich life by putting money getting into perspective.

Money is the foundation of our economy. It is a commodity each of us deals with every day. It breaks families apart and keeps families safe and secure. Money builds reputations and destroys people. People live to make money and sometimes work themselves to death to accumulate it. Money is talked about in the Bible more than heaven and hell. It is an ever-green topic along with time management. We spend our time trading one for the other, oftentimes not knowing the long-term consequences of this trade.

This book covers it all. Take all you watched along with all your listening and experiences with making money, then add this book to your mix. You will be rewarded. Apply these principles of money getting, and you will be richer than you thought possible.

And yes, get a copy for your kids. I don’t care how old they are. They will thank you. Money is tough to make and easy to spend. Buy this book for $15 on Amazon. You will show your family how to come out on the right side of economy.

What was the most impactful financial lesson you learned as a child, and who taught it to you?