David Bach The Automatic Millionaire

My grandmother, Rose Bach, was an amazing woman. A career woman at a time when most women weren't, she eventually became a self-made millionaire by teaching herself how to invest in stocks. She also changed my life by teaching me at a very young age how to invest, thus starting me on the road to financial success.

I received my first lesson from her when I was seven. We were having lunch one day at McDonalds's when she put down her Big Mac and said, "David, I want you to go ask the woman at the counter if McDonald's is publicly traded."

Publicly what?

I didn't know what she was talking about, and I had no intention of asking the woman at the counter such a weird question

But Grandma was adamant. "Go ask, and I'll give you a buck," she said. Back then, a buck was a lot of money, so I ran to the counter to find out what she wanted.

The woman at the counter didn't know what to make of a seven-year-old asking, "Are you publicly traded?" So she got the manager. He asked me what the problem was, and when I explained that Grandma wanted to know if McDonald's was publicly traded, he said, "Well, let's go talk to her."

He escorted me back to Grandma, introduced himself, and explained that McDonald's was publicly traded -- on the New York Stock Exchange, no less.

My grandmother smiled. "I know," she said. "I just wanted my grandson to learn how to ask!"

Spenders, Workers, and Owners

After the manager left, my grandmother told me something that would change my thinking and my life forever. "David," she said, "there are three types of people in the world. There are those who come to a restaurant like we did today and eat the cheeseburgers and fries. We call them spenders. Then there are who make the food and wash the dishes at a place like McDonald's for minimum wage. We call them workers. Finally, there are those who sell the burgers and pay the workers. We call them owners."

She looked at me closely. "You can always be someone who spends money at a place like McDonald's. And when you get older you can always get a job at a place like McDonald's and work for minimum wage."

She paused and took my face in her hands. "Or you can be smart and own the place. My dream for you is to be smart and own the place."

Owning a McDonald's struck me as a great idea. "My own McDonald's!" I exclaimed. "How would I do that?"

Opportunity Is Always Around Us

As we drove home from McDonald's, my grandmother explained to me what I later realized was the key to her financial success: "Everywhere you go," she told me, "there's money to be made -- if you keep your eyes and ears open. When you went to McDonald's today, you were a customer. You paid to eat there. What you should have noticed is that you weren't the only one doing that. Millions of people like you eat at McDonald's every day. The secret to getting rich is to recognize a successful business when you see it and make it a goal to become an owner."

That night, Grandma Bach showed me how to look up McDonald's in the newspaper stock tables. She promised that if I saved up my allowance and birthday money, she would help me buy one share of McDonald's. "Then you'll be an owner of McDonald's," she said, "and every time you and your friends eat there, you'll be happy knowing you're making money."

Later that year, I bought my first stock -- a single share in McDonald's. A year or so later, I bought my second -- one share of The Walt Disney Co.

Over the years, my little investment in McDonald's has done pretty well. I only wish I'd had enough money back then to buy more than one share. A smart investor who shelled out the $2,250 it would have taken to buy 100 shares of McDonald's back in the mid-1960s would today own some 74,360 shares, with a total value of more than $2.5 million.

But more important than how well my first stock pick did is the lesson my grandmother taught me. Opportunity is always around us. You can spend, work, or own. Owners get rich.

Start Your Kids' Money Education Early

Grandma started teaching me about investing when I was seven. Kids are even smarter today. You can start them even younger. How can you tell if a child is ready to learn about money? Put a $10 bill in one hand and a $1 bill in the other. Then ask them which one they want. If they are smart enough to choose the $10 bill, they're ready to be taught.

Teach them what you've learned about money from your own personal experience, the bad as well as the good. If you had a bad experience with credit-card debt, share that with your kids. If your home has been a great investment, share how and why that is. Above all, teach a child you love how to see, hear, and notice opportunity.

And don't just tell your kids stories. Get them started saving and investing. Take them to the bank and open a savings account for them. Better yet, buy them a share of stock in a company that makes something they're interested in. You can buy a limited amount of shares through almost all of the major online brokerage firms. If you want to invest regularly for your child and keep it inexpensive, check out Web sites like www.sharebuilder.com, www.ameritrade.com or www.tdwaterhouse.com. They make investing automatically in stocks or index funds easy and affordable online.

If you happen to have a financial advisor, take your child with you the next time you have a meeting. It may sound far-fetched, but this sort of thing can be a life-changing experience for a kid. And as a former practitioner myself, I can tell you that most financial advisors will be happy to help you teach your kids and get an investment account set up for them.

Financial education is the gift that keeps on giving. The mistake in our school systems is that we don't make teaching about money mandatory. For our kids' sake, it should be. Until it is, do it yourself.