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Courtesy of Ellie Diop
- Entrepreneur Ellie Diop started a $1.3 million business with a $1,200 pandemic check.
- She pays each of her four children up to $500 a month to do small tasks around her office.
- She deposits half their paycheck into a custodial Roth IRA, where the money could grow to millions.
In 2020, after getting rejected from over 50 jobs, 30-year-old entrepreneur Ellie Diop was determined to find creative ways to provide for her four children. When she received her $1,200 stimulus check, she used every penny to invest in her own coaching business, Ellie Talks Money, teaching other millennials how to start their own businesses.
Ten months later, her business earned $1.3 million, yet she was still living with her mom in Los Angeles. "When I started my business, I was living at home at my mom's house. I realized I didn't have anyone to guide me, and I was so afraid. I hired a financial planner."
Diop's financial planner helped her move out of her mom's house and set her children up to become millionaires by age 30 using two simple steps.
1. Diop hires her children to do small tasks around the office
Diop hires all four of her children to do small tasks around the office. "My son sometimes records my content. My twins take pictures of me for my Instagram, a little bit of advertising. So it's not much, maybe $250 a month, but it's planting seeds."
According to records reviewed by Insider, Diop pays each of her children up to $500 a month to hold the camera for her while recording content, light clean-up around the office, and other small tasks.
2. She puts 50% of each paycheck into a custodial Roth IRA account
"I actually do a 50% split, so I will pay them, for example, my older kids $500 a month, then the amount I'm investing is usually half of that," says Diop.
She uses a custodial Roth IRA, an investment account where kids can invest their earned income for retirement. Parents and grandparents can also contribute to the account, as long as their contributions don't exceed the child's earnings.
Diop adds, "So my son, we started at age 7. If I keep putting in $6,000 a year" — the annual contribution limit for a custodial Roth IRA at the time — "which is about $500 a month until my son is an adult, by the time he's 20 years old, that'll be a six-figure investment portfolio."
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Diop lets her kids decide how they're going to spend the rest of their paychecks
Besides investing toward their future, Diop shows her kids exactly where their hard-earned cash is going, then lets them spend the rest of their money as they please. She opened a kid's debit card with Green Light, a company that creates bank accounts for children and teens.
"It's a double win," she says. "You're paying your kids so they start understanding the value of money. You're teaching them, 'OK, if you wanna buy a 'Frozen' doll, you gotta buy it.' This way, they understand that if they want an Elsa doll, they need to work for it."
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This article was originally published in October 2022.