Fingers in the Jam Jar

Hi Scott,

When kid #1 was born, I put $10,000 into an index fund for him. Kid #2 is now due and I’ve done the same. I have not set up the money in a trust, though. I DO NOT want to hand over the Jam Jar when they turn 18, unless the funds would help them with a home, business, etc. So do I have to sign them over at 18 to avoid capital gains tax? Or can I sign them over at 25, 30 or whatever?

Simon

Hi Simon,

Yes, if you bought them via a share broker, they’ll automatically transfer to your kids when they turn 18, and they’ll be free to cash them in and head off on a bender to Bali.

(An alternative to this is to purchase your index funds either in a family trust or via an investment bond, which allows you to nominate the age your kids can inherit the money.)

So you’ve just created a trust fund kid, right?

Wrong!

Here’s how I’m doing it with my kids.

Don’t hide the fact that you’ve invested money for them: it’s an awesome opportunity to show them how compound interest works.

But do let them know there will be NO handouts (and no Dad-sponsored Bali benders).

Instead, set up what I call the ‘Barefoot Ladder’:

Use the money to match them, dollar for dollar, for something they’re saving for: a car, a small business, a house deposit, plastic surgery (well, maybe not). Either way, you choose what it is — and they work for it. And the harder they save, the more they get.

Scott.

Night-Night, Barefoot

Hi Scott,

I have been a proud Barefooter for years. Last night my three-year-old son requested ‘The Doggie Book’ for his bedtime story. Thank you for being such a positive influence in our household.

Megan

Hey Megan,

That’s awesome! Take that, Bluey!

Scott.

Thanks, Mum

Hi Scott

I will be forever grateful to you for removing the noose around the neck of both me and my mum. A couple of years ago I read your book and was hooked — I set up my buckets and paid down my credit cards. Then I realised I could also help my mum. She had just hit 70, was desperate to stop working, had little super, had credit card debt, still had a mortgage, and was being crippled by strata and council rates. On New Year’s Day of 2018 I sat her down and suggested she read your book, which she did in a couple of hours. Before we knew it, her credit cards were gone and her dreaded bills were covered. Most amazingly, she sold her place, paid off the mortgage, and retired to the country. Honestly, the best gift you could give your mum is to rid her of money stress. (P.S. I’ve just purchased my own first home — something I thought would never happen.)

Thanks, Jess

Hi Jess,

What a fantastic story!

Let’s repeat that last line so everybody gets it: “The best gift you could give your mum is to rid her of money stress.”

Not flowers. Not chocolates. Not Apple gear.

You know who would love this idea?

Anna Jarvis.

Anna is none other than the Mother of Mother’s Day.

She created the first Mother’s Day in 1908, to honour her late mother … and all mothers.

Yet, just like Coca-Cola hijacked Christmas (ever wondered why Santa’s dressed in Coke’s corporate colours?), it didn’t take long for corporations to cash in and commercialise Mother’s Day.

But she wasn’t one to stand down; instead she fought them every step of the way.
Newsweek reported that she once had as many as 33 simultaneous Mother’s Day lawsuits on the go!

She devoted the rest of her life — and every cent of her savings — to fighting to keep Mother’s Day pure.

In a day and age where you can buy anything for your mum and have it gift-wrapped and delivered, spending time with them, and maybe even helping them out, is what Anna Jarvis envisaged all those years ago.

You Got This!

Scott.

Help! My Mother-in-law Breeds Siamese Fighting Fish

Hi Scott,

I get along well with my mother-in-law — it’s her business ideas that drive me nuts. One day she discovered the marvellous world of pet breeding, specifically high-end ragdoll cats. Quite good money for cute little kittens. She took a loan — from my wife — and off she went. But the kittens turned into old cats, with no buyers. That was 10 years ago, and it almost bankrupted my wife. Lesson learnt? No! She switched to great blue mastiffs (very Instagram worthy), but still no buyers. Lesson learnt? No! Next came Siamese fighting fish!

And that brings us to today. She holds to the idea of entrepreneurship like a lottery ticket, thinking her luck will change overnight. We have shown her that if she had taken the dole and saved it, instead of buying animals, she would be in a better position. Even those poor creatures would be better off anywhere but where she has them. But she doesn’t want help. How do you make someone so delusional see the red numbers?

Craig

Hi Craig,

She sure sounds like she’s having lots of fun!

You? Not so much.

To you, the answer to her problems is so simple it’s like shooting Siamese fighting fish in a barrel: “Stop doing this, you’re going broke!”

Yet she seems purr-fectly happy with her monetary menagerie, mate!

So let me give you the same advice I give any family member who writes to me:

Never, ever ‘lend’ money to your family or friends.

Give it to them instead.

Mentally, get to a point where you’re giving away the money: surrender any thought of it ever being repaid. Which is a decent strategy if you know she’s using it to breed pets she’ll struggle to later give up.

So on this Mother’s Day I want you to stop off at the butcher and get as many bones and offcuts as you can carry.

Then tell her the debt is forgiven!

(And never lend her money for ragdoll cats again.)

Scott.

The Barefoot Barn

On the farm we’re building a barn.

Okay, honestly, it’s an old-school man cave, with a pool table, a dart board and a very big library.

“It’s very analogue, Dad”, says my eight-year-old.

He’s right of course. There’s not a screen in sight. Yet at least my kids are used to it — over the years I’ve gone out of my way to do things with my kids that encourage them away from screens.

In fact, I joke that my aim is for them to be bored a decent amount of time. After all, that’s when ideas are formed, and connections are made. Instead, we now live in a world where we are constantly distracted, and manipulated, into what to think and believe.

And so I was interested in a study last month by Reviews.org which found that “Aussies spend 17 years of their life staring at their phone”, which works out to be 5.5 hours a day for the average Aussie.

My first thought was “that sounds pretty high”.

So I grabbed my wife’s iPhone and checked her usage (‘settings > screen time’):

“5 hours a day.”

And my screen time?

“Zero”, because I don’t carry a phone (though my wife argues strenuously that I add to her daily limit).

Worse, the study found that the average Millennial spends a massive 7.3 hours a day staring at their phone.

That’s kind of crazy when you drill down on it. Deduct sleep (eight hours) and school (where phones are banned or frowned upon) and the average young Aussie spends almost every other waking minute staring at a screen.

Astounding.

Now, I’m certainly no shrink, but my thinking is that if you’re devoting seven hours of every single day to doing something, you’re well on the road to having an addiction … which is exactly how the tech titans have engineered it.

Here’s the point: the most valuable currency in the world isn’t Bitcoin, or dollars, or Dogecoin.

The true currency of the internet age is attention.

When you capture and control people’s attention, you have power.

(Just ask Dogecoin investors, or Donald Trump.)

That’s why Big Tech will continue to use their psychological tricks (nudges, notifications, outrage) to steal more of your attention. And it’s also why they’re trying to hook us younger: kids as young as six have Messenger Kids, and Instagram has announced it’s launching a kids’ version, with a spokesman for Facebook’s Australian operations saying the platform would “fill a distinct gap in apps for children”.

What’s the bottom line?

Well, I know I’m fighting a losing battle. This is the world our kids are growing up in.

Yet I’m taking a leaf out of Steve Jobs’ book. When the founding father of technology was asked by a New York Times journalist asked what his kids thought of the iPad, he gave an unexpected reply:

“They haven’t used it. We limit how much technology our kids use at home”.

And that’s why I’m holding out in my old-fashioned analogue barn for as long as possible. After all, my kids have got plenty of time before they become adults ... and stare at their phones for 17 years.

Tread Your Own Path!