Articles & Questions
Every week I publish a fun new article on a money topic I think you’ll find interesting. I also answer a handful of reader questions. Subscribers to my newsletter get to see everything first — but you can browse some of my past articles & questions on this page.
My Best Articles
Not sure where to start? Below I’ve handpicked a few of my favourites. And if you like what you see, don’t forget to subscribe to my free newsletter to get new issues before anyone else!
Search Articles
Can Grandparents Do This?
Hi Scott, I ordered three copies of your book, one for each of my adult children, but I am worried they will be too busy to get time to read it. For my grandkids’ sake I really want them to actually do it!
Hi Scott,
I ordered three copies of your book, one for each of my adult children, but I am worried they will be too busy to get time to read it. For my grandkids’ sake I really want them to actually do it! So my question is, is this something we should do as grandparents, or do you have another idea?
Barbara
Hi Barbara,
I’d say you have three options:
First, you can do it with your grandkids. Why not? It may well grow into a special bond that you create with them.
Second, you can read the book and break it down for your time-poor adult kids so that it’s really easy (all they need to get started is three jam jars and a scoreboard (you can print from my website ‒ www.barefootinvestor.com/resources ‒ for free). Then you can casually skip to Chapter 3: The Grandparents’ Dinner Party and introduce them to the concept of the Barefoot Money Meals while you’re enjoying your grandkids’ cooking!
Third, you can get them (your adult children, I mean) the audiobook and ask them to play it when they’re in the car.
Here’s to changing your family tree!
Scott
The Kind Stepmother
Scott, I have five beautiful new step-daughters. They all live nose-to-device, get cranky when offered advice of ANY kind, “don’t like to read”, and have a massive hole in their hand.
Scott,I have five beautiful new step-daughters. They all live nose-to-device, get cranky when offered advice of ANY kind, “don’t like to read”, and have a massive hole in their hand. All of them work, yet promptly spend it and/or are paying off maxed-out credit cards/bank loans (already!). They think living in debt is just life, what ‘everybody does’. Which of your books is best for young people with zero attention span? How can we get them interested in making a positive change?
Tania
Hi TaniaA cynic would suggest I trawled through thousands of emails to find one to plug my upcoming book.I didn’t … but maybe it’s the universe sending some self-promotional vibes my way? In any event, I’d suggest you get my new book, The Barefoot Investor for Families, which is now available for pre-order.If the girls are still living under your roof, you have more influence on them than you know. My new book sets out 10 very special ‘Barefoot Money Meals’ to give them experiences that will change the way they think about money. (I’d suggest you go straight to Chapter 4: ‘Breaking the Brat’.)Thank-you for reading,
Scott
Down the Rabbit Hole
Hi Scott, I have a spinal cord injury and am paralysed from the chest down. I am self-employed and lucky enough to have a wonderful wife and two great kids.
Hi Scott,I have a spinal cord injury and am paralysed from the chest down. I am self-employed and lucky enough to have a wonderful wife and two great kids. Health-wise I probably have 10 good years left, as I have been in the wheelchair now for 20 years and kidney problems tend to happen at the 30-year mark. I am 46 and earning $80,000 and I want to put my kids through private school, but I also want to see them grow up, not just work and come home exhausted. What is your advice?
Chris
Hi Chris,I’d seriously consider not sending your kids to private school.Why?Because you say you have 10 good years to spend with your kids.Personally, I’d rather spend less time working -- and less time stressing about work -- and invest that time into your kids. If I were in your situation, I’d do two things. First, set up a direct debit into an online saver, so that you put your savings on autopilot. Second, spend that money on experiences you can do with your kids: travel, sporting events, hobbies.Good luck, and good health.
Scott
Barbie and the Rocker
Let me tell you about a 59-year-old woman who makes billions of dollars a year. Her name is Barbie, and, after years of being in the (toy) doghouse, she’s suddenly cool again.
Let me tell you about a 59-year-old woman who makes billions of dollars a year.
Her name is Barbie, and, after years of being in the (toy) doghouse, she’s suddenly cool again. Last week toy conglomerate Mattel reported a 12% rise in sales of the buxom blonde:
“Mattel is trying to lure customers back by recasting the toy’s image to play up not only the nostalgia but a newer notion: they’re beneficial to child development”, says the Washington Post.
Crikey.
When I was a kid, all Barbie did was promote an unrealistic body image.
(Doctors have said that if Barbie were real she’d only have room for half a liver and a few inches of intestine. Yet apparently there is room for a much bigger brain.)
Okay so Mattel hasn’t upgraded her liver, intestines or brain … but they have added a touch of tech.
Enter Hello Barbie.
Here’s how Mattel describes the latest round of plastic surgery they’ve performed on the world’s favourite rake-thin, six-foot-tall, FF-breasted doll:
“The number one thing girls have asked for, is to have a conversation with Barbie. Well, using WiFi and speech recognition technology … now they can! Girls want to learn, tell stories and make friends … and for the first time Barbie recognises what girls are saying, and can respond!”
Uh-huh.
Here’s what’s really happening:
“A microphone records little girls’ private conversations. It transmits those conversations to cloud servers where they are analysed by algorithms and are listened to by employees of Mattel and its technology partner, Toy Talk, and they are shared with unnamed third parties”, says Susan Linn, from Campaign for a Commercial-Free Childhood.
Creepy.
“Hello Barbie asks many questions that would elicit information about a child, her interests, and her family, which could be of great value to advertisers”, says Angela Campbell, Director of Communication at Georgetown Law School.
Clearly this is outrageous.
We need to protect our vulnerable little children from a conglomerate that is openly spying on them.
They’re kids, for goodness’ sake!
I mean they’re not old enough to understand the long-term ramifications of giving up their privacy, and having their data sold and later used against them. As adults we obviously wouldn’t fall for that, right?
Wait a second …
Yes, some of the fastest-selling tech gadgets on the planet right now are Amazon Alexa and Google Home ‒ voice-activated speakers that are constantly listening in on our conversations. Oh, and then there’s the cute-looking Alexa Alarm Clock, which has an in-built camera and microphone … in your bedroom?!
Barbie may be off her rocker, but we’re all being played like toys by big tech conglomerates.
Public Versus Private
This week was the cut-off for enrolling our oldest son into Primary school. It’s been a highly stressful time for my wife, who’s been agonising over our choices: public, private, Catholic.
This week was the cut-off for enrolling our oldest son into Primary school.
It’s been a highly stressful time for my wife, who’s been agonising over our choices: public, private, Catholic.
Not me.
I’m a big fan of public schools, especially for primary school. And so, when I went along to the open day for our local public school I asked just one question:
“Who is your school banking with?”
My wife rolled her eyes and then proceeded to warn me against writing about this highly contentious topic:
“You shouldn’t write about public versus private schools … you’re going to to upset a lot of parents who’ve already made their choice.”
Excellent point. But I’m a finance guy ‒ and I don’t give a semicolon.
So here goes:
In Australia, around 35% of kids go to a private school, which is one of the highest percentages in the world.
And it’s bloody expensive. Private school fees have been growing at twice the rate of inflation. Australian parents spend, on average, $50,000 on their kids’ education, according to a report by NATSEM (the National Centre for Social and Economic Modelling).
And many parents can’t afford it. The Australian Financial Review recently reported that a quarter of parents borrow for their kids’ private school education, and one in seven run up a credit card to pay for school fees.
So is it a good investment?
Well, multiple long-term studies have proven that there is zero correlation between school fees and academic results (if you want to get a real eye-opener, read Free Schools by David Gillespie).
Still, some parents argue that if you send your kid to a private school they won’t be hanging out with a bad crowd. Then again, the best drug dealers go to private schools (or at least they did when I was a teenager).
So if school fees aren’t a predictor of a child’s success, what is?
Well, the biggest predictor of your kid’s happiness and success in life is how much time you spend with them.
Here’s the point: parents are often forced to work longer hours just to pay the ever-increasing fees. Personally I’d rather dial down the cost and spend more time with my kids, which would make me less stressed to boot!
So our son has been enrolled in a local public school. I think he’ll be fine. After all, I’m going to put my hand up to teach the school’s financial education class.
Tread Your Own Path!
Hey Kids, Let’s Learn about Credit Cards!
Dear Scott I am a teacher and I just got an email which made me angry, and I have you to blame... or should I say thank?
Dear Scott
I am a teacher and I just got an email which made me angry, and I have you to blame... or should I say thank? You see, our children are attending a compulsory ‘StartSmart’ lesson once a week hosted by the Commonwealth Bank. I looked at the program for Year 3, and what is the very first concept they mention? You guessed it, credit cards! I will be attending the session with my students and I can already feel the rage inside.
Narelle
Hi Narelle,
They’re talking to eight-year-olds about credit cards?
That’s kind of … shocking.And the concept of compulsory corporate-branded education reminds me of ‘Hamburglar University’.
However, you’re a teacher, which means you can be a force for good. You can stand up and fight for your kids. If I were in your shoes, I’d talk to your principal about kicking the CBA out of your school ... and use it as a financial lesson for the kids.Here’s how you can explain it to your students:
“The CBA has spent millions of dollars of their shareholders’ money buying their way into classrooms.
“Their motivation is to make that money back by signing you up to be their customer.
“One of the bank’s most profitable products is a credit card, and when you turn 18 they’ll likely send you one.
“The bank brings mascots to assemblies, like ‘Cred’, which make credit cards sound normal.
“However, the truth is that you should avoid them.
“This week ASIC released a report that showed that one in six people are caught in what they call a credit card ‘debt trap’. Worse, they found that young people’s credit card debts were ‘of particular concern’, and that they ‘were more likely to be in delinquency, and multiple cards were over-represented’.
“The CBA will never tell you that they’re ‘debt traps’, because it’s how they make their money.
“However, that’s not independent education; it’s really just another form of marketing. And that’s the reason we decided to kick the CBA out of our school.
“Now that would be a fantastic financial lesson!
Scott
When the Bank of Mum and Dad Goes Bad
Can you remember when you got your first credit card? Mine was automatically bundled into my NAB student banking package when I went to university.
Can you remember when you got your first credit card?
Mine was automatically bundled into my NAB student banking package when I went to university. At the time NAB said it was a smart idea for students to have access to a ‘low-rate credit card’ for ‘emergencies’ (like bar night).
That card allowed NAB to begin building a marketing profile on me. Through the positioning of minimum repayments on my statements and online banking, they trained me to see their credit limit as my money.
Then they began bumping up my credit limit.
That’s how the game works.
Commbank are doing this right now with their latest advertising campaign, which targets young people to sign up for their ‘low-interest’ Essentials credit card … instead of going through the hassle of borrowing money from their parents.
One CBA billboard says: “Because the Bank of Mum and Dad will probably give you a lecture, and you had enough of those at uni.”
Their TV ads show millennial kids having to suck up to their parents ‒ listening to their dad’s jokes, eating their mother’s terrible cooking ‒ just so they can borrow some money. CBA’s tagline at the end of the ad says: “For when you’ve outgrown the bank of Mum and Dad.”
A spokesperson for CBA said their ads aren’t manipulative in the slightest.
In fact, they’re in it to help young people:
“We believe it’s really important to help young adults develop good financial habits, such as budgeting and managing their money wisely. As they move into full-time employment, their spending and payment habits change, and this includes using credit cards.”
That’s the corporate spin, though there’s no way they actually believe it.
It’s all just part of the game.
(To be fair, the vast majority of CBA employees are hard-working, diligent professionals who care deeply about their customers. It’s just the top brass that are knobs.)
Tread Your Own Path!
What About Helping ‘Tweens’ Too?
Scott, Last night I was reading your book and my 11-year-old son asked me about it. I was reading the chapter about credit cards, so I explained the dangers of them to him.
Scott,
Last night I was reading your book and my 11-year-old son asked me about it. I was reading the chapter about credit cards, so I explained the dangers of them to him. Would you consider revising your book and targeting ‘tweens’ like my son? He is faced with so much more ‘negative temptation’ than I ever was. He talks about an online shopping site called Wish, and he also talks about gambling because of those horrible Lottoland and Sportsbet ads. I think your advice and guidance would help reinforce some good financial messages for kids.
Nikki
Hi Nikki,
As luck would have it, I’m currently writing a new book ‒ The Barefoot Investor for Families: The Only Kids’ Money Guide You’ll Ever Need ‒ that helps parents to raise financially fit kids of all ages, including tweens. While my last book focused on doing ‘Barefoot Date Nights’, this one focuses on the entire family having ‘Barefoot Money Meals’.
It’s due for release in September. (Calm down, Bill. I told you not to read this!)
Thank-you for reading,
Scott
Here’s What I Really Think About the Acorns (Raiz) app
A lot of people ask me about the youth-focused investing app Acorns. Its ‘killer app’ is that it collects your spare change and invests it in the share market on your behalf.
A lot of people ask me about the youth-focused investing app Acorns.
Its ‘killer app’ is that it collects your spare change and invests it in the share market on your behalf.
The company recently changed its name to Raiz Invest, and this week it had an IPO (initial public offering) and became a public company trading on the ASX (ticker ‘RZI’).
If you’re one of the 160,000 young people who are already a Raiz user, or if you’re just an interested punter, you may be wondering if you should invest in RZI.
Well, thankfully, the difference between being a private company and a public company is kind of like the difference between going on a first date and going on your seven-year wedding anniversary: there’s a lot more disclosure.
So let’s take a look-see.
Raiz states in their prospectus that they make their dough by charging users maintenance fees, account fees, netting fees and advertising fees. Lotsa fees. However, these fees only amount to small beer for the company, because the average Raiz account balance is just $1,234 (not a typo!), according to the company.
Looking at their cash flow statement, it shows ‘receipts from customers’ in FY 2017 was $990,424.
However, ‘payments to suppliers and employees’ for the same period was $3,005,078 (also not a typo!).
Feel the burn, baby.
Raiz has recently launched a super fund version of the app (which is cheap, but not cheap enough for my liking), and is also expanding overseas by targeting kids in South-East Asia, which seems like a very slow ramp-up to me … I’m not sure how much spare baht teenagers in Thailand will have to invest.
So, how did Raiz’s debut on the stock market go?
Not well.
The share price plunged 20% on the first day. Though I don’t think it helped that ‒ of the $15 million the company tapped investors for ‒ $2 million was trousered by staff, including a $1 million cash bonus for the CEO.
So should you invest via the Raiz app?
I think it’s a great introduction for novice investors, which is why it’s been so successful. However, after a certain point the fees Raiz charges are too high for what amounts to a cute index fund app.
So should you invest in the Raiz company itself?
Based on what I’ve read, they won’t be getting any of my nuts.
After all, I’ve always thought of Raiz (Acorns) as being a little like your first teenage love:
Memorable, but you’re not going to stay with them long term.
Tread Your Own Path!
The Billionaire
Dear Mr Pape, My name is Lachlan, I am 16 years old, and I live on the Gold Coast. I have a keen interest in finance and economics, and through my part-time job I have been able to build a share portfolio worth $3,000, on top of $2,000 in savings.
Dear Mr Pape,
My name is Lachlan, I am 16 years old, and I live on the Gold Coast.I have a keen interest in finance and economics, and through my part-time job I have been able to build a share portfolio worth $3,000, on top of $2,000 in savings. I would like some help on how to best manage my funds as I look to achieve my one life goal: to reach a net worth of $1 billion.I have thought about joining a super fund, but that idea has continuously fizzled out because I am sure I will never need it. If you could provide me with some information about how best I should go organising my finances, it would be greatly appreciated.
Lachlan
Hi Lachlan
Look, I like ambition as much as Malcolm Turnbull ... but your one life goal is to become a billionaire?
Just 0.00002% of the global population are billionaires. I fear you’re painting yourself into a corner, cobber!
Anyway, let’s hear from one of them, Bill Gates: “I can understand wanting to have millions of dollars, there’s a certain freedom, meaningful freedom, that comes with that. But once you get much beyond that, I have to tell you, it’s the same hamburger.”
He’s right.
Being a billionaire won’t make you a thousand times happier than being a millionaire. As Bill says, you can achieve the lifestyle and the freedom you want with a few million bucks ‒ which is still ambitious but, with enough time and the right plan, is achievable.
So your first goal ‒ your only goal ‒ is not to strive for some pie-in-the-sky figure you think will make you happy.
Rather, it’s to focus on finding something that is guaranteed to make you happy.
How do you do that?
My friend Arun Abey, a wealthy man himself, has a strategy he calls ‘the three circles’.
It involves asking yourself three questions:
What am I deeply passionate about?
How can I work, over many years, to become truly great at it?
And, finally, how can I make enough money from doing it?
Fulfilment is found at the intersection of these three circles.
One last thing: you should keep this article and re-read it in 40 years’ time.
Scott
My Son is $120k in Debt … and Wants Me to Save Him
Dear Barefoot, Twelve months ago my wife and I separated, so I am now ‘starting again’. We have nine children, and my eldest son has asked me to go guarantor, or have a joint loan, so he can consolidate his $55,000 credit card debt.
Dear Barefoot,
Twelve months ago my wife and I separated, so I am now ‘starting again’. We have nine children, and my eldest son has asked me to go guarantor, or have a joint loan, so he can consolidate his $55,000 credit card debt. He also has two personal loans amounting to about $70,000. He earns about $120,000 a year, and I earn about $100,000 myself. I gave him your book for Xmas but I fear it is not enough. His situation is crushing ‒ what can I do?
John
Hi John
You have nine kids?
That’s very impressive. I have a 66 percent fewer kids than you, and my life resembles the Teletubbies.
Now, with nine kids you’re in danger of setting a very expensive precedent by bailing out your eldest. Even if you could afford it, I still wouldn’t recommend it. Your son is in desperate need of a life lesson, and if you go the hook for him you’re denying him that opportunity (at best) and screwing yourself financially (at worst).
It takes a lot of guts for a parent to sit back and let their children learn from their experiences. Be courageous.
Besides, your son’s problem isn’t the interest rates he’s paying — that’s merely the symptom. His problem is that he has out-of-control spending. The sooner (and more brutally) he works that out, the sooner he’ll start behaving like an adult, take responsibility for his actions, and move forward.
There are no magic wands, but all the answers he needs are waiting for him in the book you’ve already given him.
Scott
My First Year as an Adult
Dear Scott, Just over a year ago I was a 17-year-old high school graduate with literally $0 to my name. Luckily, I managed to find a farm job over the summer break before starting uni.
Dear Scott,
Just over a year ago I was a 17-year-old high school graduate with literally $0 to my name. Luckily, I managed to find a farm job over the summer break before starting uni. My boss, a charismatic Canadian lady, had just finished reading your book. She bought copies for her children and, to my surprise, one for me. I am sure you can imagine my first thoughts — what does a 17-year-old girl need with a finance book?
Nevertheless, I decided to give it a go. Reading your book made me feel like I had been living in the dark. There were so many things I should have known! I was taken aback by how easy it was to read and how everything was explained in a way that even I, who knew nothing about finance, could understand. Back then I had one everyday bank account and no super fund. Fast forward to now …
I have switched to a low-cost super fund. I have set up two daily accounts (‘Expenses’ and ‘Splurge’) and two long-term accounts (‘Smile’ and ‘Fire Extinguisher’), and have $3,000 in ‘Mojo’. I love my ‘Barefoot Date Nights’!
In the past year I have saved, using your methods, for a $3,000 trip to Japan, a $3,000 car, a $1,000 trip to Brisbane, a $1,000 University Games tournament, and $2,000 for braces … and I still have $4,000 of my original money from the farm job. I have no debt, I receive no money from my parents, and I don’t worry about money.
The Barefoot Investor has helped me survive my first year out of home, and my first year as an adult. I owe you a tremendous thank-you. If not for the Barefoot Investor, I’m not sure where I’d be today.
Jess
Hi Jess,
You just nailed why I wrote my book.
See, most teenagers don’t have much confidence. Especially teenage girls. And especially when it comes to money.
Let me tell you what typically happens next:
You turn 18, and the world is waiting to reinforce your belief that you’re no good with money:
Advertisers spend billions of dollars targeting you to buy stuff you don’t need, to impress people who (you’ll eventually come to understand) don’t really care about you. Social media makes you feel like a loser if you’re not living an expensive Instagram-filtered life. And your bank will send you a credit card ... and then begin upping the limit.
And within a few years your negative beliefs will become a self-fulfilling prophecy:
“See, I am a loser with money! It must be true! Just look at my credit card statement!”
And then these negative beliefs feed on themselves. They colour your entire life. They keep you stuck in jobs you’ve outgrown, in relationships that aren’t good for you. And life passes you by.
But that’s not you, Jess.
You have confidence. You’re a strong woman. No one messes with you. Keep treading your own path. You got this!
Scott
Daddy’s Girl
Dear Barefoot, My father monitors my money from afar and, as a 25-year-old woman, I feel I am being treated like a child. He thinks my partner and I are financially illiterate, and disagrees with us having joint bank accounts (he and Mum keep their money separate).
Dear Barefoot,
My father monitors my money from afar and, as a 25-year-old woman, I feel I am being treated like a child. He thinks my partner and I are financially illiterate, and disagrees with us having joint bank accounts (he and Mum keep their money separate). He does not have my account passwords, but he does ask for updates on my money, and has forceful discussions with me about my budget — talk about pressure! Reading your book, I want to take control of my money, but I know this will be very hard for Dad. How do I tread my own path?
Jessica
Hi Jessica,
Your old man just wants the best for you, but he’s got boundary issues.
You’ve probably worked this out by now, but forceful conversations about money are rarely about money — they’re usually about control — and it sounds like your father wants to control you just like he did when you were a kid.
Of course you’re now an adult, living with your partner, and your financial situation has nothing to do with your dad.
My suggestion would be to give him a copy of my book for Christmas. This will show him you’ve got your head in the right space financially. Then explain to him that if you ever need any further advice he’ll be the first person you ask.
Scott
The Scary Stepmother
Dear Scott, I need help to do a ‘full life’ money plan for my 21-year-old stepson -- and I am getting migraines! Here is how I picture it: he puts 12.
Dear Scott,
I need help to do a ‘full life’ money plan for my 21-year-old stepson -- and I am getting migraines! Here is how I picture it: he puts 12.5% of his wage into super, gets married at 25, has a good job, takes out a 30-year mortgage, and has two kids (reports show that two kids at private school costs $800,000 by the end of Year 12!). He then retires at 67.5 years old and has a ‘reasonable life quality’ of $42,500 income a year, with around $500,000 saved in super. Is all this possible? Can you help?
May
Hi May,
I just read your question, and I’ve got to be honest … you’re kind of freaking me out right now.
Your heart is obviously in the right place, but you may as well be lecturing him about the danger of venereal diseases.
First, you’re never going to convince a 21-year-old guy that he’ll one day be 67.5 years old.
Case in point: a young Mick Jagger once said, “I’d rather be dead than singing ‘Satisfaction’ when I’m forty-five”.
Second, no 21-year-old bloke wants to have, as you put it, “a reasonable life quality”.
He wants Satisfaction, goddammit!
Here’s what I’d say to him:
Most things don’t matter that much, but there are a couple of things that really do:
Make sure you do well-paid work that you enjoy, and become obsessed with saving money.
Let’s deal with work first: fact is, you’re going to spend 90,000 hours of your life at work. Add in sleeping, Facebook and sitting on the can, and there’s not much time left over. You’ll spend more time at work than you do with your family and friends. So you better make sure you enjoy it, and you better make sure you get paid well.
And saving: if you want to stay poor, do what everyone else does and focus on spending your money. If you want to become wealthy, focus on saving and investing your money. When you have savings, you’ve got freedom. You call the shots. You’re in control.
Then give him a copy of my book, encourage him to work hard, and have him follow the steps.
He’s got this.
Scott
Banker Bait
Dear Scott, My 18-year-old daughter lives at home, pays no board, works full time, and is saving for her first property. She also wants to buy a new car ($20,000) so she can get a credit rating, which will make it easier to get a home loan.
Dear Scott,
My 18-year-old daughter lives at home, pays no board, works full time, and is saving for her first property. She also wants to buy a new car ($20,000) so she can get a credit rating, which will make it easier to get a home loan. Should she keep driving the old car and put all her money towards the house deposit, or get the car loan and take a bit longer to get into the property game?
Fiona
Hi Fiona,
Congratulations on raising such an ambitious daughter!
Now it’s up to you to teach her some common sense:
Spending $20,000 on a brand-new car will not help her buy a home in any way, shape or form.
Instead, she’ll just end up forking out roughly $30,000 for a car that will only be worth $10,000 in five years’ time.
The idea that you need to take out a loan so a bank will lend you more money is absurd.
Just like Sam Dastyari, the credit reporting agencies have done their darndest to convince everyone they’re more important than they really are.
Now it is true that if you’ve got something bad on your credit file it can be a red flag to lenders. But for a cleanskin, like your daughter, it’s really not a big deal.What is a big deal for lenders is:
1) a stable income that can comfortably meet the proposed repayments;
2) a verified savings history; and
3) a meaty deposit (I recommend 20%).
If your daughter can tick those three boxes, she’ll get her loan.
Scott
Three Is Enough, Barefoot!
Dear Scott, You seem like a smart guy, but I think your wife is even smarter in wanting to limit the number of children you have to just three. The environment is freaking out, and curtailing the number of children born into our consumer society is one of the greatest contributions anyone can make.
Dear Scott,
You seem like a smart guy, but I think your wife is even smarter in wanting to limit the number of children you have to just three. The environment is freaking out, and curtailing the number of children born into our consumer society is one of the greatest contributions anyone can make. And all that money you save by not having those kids can be donated to worthwhile charities that help the environment, animals and people instead!
Jessica
Hi Jessica
You must be a real hoot at a baby shower.
I’m naturally an optimist, and on almost every measure right now is simply the best time in history to be alive.
Case in point: in his book Abundance: The Future Is Better Than You Think, Dr Peter Diamandis reveals that in the past century the average lifespan has doubled, and the average income has tripled. At the same time, food is 10 times cheaper, electricity is 20 times cheaper, transport is 100 times cheaper, and communications are 1,000 times cheaper!
Besides, a wise person once told me “no one ever regrets the kids they have … only the ones they don’t”.
Scott
How Should I Save for My Baby?
Dear Barefoot, Firstly, I want to say thank you. I have been following the Barefoot system and this year my husband and I got pregnant with our first child!
Dear Barefoot,
Firstly, I want to say thank you. I have been following the Barefoot system and this year my husband and I got pregnant with our first child! I am self-employed and had planned to work until a few weeks before he was due and then take advantage of government maternity leave. But he had different plans and arrived 10 weeks early; he’s still in the hospital ICU but thankfully doing well. More so, thanks to your book, we have two months of living expenses saved up and therefore can focus on our amazing little man rather than worrying about work. My question is: a friend has suggested that, rather than buy him gifts, we should drop some money into an account for him -- is Westpac’s ‘Bump Account’ worth looking into?
Emma
Hi Emma,
I don’t know what you’re thanking me for -- you did all the hard work.
(Then again, I have always said that Barefoot Date Nights are a wonderful aphrodisiac … and given we’ve sold 480,000 copies … that’s a lot of lovin’ going on.)
Now, to your question.
The Westpac ‘Bump Account’ really should be called the ‘Dump Account’, because it seriously has a stronger stench than your little one’s nappy.
Here’s how Westpac puts it:“On our 200th anniversary, every child born in 2017 is eligible for $200. If your parent opens a Westpac Bump Savings account in your name, we’ll deposit $200 into it which you can withdraw when you’re 16.”
Okay! Let’s rip off that soggy, boggy nappy off!
First off, you (the parent) have to wait 16 years to get the money.
Second, you’re dropping your kid into the bank’s sophisticated marketing funnel -- which will go into overdrive when they’re 16, rebellious, possibly Emo, and desperately lusting after a new iPhone 24.
Third, the interest rate they’re offering is trickier than a teething poo:
The base interest rate is a stinker 1.5%, and to get the advertised rate of 2.3% you’ll need to make a monthly deposit, ensure your account balance is higher at the end of the month than at the beginning, and keep your balance above $0 at all times.
Finally, and most importantly, if you’re saving long term for your kids, you’d be better off investing the money into shares via a low-cost index fund or a listed investment company (LIC).
In other words, dump the Bump -- your kid can do better!
Scott
My $297,641.32 … errr, investment?
The first time, my wife flung her arms around me and, through tears of sheer joy, whispered “we’re pregnant”. The second time, she raced up behind me and squealed with delight.
The first time, my wife flung her arms around me and, through tears of sheer joy, whispered “we’re pregnant”.
The second time, she raced up behind me and squealed with delight.
The third time, she pushed open the bathroom door, locked her eyes on me, and pitched the plastic preggo stick square at my noggin. (To be fair to her, it was a Friday night and I’d just got home from the pub … so I wasn’t exactly on my A-game.)
That was twenty-two weeks ago.
For the record, we’re over the moon to be having a new baby … it’s just that Liz was wanting a few months before going back into the ‘baby bubble’. (Fun fact: at our pre-marriage counselling session, Liz put down that she wanted three kids … I put down six. Time will tell who wins.)
Here’s one thing I do know: unlike buying a slab of beer, it doesn’t get cheaper the more kids you have. According to a study by Suncorp, the average Australian parent spends $297,600 raising a child to age 17.
Hang on — $297,600? That’s a very specific number. Maybe Simon from Suncorp followed Junior around with a Casio every day of his life. And then on his 17th birthday Simon hit ‘equals’ and triumphantly announces, “You cost me $297,641.32! But hey, I’m your dad, so let’s round it down to $297,600.”
Either way, it’s a huge number.
Worse, Suncorp’s research suggests it costs $984 per month for the first two years of your child’s life. That’s a huge whack of dough for any young family, let alone for those of us who want six kids (no wonder Liz threw the stick at me!).
So in celebration of our currently baking baby, this week I’m answering questions from new parents and parents-to-be.
Tread Your Own Path!
The revolution starts with you
The Commonwealth Bank is under fire (again). This time it’s because CHOICE magazine called for the CBA’s Dollarmites school banking program to be banned.
The Commonwealth Bank is under fire (again).
This time it’s because CHOICE magazine called for the CBA’s Dollarmites school banking program to be banned.
(For the record, I’ve been banging on about this issue for the best part of a decade, including two years ago when I fronted a Senate Inquiry into Banking and argued that Dollarmites should be banned.)
Anyway, CHOICE said that Dollarmites is essentially a marketing scheme that pays schools kickbacks so they can weasel their way into classrooms and flog their products.
The CBA also gets to promote their own special North Korean-style financial education in the classroom, complete with corporate-collared cartoon mascots like ‘Cred’ — short for credit card — who has the tagline ‘Cred’s a cool dude’.
In response, the CBA has said they’re ‘holding a review’ into the program.
Yet, as the honourable John Howard will attest, you never hold a review unless you already know the outcome.
Mark my words, the CBA has absolutely no intention of giving up Dollarmites.
That’s because it is, quite literally, the most successful marketing campaign in Australian history: over the past 85 years, millions of Aussie kids have innocently been siphoned into the bank’s marketing funnel. Many of them got credit cards when they turned 18, and became ‘cool dudes’.
As a sign of just how strong the Dollarmites program is, today almost half the Aussie population open their first account with the CBA. Westpac, though, are trying to get the generational jump on the CBA — by focusing on the foetus, with their recently released ‘Bump Account’ (I promise you I am not making this up).
And it’s rumoured that ANZ will soon launch a ‘Sperm Account’ that targets responsible tadpoles who don’t want to be caught without ATM access during the fertility process. (Okay, so I made that one up. But don’t be surprised if, a decade from now, CHOICE is calling for the banning of the Sperm Account).
So if the CBA is never going to voluntarily get out of schools, what can we do?
If you ask me, we need a parent-led revolution.
Starting with this question …
Tread Your Own Path!
Talking kids and money with Jenny Marchant on ABC Mornings
I was on the air last week with Jenny Marchant from ABC Mornings discussing teaching kids about money.
Have a listen below if you missed it.
Dump the Dollarmites?
Dear BFI, My kid’s school is considering school banking, and someone suggested Dollarmites. I bit my tongue while screaming NOOOOOO inwardly.
Dear BFI,
My kid’s school is considering school banking, and someone suggested Dollarmites. I bit my tongue while screaming NOOOOOO inwardly. I want to attend the next meeting armed with my Barefoot ‘bible’ and strong arguments against Dollarmites, but I also need to supply an alternative. Someone else suggested school banking with Bendigo Bank, but what would you suggest? I want to educate our kids about finance, not set them up for financial ruin.
Melanie
Hi Melanie,
As Jenny from the Block would say, “You go, girl!”If I was at your P&C committee, here’s how I’d lay out the argument.
First, let’s look at this from the school’s perspective.
The CBA has said that it pays the average school $400 a year in kickbacks. That’s a great deal for the bank (after all, bank tellers get bonuses for signing up accounts). Yet it’s a crummy deal for even the most cash-strapped school.
Second, let’s look at it from a parent’s perspective, who are the ones putting the money in.
The CBA Youthsaver account pays a pretty attractive 2.29% per annum (*).
* Welcome to banking! If you fail to make at least one deposit a month, or if you make even one withdrawal, you’ll get a not-so-attractive 0.01 per cent. And if you forget about the Dollarmite account after a few years (which many of you will do), you’ll actually end up losing money when you account for inflation.
Finally, let’s look at it from a kid’s perspective.Financial education is a core life skill that every child will be tested on every day of their adult lives.
It’s far too important a subject to be left to a bank’s marketing department.In fact, financial education isn’t about opening a bank account … or even much about money. It’s about teaching values. It’s about raising resilient, hardworking, responsible and generous kids.
So, Melanie, what would I suggest?Hold off till next year.
Why?
Because I’m in the very, very early stages of writing my next book … which is all about teaching kids good old-fashioned money values and skills. And I’ll be taking it to schools -- no kickbacks, no bank accounts and no dancing mascots.
Scott