The Barefoot Investor for Families

by Scott Pape

  Let’s face it . . . parenting is hard enough.

  Let me give you an example: one morning I was walking along Collins Street, Melbourne, with my then two-year-old, who was, as always, straggling behind.

  ‘Hurry up!’ I yelled over my shoulder.

  No response.

  My eyes darted around trying to find him.

  He was . . . gone.

  Then a guy walked past, smiled, and nodded to a point 10 metres up the footpath.

  Through a crowd of people I spotted my son . . . with his pants around his ankles, peeing on a tree.

  In the middle of Melbourne’s financial mecca. At 8.45 am on a Wednesday. On a crowded footpath.

  ‘What the hell are you doing?’ I screamed, rushing towards him.

  ‘Bush wee,’ he replied matter-of-factly.

  ‘Look, we aren’t on the farm today. You can’t just down your dacks and wee on a tree in the middle of the city!’

  Finally, I came to my senses and scooped him up around his waist.

  However, he responded like every two-year-old does when they’re in trouble:

  He went limp.

  So, I’ve now got him under my arm—with his pants around his ankles—and he’s still weeing.

  Kind of like a pop-up sprinkler.

  There I stood—in the peak morning shuffle, with office workers awkwardly rushing past us, avoiding eye contact—negotiating with a tinkling two-year-old.

  Again . . . parenting is hard enough, and I’m not going to ‘should’ all over you.

  Other finance books for kids might assign you huge lists of things to do: check off 91 chores each week. Follow a nightly 11-step plan. Have a detailed remuneration plan (pocket money) that calculates payments based on the square metres of bedroom vacuumed.

  Bugger that!

  If it feels like homework, you’re not going to do it . . . and your kids definitely won’t do it.

  Instead, I have a much simpler way for you.

  Our game plan

  This book is in three parts, and each of them has some of the ‘big things’ that you should get right as a parent.

  Part I: First Steps

  The first part is about the fundamentals . . . getting your kids to take their first financial steps.

  I’ve boiled down the basics of teaching your kids about money to a dead-simple strategy:

  Three jam jars . . . to put their pocket money in.

  Three jobs . . . so they can earn that pocket money.

  Three minutes a week . . . where you’ll ‘lock in’ life-changing money lessons with a simple weekly ritual over dinner.

  That’s it.

  And yes, it does take you three minutes (I know because I’ve tested it in the field with lots of families).

  Your kids will pitch in and help get dinner on the table, work hard and do some jobs. Then they’ll get paid, and make decisions on how to spend, save and give that money.

  Part II: The Barefoot Ten

  The second part of the book will arm your kids with the life-changing money skills that most people don’t learn till they’re in their 40s (if ever!).

  Remember, as a parent you can afford to get a lot of things wrong, as long as you get a few big things right.

  Well, I’ve stepped out exactly what these big things are, and I’ve put them into a simple checklist that you’ll be able to go through with your kids.

  But let me be clear: this is NOT just a list of topics, or a table of contents, or a lesson plan.

  In their bestseller The Power of Moments: Why Certain Experiences Have Extraordinary Impact, authors Chip and Dan Heath researched the building blocks of life-changing moments:

  ‘We spend weekend after weekend together with our kids, but in our memories all those times blend together. What’s needed is to rise above the routine. A few minutes can change a life. And the moments that stick with us years later are ones that involve praise, and create an emotionally elevated experience.’

  That’s why for each of these ‘big things’, I’ve created custom-made, real-life experiences that you can do together over the family dinner table.

  If you check these experiences off with your kids before they leave home, they’re virtually guaranteed to be financially safe and secure for the rest of their lives.

  I call them the Barefoot Ten . . .

  Hold your alpacas for a moment.

  Think about the headstart a kid would have if they’d checked off all these things at the start of their life.

  Think about the headstart you would have had if you’d checked them off when you were still in school.

  I’ve worked through the Barefoot Ten with kids of all ages, and I can tell you it boosts their confidence—often dramatically.

  Instead of internalising what the bullies at school say about them, or what the bullies online say about them, or what the bully who looks at them in the mirror each morning says about them . . . the Barefoot Ten changes their identity, and lifts their vision for what they can go out and achieve. They’re prepared, and in control.

  That’s what the Barefoot Ten will give your kid.

  Part III: Off and Running

  By the time you get to this part, you’ll have already scored the big wins that will ensure your kids never have to worry about money. That’s a feat worth celebrating, and that’s exactly what we’ll do—in fact, I’ve organised a very unusual celebration for you. Plus, I’ll show you how to keep your family safe and secure, with a strategy I call the ‘Fearless Folder’.

  That’s the game plan.

  So how the hell are we actually going to achieve all this?

  With food.

  Weekly Barefoot Money Meals

  I based my book, The Barefoot Investor: The Only Money Guide You’ll Ever Need, around the concept of ‘Barefoot Date Nights’—where couples (and singles) go out to dinner and sort their money over garlic bread and wine.

  I came up with the idea years ago when I was trying to get my wife, Liz, interested in how we’d manage our money as a couple. At the time, the idea of sitting down and chatting about money was as sexy to her as me breaking out a spreadsheet after dinner and saying, ‘Let’s you and I fill in some spending cells . . . baby.’

  Anyway, I saw how powerful these nights were for us, so I wrote about them.

  Turns out they were helpful to other people too. That book went on to become one of the bestselling Australian books of all time, and a big reason for its success was the practicality of the Barefoot Date Nights in getting ‘non-interested parties’ interested in money.

  This book follows the same approach, but this time over the family dinner table.

  Instead of Barefoot Date Nights, we’re going to have a weekly ‘Barefoot Money Meal’.

  And given we’re already in the business of feeding our kids each night, this is going to be simple.

  All you have to do is have dinner, once a week, and I’ll take care of the rest.

  Sound good? Good.

  Now, take a deep breath and kick off your shoes—we’re about to take our First Steps.

  ‘I swore I’d make things different for my daughter . . .’

  Amanda Screen, Ballina, NSW

  I remember the exact moment I told my husband that our daughter had a brain tumour.

  He was looking after our four-month-old son. He just went into shock and couldn’t speak. To be told your child is going to die is the worst thing imaginable.

  The doctors said she had 12 months to live. She was only six at the time. I thought that moment was the lowest point in my life . . . but that was to come.

  My husband just couldn’t cope, so he left.

  All of a sudden, I was a single mum caring for a baby and a sick child—and in debt over my head.

  Our local community helped us fundraise to cover the medical expenses, which totalled over $100k. But my personal debts were spinning completely out of control. And I was at risk of losing our home.

  I borrowed The Barefoot Inv
estor from the library and read it in one night. It changed everything. Within a day I had our family’s first financial plan. And within 12 months, I had paid off my debts and had Mojo in the bank—I was in control!

  I want the same for my kids. My daughter Talaya beat the odds—she is now 15 and tumour-free, but has an acquired brain injury that affects her vision and other areas of her life. Sometimes she gets worried and anxious about her future.

  And that’s why the Money Meals have been a godsend; it’s a really simple way for me to teach her all the financial knowledge I wish I’d known when I was her age. With the Barefoot Ten, I now have a simple plan to teach her, so she’ll always be able to feel in control.

  In fact, as we’ve worked through them together, amazing things have started to happen . . .

  PART I

  First Steps

  You’re probably keen as mustard to get the jump on the Barefoot Ten, and the ripper Barefoot Money Meals I have planned for you.

  But before we do that, there’s something even more important we need to sort out.

  Pocket money.

  Believe it or not, paying pocket money is one of the most powerful tools you have to teach your kids about money.

  Yet for most parents, it’s a source of shame . . . because last time they tried it ‘it didn’t really work with our kids’, and their efforts just fizzled out.

  Even then, most parents who pay their kids pocket money are only doing it half right.

  Getting them to do a few chores and paying them a few bucks is only the first step. The main money lesson comes in what they do with their pocket money: the spending . . . the saving . . . and the giving.

  That’s where the life-changing lessons really happen. You want to take that pocket money and use it to teach your kids things like goal-setting, delayed gratification, kindness and empathy.

  That’s why we’re going to sort it out first, in Part I: First Steps—and then the rest of this book (and the Barefoot Ten) will build upon those foundations.

  Thankfully, I’ve made it unbelievably easy for you. Because what I’m about to lay out for you is the simplest (yet most powerful) pocket money plan you’ve ever seen:

  Three jars.

  Three jobs.

  Done and dusted in three minutes a week.

  Honestly, if this plan is all you take away from this book, your kids will be so far ahead of everyone else it’s scary.

  Let’s begin.

  Three Jam Jars

  Roughly once a week, a marketing guru contacts me with their ideas on how I can make a lot of cashola.

  Their pitch is almost always the same:

  I should ‘capitalise on the success of the Barefoot Investor book by diversifying the product offering’.

  And their solution is almost always the same:

  I should create an app that I can charge people $2.50 a month for.

  Or sell Barefoot-branded piggy banks.

  Or do a deal with a bank on a Barefoot-approved account.

  And my answer is always the same:

  No. No. And are you freaking kidding me? No!

  I much prefer a no-technology method that I call ‘three jam jars’.

  So, please put this book down right now, head to the pantry, and get some Tim Tams. While you’re there, check and see if you have three jam jars.

  (Actually, any three glass jars will do. We had the same big-arse jar of pickled onions in our pantry for my entire childhood. I guess Mum bought them thinking she’d try that fancy Peter Russell-Clarke recipe, but never got around to it.)

  Also check and see if you have stickers to get your kids to label their jars—the more sparkly the better. If you don’t, make a note to buy some jam and stickers next time you’re doing the shopping.

  Go on, do it.

  Done? Good.

  Okay, now as you munch on Tim Tams, let’s jam . . . jars (and that is my first, and last, dad joke of the book).

  Jam jars are the new buckets

  If the whole idea of dividing your money into three sounds familiar, you’d be right . . .

  If you read The Barefoot Investor, you’ll know that I have the simplest money management system going round. In fact, it’s so simple I sketched it out on a serviette on my very first Date Night with my wife. Which is why I call it the ‘Serviette Strategy’.

  As part of that strategy, I recommended dividing your money into ‘buckets’, and setting up several bank accounts: ‘Daily Expenses’, ‘Smile’, ‘Splurge’, ‘Fire Extinguisher’ and ‘Mojo’.

  It caught on so well that some in the media even referred to it as ‘the biggest finance cult in Australia’.

  Why thousands of Australians have the same bank card, labelled “Splurge”.

  Right now, thousands of Australians are flashing orange bankcards with mantras penned with sharpies and stickers. “Splurge”, they read. “Daily expenses” read others. And they all signal one thing: that you are following the biggest financial cult in Australia.

  Well, for this book, jam jars are the new buckets for kids.

  It’s standard practice to use three containers to teach kids: there are fancy options like Moonjar Australia’s three-part Save, Spend and Share money box and US-based financial guru Dave Ramsey’s Smart Saver Bank, which does the same thing.

  In fact, in my last book, I even recommended the concept of jam jars for little kids. However, I’m now convinced that kids all the way up to 15 or so should have them (with a few age-appropriate variations which I’ll explain in good time).

  After all, the point is they will transition from the jars to bank accounts when they’re older.

  And there’s power in kids being able to see they’re using the same kinds of accounts their parents have.

  So let me introduce you to the three jam jars your kids (under the age of 15) will be using . . .

  The Splurge Jar

  Okay, it’s time to walk off those Tim Tams.

  Get up! Stretch!

  Put a sticker on one of the jars, grab a texta, and write ‘Splurge’.

  This jar is for your kids’ day-to-day spending.

  Hang on, am I saying that I want your kids to splurge part of their money?

  Yes, that’s exactly what I’m saying.

  The truth is that sometimes pocket money works a little too well: kids can get so addicted to watching the coins pile up in their jars that they don’t want to spend it:

  ‘Little Mickey is such a good little saver; he won’t spend his money on anything!’ brag his proud parents.

  Twenty years later . . .

  ‘Michael is such a miserable tightarse! He won’t spend money on anything or anyone. No wonder he can’t get a girlfriend,’ snivels his frustrated friend.

  You don’t want your kids to grow up with an unhealthy obsession with money. Neither do you want your kids to grow up like one of those twatty teenagers on Instagram who posts a selfie with their $900 handbag (#myparentsfailed).

  This jar will help turn your kids into well-adjusted, savvy spenders.

  There’s just one caveat with this jar for older kids:

  No self-respecting 12-year-old is going to the mall with a jam jar tucked under their arm.

  ‘Hey Todd! Check out my jam jar, man.’ Not going to happen.

  So, in addition to their jam jars, I’d suggest you get them a wallet or purse that they can transfer their Splurge money to.

  The Smile Jar

  Grab the second jar, with sticker, and label it ‘Smile’.

  Like the ‘Smile’ account in my Serviette Strategy, the Smile Jar is for saving up for things that will make your kids smile.

  The golden rule of wealth is to spend less than you earn.

  (A long-term study by researchers from the UK, Canada and the US—the Dunedin Study—starting way back in 1975, followed the development of over 1000 kids. It showed that lack of self-control in childhood was the number one predictor of financial problems—more so than social class or even IQ!) />
  Here’s the deal: the art of saving is as much a financial technique as it is a character trait.

  And that is what this jar is all about.

  When you ingrain the act of regular, systematic saving, you’re not only creating money ‘muscle memory’—you’re giving your kid a way of looking at the world that will keep them safe, long after you’re gone.

  The Give Jar

  What do you think we’re going to name the next jar?

  If you thought anything other than ‘Give’, you need to tone down the Tim Tams. (Sugar is the new heroin, right?)

  This jar is what I refer to as ‘the brat buster’ (we’re going to go deep with this in Part II).

  Not only do studies repeatedly show that we get more pleasure from spending money on other people than on ourselves, it has even been shown to change the mindset of bratty, self-centred teenagers.

  Being kind is a big deal in my family—it’s much more important than money. That’s because if my kids are kind, they’ll be happier, have more meaningful relationships and be decent human beings.

  Okay, here’s a quick recap . . .

  Everything you wanted to know about jam jars in two pages

  If Grandma gives my child some birthday or Christmas money, does it go in the jam jars?

  No. You should put any ‘non-pocket money’ into a high-interest online saver account. Which one? I’ll tell you the exact accounts I use in the next chapter. Stay tuned!

  My kids will just splurge everything!

  Probably. Which is why you’ll have one rule for the jam jars: each jar gets some money each payday. (We’ll talk about payday more soon.)

  Beyond that, though, let your kids decide how to divvy up their pay into the jars. If you’re helicoptering over them, making their decisions, they’ll never get to stuff up. And we learn by making mistakes. It’s better for them to learn their lesson when they blow their $6 pocket money than when they blow their $60 000 annual wage.