Why you can’t invest now

[Sunstone]

Dear guys,

Something that I think is good for us to think about or something we can show to people we want to motivate to change.

Cheers,

Sunstone.


Why you can’t invest now

No matter what stage of life you are at, there are bound to be many good reasons why you cannot invest at this particular time.

Age 18 – 25 I can’t invest now. I’m just getting my start in life. I don’t make a lot yet, and I’m entitled to have fun while I am young, and I’m saving for a new car. There is plenty of time. Wait until I start making a little more. Then I’ll invest.

Age 25 – 35 I can’t invest now. The car registration is due and the brakes need replacing on the car. I’ve got a growing family on my hands. Children and a house cost a lot of money you know. It takes all I have to keep them going. As soon as they are a little older, it’ll cost less, then I’ll invest.

Age 35 – 50 I can’t invest now. I’ve got two children in high school. It’s all I can do to pay their expenses. In fact, I had to borrow to pay their school fees last year. This is the most expensive period in a person’s life. I can’t save a cent; and the car needs new tyres!

Age 50 – 65 I can’t invest now. I know I should, but things aren’t breaking like they were. My car is so old now that it costs a lot in maintenance. It’s not easy for a person my age to step out and get a better job. I’ll have to ride along where I am. Maybe something will break my way.

Age 65 – I can’t invest now. We’re living with my son and his wife. My pension doesn’t go far. The only asset I have is my vintage car. I wish I had started saving twenty years ago, but it’s too late now. You can’t invest when there is no income.

The convenient time to start investing never comes.

[Rolf Latham]

Hi SS

As a Professional Salesperson i can tell you that I cant motivate people to change.

If Im lucky I can irritate some emotional issue that may have held them back in the past. Humans will only want to do what they want to do.

I have always said my biggest enemy is my clients' indifference.

My clients' biggest enemy is themselves.

If we all got out of our own way we could all achieve much more for ourselves and others dear to us.

ta

Rolf

[Glenn]

I would have to agree with Rolf here and also suggest that while many salesman focus on their product, they totally miss the "why" which is the reason people will make a purchase/investment.

A recent discussion with a friend revealed that her grandfather(born in Australia) rented a house all his life and died about 10 years ago, leaving the grand sum of $12k to his long suffering wife. This got me thinking about the book, The Richest Man in Babylon and the way that Arkad professed that the want to be rich among other things, comes out of a love for the wife and a love for the king, while an indifference of wealth is in turn an indifference to the wife and king. In our land of such abundant opportunity, it amazes me that so many of our people are so selfish that they squander almost every cent they ever earn with most only passing the family home to their family when passing. There seems to be little thought given to generational wealth like some of the wealthier families create and maintain....and it doesn't have to be property that creates this as putting just 1% of someone's net wages into Australia's top 10 companies (by market cap) shares over 40 years would produce outstanding wealth for future generations...why would you want them to struggle when it is so easy to create a vehicle to provide income for them?

Last night on TV (SBS or ABC) there was a show about a farmer in New Zealand who thought this way (but only passed the farm to one son out of possible 2... the other was a bit dark on daddy!) and the son who received the farm suggested that he had not really inherited the farm but was appointed a custodian...he was able to receive the income (generous) from the farm but was expected to pass custody to a worthy son. The rich the not-rich people of this world seem to think so differently about money that it is remarkable. Twice in the last week I have heard people say that they intend retiring and spending all of the money that they have accumulated.....

Glenn

[cathyb]

Glenn

The farmer on tv last night was in fact a direct descendant of Macarthur (famous Australian pastoralist) of Camden who settled the area in the early 1800s with 100s of thousands of acres - now they only have 1000 left that is run as a dairy farm. Apparently the last 10000 acres was sold to a developer in the 1970s - what a gold mine that would have been had they kept it. Camden is southwest of Sydney and the centre of major growth.

Cathy

[PT_Bear]

I read somewhere that without the right education, wealth only tends to last 3-4 generations.

Generation 1 spends their life accumulating assets.

Generation 2-3 spends their life enjoying the fruits of the labour of generation 1.

Generation 4 wonders why their parents were wealthy and they're not.

Generation 5+ (if they're fortunate) starts again...

[Kevmeister]

Sounds like Generation 1 spent too much time accumulating wealth to teach their children (Generation 2) about how to do the same for themselves!

:-)

Kevin.

[Macca]

Hi Kevin,

The actual cause of the "shirt sleeves to shirt sleeves in 3 generations" phenomena has been studied quite a lot.

I believe what it is, is simply that some one with enthusiasm and drive sets out to better their position in life. They may start a business, buy a farm, invest in real estate or simply find some profit making venture that they are better at than others. They create the wealth, they encourage their offspring to go on with what they have created but the off spring don't have the magical "IT" that is required so they battle on, gradually going back wards. Quite often because their parents were successful they have had everything they want when kids and don't grow up with the hunger that drove their parents to succeed. The grand kids get it even easier because when the achiever dies the kids sell off whats left and live on the money. By the time the grandkids mature their parents are living on the proceeds so very little left to inherit.

I have seen this in 3 different families.

If you want your kids to be ambitious, learn to say no, let them do without every latest fad, make them wait until Christmas or birthdays for gifts. Let them save up their pocket money to buy what they want.
They then grow up with a lot more ambition than those that were spoon fed.

Macca :)

[bbruham]

G'day all,

The first generation builds the wealth.
Second generation triples the wealth.
Third generation loses the lot!

Is this goodbye the Packer's?

First gen. Frank Packer.
Second gen. Kerry Packer.
Third gen. James Packer.

As a fan of the Packer's I hope not.
Actually a fan of Kerry.
It's great to see people like these aspire to greatness.
Let's hope this is way off this time.

Bruce G.

Winners make it happen.
Loses let it happen.

[Ross Sneddon]

An old saying, trite but often true

"Clogs to clogs in three generations"

Regards

Ross

[davids]

Hi all,

I have seen through my own families experience that if the second generation is not tought how to not only maintain, but continue accumualting wealth, it will be squandered.

Davids

[adaran01]

I find it quite common and very distastefull, the amount of people hanging around there parents waiting for them to drop off so they can get at some inheritance.
I have done pretty well for myself, even though I still struggle (relatively), and no-one has given me anything, apart from a good upbringing.
I have told my parents the only things I want when they go are items that are of sentimental value.
What they should do is in their retirement take out the biggest loan possible against their house, and go on one hell of a world holiday together.
Life as far as Im concerned is what you make it, recieving a handme down from someone is not going to make me feel better, why?, because I can't look back and say I did this, I made my life what it is.
I respect a great deal the people who start with nothing, and build from that, I don't respect someone because they had it handed to them on a plate.
I remember seeing a story about the youngest self made millionare (about 9 yearts old). It turned out his Dad was a filthy rich doctor who had quite obviously helped out, give me a kid from a working class suburb in any major city, with a family who is struggling to make ends meet, then I will believe its not some sort of media stunt.
Regards Adam

[JumJones]

Part of my retirement plan, and before I drop off, is to lock up most of my assets in a trust whose purpose is to donate to childrens charities. I wont have to go on a spending spree befire I carck (sp?) it, because I already live and experience life to the fullest. I certainly am not miserly, apportioning about 20% of all income to having a damn good time.

When I go the kids will only get one thing .. all the experience I can possibly impart in the fiscal realities they face. Whats the use of giving someone wealth? We all know what happens to most lotto winners .. the only ones that do any good are the ones with financial sense. I say give them some wisdom, start them young to give them experience, and the rest should take care of itself.

Heh, my folks retired at age 50, having just paid off their house, with 2 IPs, and are travelling the country selling coffee and doing odd jobs (the crazy old bugger still climbs trees in spurs to lop branches!!). They absolutely love their life, and I dont give a stuff that I'm not getting one red cent inheritance. I was taught financial responsibility, decency and most of all charity.

Sunstone .. you left out 0-18 age bracket. Educate them and they wont have to save for a car, a house, a portfolio. It will all be automatic. It wont be saving, it will be called being financially responsible, of which investing is part thereof.


Back to lurking..

[geoffw]

I had most of my support from my parents when I was growing up. I can only see a lot of the sacrifices they made in retrospect. They put so much in for us at a time when they were trying to build up a business- I'm sure the business would have done a lot better withuout us- but it left them comfortable and able to semi-retire early.

I realised some years ago that I needed something better than superannuation to be able to retire comfortably myself. It just took me some years to find the answer myself. The answer I was found was somewhat different for me than it was for my parents- and different again than it was for my maternal grandparents- who retired well off by speculating in vacant land just outside a country town.

Now my parents have done the hard yards (metres?) and are enjoying retirement. They're 75, and still healthy and strong. They're living on annuities- so I know that my retirement plan does not include anything from them. They will probably outlive me. I'm very thankful to the likes of Peter Spann, Jan Somers, and contributors to this forum for helping me to realise that there is a way that I can have a financially healthy, if not early, retirement, despite a late start.

[paulzag]

Allow me to run against the herd for a minute.

Imagine how you'd do today if you'd started with a financial education and some capital to make it work.

I will not live miserly and conserve my wealth for the kids. Neither will I squander it and force them to make their own way.

I set an example that includes charitable giving. As a matter of fact I give sacrificially - it hurts to give 10% of my gains away. Imagine what I could do if I kept it? But it I don't start now when will I start?

OK so my kids will get a financial education plus a series of venture capital investments to back their ideas. They'll make mistakes, expensive ones. But how else will they learn? And how will they grow wealthy if you starve them at the beginning? What good could they do in the world if they became billionaires?

Wouldn't any of you like your achievements to be exceeded by your offspring?

Regards

Paul Zag
Dreamspinner

[Desto]

Yep, it was definitely not a good time to invest for me. So I did and I suddenly have a budget for my 'discretionary' expenses and I don't feel guilty about enjoying myself, knowing that a good portion of my money is invested and working hard for me.

As for building wealth for the next generation, nope. I don't have kids, but even if I did, I'd make sure they are educated in managing finances and how to create their own wealth. If they want it, they'd have to work for it.

In the absence of kids, my money will go to create a charitable foundation, maybe a scholarship fund, so this way I have contributed a little to the betterment of society.

I"m glad I took the plunge when I did. :D

[Ross Sneddon]

Hi Guys

One thing I note are the number of people who all say, and I have been no exception, "I will give my kids the best Financial Education" I can and then they are on their own etc., etc..

I agree with this philosophy but the thing that alarms me most is that kids are NOT taught financial matters at school. I have checked extensively within my limits and I don't know of any school that teaches "finance", money matters, investment, and those other things we talk about on the forum.

Now I would be happy to stand corrected, but I don't believe kids are exposed to savings systems, investment planning and implemantation, long term savings and investment, retirement planning, and all that unless they are from fortunate families. I didn't get the knowledge mainly because my parents didn't understand either. What little they learned themselves, they did their best to impart to me, but surely education should be better than this.

I learned I think, in a manner similar to many of you who contribute to the forum, and that was partly by accident and partly because we attended seminars, read books, this forum, luck, trial and error and from wherever.

And yet it is so important, perhaps more important than many of the subjects currently taught at school. Education in my mind is essential and you can't get too much of it, but surely there is a better approach to finance education than simply hit and miss.

One of my sons spoke to me earlier today and we have arranged to meet tomorrow so that Dad can teach the son about finance investment. Now there is a broken family situation involved here and we have not had as much access to each other as desireable, but as an individual, he is not stupid. He is a graduate in Laws with honours, master of Arts plus a PhD to boot and he said to me today, Dad I don't know anything about investment, will you teach me?".

Frightening, isn't it. It frightened me. I now have a vocation, one to which I will dedicate a lot of time and care.

But what of education generally. I am not a teacher but think this is something we need to addreass, What say you?

Regards

Ross

[Danni]

Ross,

Alas, you are correct. Our educational system, from primary through to University, does not at any point cover personal financial management (maybe if one does take some kind of finance course at university?).

I have experienced secondary education both here in Australia and in Germany. Both had zilch about managing one's own finances intelligently , other than, 'have a budget and don't spend more than you earn'.

I am from a relatively poor background. My mother was a WWII refugee and wanted us all to get degrees and not have to work menial jobs for a meager wage. Well, we did just that. Then I realized that while I had a high income, it was spent as quickly as it was earned.

I learned about investing in property by accident because I always had an indying desire to have my own home. So I read up about home buying. While scanning a bookstore's bookshelves, I came across a book called, "Investing in Real Estate on a Budget". Being totally inexperienced in buying real estate since my family has always rented, there is just one line that I remembered from this book as I went about to search for my place in the sun, 'time heals many mistakes in real estate purchases'. So I bit the bullet, followed my heart to the bay and bought a piece of land to build the smallest house that I felt comfortable with paying off.

Then I started reading more and I worked out that my superannuation would probably amount to around $100K, if I'm lucky and work until I'm 65. I didn't like that prospect at all. More reading on my favourite subject of real estate investing, finally moved me in the right direction; and I'm still learning.

I spent many years at university getting a string of degrees, but not one of them taught me what I really needed to know.

I don't want to be cynical, but society does benefit by making sure that as few people as possible find out how to create wealth, and ensure that as many of the population as possible remain ignorant and unmotivated in this matter. After all, we want our properties to be rented out by those who work hard for a living but are always broke, or those who live for the glitz and glamour of a city apartment, but are always broke and think that this is their lot.

D.

[NigelW]

I'm with Paul on this one. I want to help my kids (altho they're some long way off yet! :D ) but they'll have to present a viable business plan to get venture cap from me!

It is of course a very personal choice, but I think half the fun of making money is being able to buy things for your family that will bring them great joy or even just make their life easier.

[Ross Sneddon]

Hi Nigel

My point is that if your kids in due time have been unable to learn about investment practices and all that investment means, they will be handicapped in knowledge.

Will they be able to assess an investment possibility and prepare a viable business plan for presentation to you. We all want to help our kids. It is the manner of assistance to which I refer.

I really think we are saying some similar things here.

Regards

Ross

[Kevmeister]

I agree that financial education has to be one of the most overlooked area of education in our education system. My daughter is 16 months old and I will do our best to both educate her and possibly to have sufficient self-wealth to help her when appropriate.

But I also believe that children need to appreciate work and achieving things themselves to make them appreciate what they have. I bought and paid off my own car etc (hmmm, not a good "investment" though!) with 100% of my own money, not even a loan from my parents (who couldn't afford it anyway), and it has taught me to appreciate the car, look after it, and appreciate the enormity of the commitment I took on for 5 years or whatever.

That leaves my wife and I in a dichotomy of wanting the best for our child but knowing that by giving her too much in the future we may actually be doing her a disservice. She might become reliant rather than self-sufficient, unappreciative instead of appreciative, etc.

I think having a good job may well still be good advice, but as another forumite said, the more you earn the more you spend. It is the bane of nearly every income-earner I expect.

In some ways, even simple bits of advice like Paul Clitheroe who suggests saving 10% of your income *always* is useful. I would prefer to say "invest" rather than "save" but that still leaves a big question of "how".

One thing I notice as I get older is that the years seem to pass quicker. A year for a child is an eternity. Whilst as adults we are prepared to hold property for 15+ years these timeframes are almost incomprehensible to most 15 year olds, who think "that's my entire life".

The education battle is not really just an education battle either. It's a battle to educate your child against a society which as a whole is becoming more consumer-driven, more motivated by the desire for instant gratification, etc.

Education will only be half of the battle. Convincing your children that delaying their gratification by investing money now, for their future, will be the harder sell I believe. Peer group pressure can be implicit, like the implicit pressure one might feel to wear new fashion clothes just because your friends are.

It will be an interesting parenthood...

Kevin.

[Luke]

Originally posted by Kevmeister
The education battle is not really just an education battle either. It's a battle to educate your child against a society which as a whole is becoming more consumer-driven, more motivated by the desire for instant gratification, etc.

It will be an interesting parenthood...
Kevin.

Hey there Kevin,

Absolutely it's about seeing the big picture, and seperating needs from wants. Saturday's Age had an interesting story here. (http://www.theage.com.au/text/articles/2002/11/29/1038386312541.htm)
To quote: "Australians have never been richer, says the study report by the Australia Institute. Yet the majority of middle-income households believe they are doing it tough.
The report's author...says inflated expectations, not inadequate income, are the problem.
"A large and growing proportion of the population wants to emulate the lifestyles of the rich and famous," he says. "Because they can't afford it they constantly feel deprived of the good life."
A Newspoll survey conducted in September for the study found 62 per cent of Australian households believe they "cannot afford to buy everything they really need". Almost half the richest households - with incomes over $70,000 - agreed. " Ends quote

I re-read parts of "Richest Man in Babylon" over the weekend... It's been about 5 years since I last read it, and I am still blown away by the depth of wisdom in it. I'm sure I'm only just starting to appreciate it. The simplicity of living on no more than 80% of your income, and paying yourself 10% first (investing) and doing so wisely, and with security is just so simple it's ludicrous. But the culture is so often telling us to take it now, get it now, - take that one marshmallow now... quick... ! Worry about what you want, no one else matters, and put it on the visa.

I look at where our family is today (almost turning 30) and think I am so lucky, but it's all about choices and responsability for them. Financial management isn't rocket science. Hehe... re: education, when we first got married I had never written a cheque. My wife did, - she'd learnt it in the ('dumb') maths subject that you did in VCE when you weren't doing the 'real' maths subjects that I did with a math/science major. So she had to teach me.

Good luck in your parenting, it's an awesome vocation, and it sounds like you're starting off in a good direction regards material things. I'm convinced the most significant impact on a child from the family comes in the first 5-6-7 years... and by 13-14-15 the foundation has to be there in place for them to build on with peers. All the best.

I'll stop rambling, but this has been a great thread.
Luke

[NigelW]

Originally posted by Ross Sneddon
Hi Nigel

My point is that if your kids in due time have been unable to learn about investment practices and all that investment means, they will be handicapped in knowledge.

Will they be able to assess an investment possibility and prepare a viable business plan for presentation to you. We all want to help our kids. It is the manner of assistance to which I refer.

I really think we are saying some similar things here.

Regards

Ross
I think we are saying similar things. Your point that kids don't learn about personal finance and investing is spot on. The point I was really trying to make is that I think a parent's role is twofold:

1) educating their children on many things, including financial issues
2) giving them a bit of $ help along the way in furtherance of their sensible financial objectives.

But not being a parent myself I guess this is all academic!

Beware of those who speak purely from theory :rolleyes:

[yuch.]

Well, it's a good idea to incorporate financial education into our current education system, so our next generation will be more independent and wealthier than our generation.

Small problem here.....

Assume that the course is designed by an experienced financial educator, and practicality reviewd by a successful investor. We still have the problem that the teacher may be one of the 95 percenters.

If the teacher doesn't even believe in what he/she is teaching, how can we be sure that the kids will be "properly" educated?

Personally, I don't think schools and universities will ever be the places to learn about personal finance, it's really up to the parents to teach the kids what they know about money.

Or maybe have a proper structure in place as well, so the wealth passes on from generation to generation?

[Lissy]

Fascinating thread! I thoroughly recommend "The Millionaire Next Door" - the author talks at length about the fact that wealth often comes and goes in about 3 generations. He says it's because the first generation have the drive and commitment, they then pay to get their children well educated in high paying jobs, but those children then fall into the consumerism trap of status, and never learn the financial principles of their parents. It's interesting stuff.
I was never really taught about money at home, I only heard the occasional grumble from mum about money when dad was late with a support payment. Even that was rare!
It was my grandfather who was the smart one with money. He'd run a successful business, sold it, and then invested the proceeds. He was very conservative, used mainly term deposits (which paid much better interest 20-30 years ago!) but at least he did something. He had money put aside in term deposits for me, and as a young teenager I was shown these and told how they worked, and gradually given the responsibility to choose what new term deposit to put them in when the old ones finished. By late teens he'd handed them over to me, and I maintained them and added to them when I started working. They meant we could buy land for our first house outright. It still took me a lot more years to begin thinking about investing, mostly that urge came when I was pregnant with my first bub, and realised I wanted to still contribute to the family finances even though I wasn't going back to work. And so my journey began...
Looking at the 3 generational thing again, I have to say that I think it will be true in my family. My dad likes to think he's clever, but sometimes he tries to be so clever with money that he ends up being silly, if that makes sense. Already, unless I'm much mistaken, there's not a huge amount of grandpa's money left. I am not looking forward to the day my dad dies (apart from the usual reasons!) because I have a sneaking suspicion it's going to be a nasty, disorganised mess. He has a de facto, she has her own kids, I suspect the money will go to her, and when she dies, to her family. What little is left will, anyway.
As for my own kids, I plan to take a middle road. I will educate them about financial things and investing, already my son who's 5 is interested in buying houses, because he understands that when mummy has bought x houses, daddy won't need to work any more. So he's helping me count houses, he loves inspecting houses to buy, tells me if he thinks they're nice or not...!! usually based on the number of toys he finds.... hehehehe He and his little sister (2) sit in the back of the car reading "For Sale" magazines and babble on about the houses, he often recommends houses to me because he thinks they look nice.
Further down the track, they will get some things but not everything they want when they want, I will encourage saving for special things, and when they want to start investing, I will become a joint venture partner with them so that they can begin - and I will expect my returns on the deal!
In the end, though, I think they will learn the most by simply watching what mummy and daddy do, and by us having investing conversations around them initially, and including them when they're ready.

[Kevmeister]

As far as financial education goes, perhaps it time that some subjects mandate that teachers are practiced in the subject. I know there's a common saying about "those who can't, teach".

Surgeon's learn theory and then have an experienced practitioner guide them. Obviously we can't expect our children to be investing $300K buying houses when their 14 as part of their financial education course, but having someone who has "been there, done that" doing the educating makes an awful lot of sense.

[geoffw]

Has anyone read the Kiyosaki/Lecter book "Rich Dad's Rich Kid, Smart Kid: Giving Your Children a Financial Headstart" (http://www.amazon.com/exec/obidos/tg/detail/-/0446677485/qid=1039336071/sr=5-2/ref=cm_lm_asin/103-8590770-5916651?v=glance)

Is there anything helpful or useful for helping teach kids ourselves?

[Sunstone]

Dear Geoff,

Have practically all his other books and just found that I have "Raising your childs Financial IQ" by Kiyosaki and Lechter. Maybe has some of the content of the Rich Kid Smart Kid book.

This came when I got a Cashflow bundle with Cashflow for Kids thrown in for free.

Haven't read it but may revisit now.


Suggestion. You and I know most of Robert Kiyosaki's stuff is good. If you want something specifically to help teach your kids then certainly look at investigating it. But then I would have thought that a better beginning way was just to get them to play CASHFLOW with you?

Cheers,

Sunstone.

[geoffw]

Sunstone,

Probably time to try again.

They love monoply. And the older one beat us in cashflow 101. And then lost interest.

The older one was buying lollies from the tuckshop for a while- for 15 cents, and then selling them to classmates for 30 cents to 50 cents. The classmates knew the price- but were happy not to walk to the tuckshop themselves. We thought that she had some of that entrepeneur. But she lost interest. Oh well, start again.

[Bill.L]

Kev
I think that the full saying went something like this

Those who can do
Those who can't teach
Those who can't teach, teach teachers.

Sorry if this is out of place in a very interesting thread.

Having three children and never having a financial education when I was young, other than get well educated, high paying job etc etc, this topic is very relevent to our situation. Problem is young teenagers tend to think of 5 minutes as short term and 5 days as long term. I'd love to know HOW to change this perception.
Last year had chidren working during school holidays getting very good money for piece work, but they would work out that the new game on the computer cost $x and after they had worked enough to earn $x, it was like drawing blood from a stone. To earn extra for later in the year when other nice things may come along was not a concept they could conceive. Perhaps my failing.

Bye

[Ross Sneddon]

Hi Bill

No doubt there are a number of variations on the same theme.

The one I heard was:

Those who can, do
Those who can't do, teach
Those who can't teach, become critics
The world has enough critics
We need more doers

Regards

Ross

[Macca]

In my last business I had 4 male teenagers working for me, they were all 18-19 at the time. One day when it was a bit quiet, I got them together and asked them to tell me where they wanted to be in their life in 5 years time.

I insisted that they tell me the next day, they had to think on it overnight.

The next day I got a variety of responses but the most interesting part was that none of them had ever been asked, or even thought about what they wanted to achieved by the time they were 25.

Maybe that is a starting point, ask your children every birthday if they have any plans for the next year. It wouldn't matter if it wasn't a grand plan, we might at least get them thinking.

I believe it is a sign that they are maturing when they start to plan ahead.

Macca

[natmarie73]

This has been an interesting thread. I think that as a parent (which I am not) all you can do is make investing as interesting as possible to the child and not spoil them by giving them everything so they don't learn how to "want" something enough to work for it.

I feel the biggest incentive to investing and creating wealth is to want it. If you are used to getting everything you want without effort, you will never learn how to get what you can't have - if that makes any sence.

My parents were working class battlers and we didn't have very much in the way of doodads and luxuries when we were growing up but it has given my sister and I a hunger for wealth creation that we would not have, had our parents just given us everything we wanted.

I also learnt about compounding interest and other useful financial info in Veggie Maths - it is about the only thing that has come in useful from 12 years of education.

[Lissy]

I believe on the ABC tonight at 8pm there is a show called Dynasties, and they're going to be looking at the Myer family of Melbourne.
In some blurb I read on it, they mentioned they had specific plans in place to ensure that the family wealth continued to grow from generation to generation, in order to support all their charitable work.
So could be interesting!
Now, if I can just remember how to reset the blasted clock on the VCR....

[Aceyducey]

I think with kids you've just got to hit them whenever they're interested, and then not push the matter when they're not.

Kids have so many things to learn and experiment with RIGHT NOW - not to mention rapid body & mind changes, school and social pressures, that even getting them to think about 6 months ahead can be a real challenge.

We've tried to keep our kids informed of what we're doing financialwise, and some of it seems to have stuck as our 5yr old son was able to question me on whether we were following one of our investment strategies.

My kids (5&3) are already into Monopoly (and our 3yr old frequently wins - she loves building houses, they're both good at trading and negotiating), and both have virtual bank accounts & are learning that if you spend money now you don't have it later.

Hopefully we can start tying in some basic financial strategies as they get older.

We've found that the key thing is to provide a positive example. If we go and spend big on credit cards they pick up the habits - but if we're busy investing they get interested as well (at least until they become teenagers and rebel against everything).

Frankly I believe that neglecting childrens' financial educations is tantamount to neglecting the child - they cannot reach their full potential and dreams if they never grasp the fundamentals :)

Cheers,

Aceyducey

[John@IWC]

My wife and I have discussed this issue recently, and agree with something mentioned in a previous post.

We have no interest in subjecting our son to the pressures of succeeding in the normal school areas (the 'you must get straight A's').

Rightly or wrongly, we are focused on getting the best education for him in Maths and English. Beyond that, everything else is a bonus.

(I often silently thank the one teacher who taught me the ability to read aloud and to spell the '100 demons' week in week out...........before we could go to the library and goof off).

Where we intend a different tack, is to involve him in all our house hunting from a young age, so that he has a reference point in the real world for the maths he is learning, and a background experience for later years (after he knows it all during his teenage years).

Pocket money is earned not given, and loans are made and repaid with interest. (this we believe teaches the value of money)

The next step, are the business principles of cashflow and debt, with leverage used to increase the loans (eg for a bike) for the "consumer items" they so often need through peer group pressure.

We hope that this will break the cycle of unsustainable consumer debt early, and lead our son to look for better incomes (read investments)

At this point, we hope to teach our son the principles of property investment and income, and help him start by using our assets in a Joint Venture to create income.

This is hopefully our legacy to him. The helping hand to start any venture he chooses, with the guidance of our initial involvement, as a partner.

There are no assets for him to have.... only the love and willingness to educate, then OPPORTUNITY.

[Donna L]

Perception of wealth for children and adolescents is a fascinating topic. My son once berated me for not being wealthy and why were we so "poor". "Excuse me?" Well he said you are always talking about property and stuff but we are always broke. "How did you determine that?" Well a lot of my friends are wealthy - they have these big houses and big, flash cars and when the Dad opens his wallet there are hundreds of dollars - when you open your purse there is a handful of small change - I sometimes have more money on me than you." (This is very true - I hate cash - I'll be first in line for the Smart Card.) It is a sobering thought to think that one million dollars of assets could place you in the top 5-10% of the population, not the fabulously wealthy top 1% but hardly "poor". I tried to explain about people who live off rubbish dumps and those who have to walk 20k for a few litres of water but this was not part of his "experience". I don't think we should feel guilty but I think we need constant reality checks. At the moment I am feeling childishly frustrated cause I cannot raise the deposit for a property I want to buy - asset rich, equity poor - at the moment. I feel deprived. Why can't I have my holiday home now. Somebody, please come and stamp their foot on me before I become too upwardly mobile!

[brains]

This is an interesting thread and i'll be giving my kids the necessary financial education. There is one thing we are all forgetting, and that is.......shock horror......

not everyone is into money (but i am)




Donna,

My wife is like you, she never has cash in her purse and it drives me crazy. Im a credit card/cash person (i always pay my cc before the due date) and it frustrates me when people say "oh no, no cash...i'll just pop down the ATM"

I think the last time i did that, i was probably 19 years old.





:) :)

[natmarie73]

You're right - not everyone is into money. Those who aren't are probably not on this forum though!

I would think that those of us who are here have realised that financial freedom is a worthwhile pursuit and are doing all we can to ensure we are not slaves to employers for the rest of our lives - I am that's for sure!

[brains]

So true Natmarie, i decided 9 years ago that i will never work for
anyone again, and that has been the case and always will be.

To clarify my statement, i'l give you an analogy:

Say your husband/partner loved football and played it when younger, he wants his son to be a footbal player. But the son's just not into footie. You cant force him to play football.

I think its the same with money, we all have our own destiny and for some people (strangely enough) its not money.

[Bobq]

Gee, I've enjoyed this thread!

A few thoughts: My 7 year old plays 101 and 202 and enjoys it. He's getting past wanting to have the highest salary NOW so that he can get out of the rat race faster - but he's good at it, and his arithmetical abilities have blossomed.

My 15 year-old has a virtual bank account. $250 per quarter to cover all presents, excursions, cost and treats. We go halves with him on clothes (and have equal rights in deciding what he wears). Loans have not been raised as yet, but would carry interest at our standard rates. He's gotten pretty canny about investment. By the time he's looking for his first IP, we'll be able to help with the deposit and structuring. We'll do this so he can start early and have that good old compound interest working for him.

While we are interested in money, we also try and teach the family virtues, laregly by example - tolerance, openess, honesty and love. Without these, you may get rich, but you'll probably be beneath contempt.

On the perception of wealth, my 7 year old's friend stated confidently that his family was much richer than ours. When my son questioned this, his friend pointed to the number of cars, computers and bottles of wine owned by his family compared to ours. My son responded with the number of IPs we owned and (I was surprised) all the consumer items in those houses. "Oh," said his friend dismissively, "But they're not in YOUR house so they don't count!" And I think his parents think the same way.

I guess one strategy might be to reinforce at every opportunity the joys of delayed gratification, by example and reward.

Cheers,

Bob

[brains]

I just thought of a great idea, im going to get my kids to register for an ABN, and then when they do stuff around the house they can invoice me for services rendered.

Therefore i can claim my payments to them as tax deductible.........cause i will register a business at our PPOR.....and they can be schoolkids and subcontractors at the same time......sometimes i surprise myself..........:D

[natmarie73]

Great idea! You can help them with their homework and BAS at the same time! Seriously though - how would that work with GST and all.

[phm]

Hi there.

This is probably a bit off the track, but John@IWC reminded me of it. Recently, my son (who is going into grade 11) and I went to a special evening organised by the high school, for this age of students. It was a very informative evening, with two points that especially stuck in my mind.

1. 4 out of 5 students who leave school at grade 12 DO NOT go to university.

2. Regardless of the line of work that you wish to go into, the only three things that you need are the best marks you can achieve in Maths, English and Science.

Food for thought.

[brains]

natmarie,

can you be more specific with your GST question?

[mike2002]

Hi,

I'm 27 years old, and I think that I'm too old to do this stuff already! I should have started when I was 17!

Mike

[brains]

Mike,

never too old, never too young (unless your a toddler:D

the right time is now........

[natmarie73]

brains, I'm not being 100% serious when I asked the question although it does raise an interesting point. If you were to register your children with ABN's and invoice them for household jobs so that you can claim on tax, wouldn't your children need to charge you GST and wouldn't they then be able to claim back the GST or pass it on? I'm not entirely sure how this would work although I agree it would be great education in running a business and making money rather than just being told to get good grades and get a government job...

[brains]

"If you were to register your children with ABN's and invoice them for household jobs so that you can claim on tax, wouldn't your children need to charge you GST and wouldn't they then be able to claim back the GST or pass it on? I'm not entirely sure how this would work although I agree it would be great education in running a business and making money rather than just being told to get good grades and get a government job"






Natmarie,

I think you mean they would invoice you for household jobs?

But I was joking to start with and being a little bit sarcastic.
I disagree with what you're saying:

Adults and businesses should register for ABNs and kids should be kids, they have plenty of time for that stuff later.

Wayne

[natmarie73]

Yeah that's what I meant. I wasn't sure if you were joking or serious but it could be a way to get kids into the idea of owning/running a business by maybe having a "mock" business (no ABN's, GST etc).

[Kevmeister]

For what it's worth, I don't think you need to register for GST unless income is > $50K per annum.

Not planning on giving your kids *that* many chores are you?

:-)

[chris1]

Hi All,
this is going back to earlier posts, but I have only just jumped onto this thread.
We were told by my 11 year olds teacher 2 yrs ago ( in yr 3) that we had to teach times tables at home as she didn't have enough class time to devote to them. Most parents at this meeting were Ok with this(some doing it already), but questioned why??
Teacher said that so many new topics were now in the curriculum (ie computers, child protection etc) and she still had the same amount of time in the day! School days are really quite short, and there is too many important "basic" subjects to learn.

If times tables are out, What hope has financial education got?????

[np2003]

Remember don't push your kids to get A's all the time. Give them options, see what they like and push them towards their passion.

I once knew a girl who was pushed by her parents to get straight A's. Well she did, she got the top 1% in QLD when she graduated from grade 12, she could do anything in university, however her parents allowed her to go live by herself and do whatever she wanted after she graduated because they were now no longer responsible for her well being, their thinking was that as long as they pushed her to the max till she graduated that was it, after that she is a free person.

Well she is now working full-time as a checkout girl in Target and she plans to stay in that position for a very long time. I guess the reason why she is working at Target and did not proceed through university or a higher career is that through her entire life she was forced and pushed around so much. She just got so sick of it and just settled down with a suitable job.
:confused: :(

[OPM-addict]

As a uncle of a 12yo bright niece, 10yo gifted niece and a 6yo nephew. I can taken up the banner of a male role model for then in leui of the father which is divorced from my sister.

I only started seeing them about 2 1/2 year ago since I couldn't stand the loser husband. Enough said there, every family has at least one.

I get involded with the kid by asking them what they want to be.
The 12yo wants to be a lawyer,vet,marine biologist, zoologist.
It changes very often. (most all deal with aminals of one sort or another). Hopefully she will be a lawyer. Since she likes argueing.

The 10yo wants to be a artist or a physiotherapy. Hopefully a physiotherapist since they actually earn a wage. But she is creative in painting and sculpting.

The 6yo want to be a mechanic or ninja. (Go figure).

Though the 6yo is still learning maths and english the 2 girls are already earning a wage from me by helping me house hunt.

I get them to do 20-25 suburbs I have chosen in which I want to invest in. The have a set procedure.
- They circle the ads of houses in a certain range and criteria.
- The get the medium rent paid for that type of house in that area.
- They work out the yields for each circled property.
- They write each down on a single piece of paper.

For this they get a pay of $5 for every 10 they hand me.

Yes, I hear you, I am cheapstake.

My sister is happy she doesn't hear from them on the weekend so she can spend her time studing and they are getting better at finding real estate. A good one was around the corner from their house so we walk there when it was open. (-a real reno was needed).

I hope that this and paying monopoly and cashflow for Kids with them will help their financial education.
That and going to collect rent with Grandma and Opa.

In closing, I will help them be who they want to be and encourage them to invest there paycheck wisely.

Respect, Peace, Out.

OPM-addict.

[beech]

If only they knew how good a lesson you are giving them,and they get paid.

Well done OPM.

[Sunstone]

Dear guys,

Revisiting the original topic of the thread "Why you can't invest now".

We will always come across "gunna's" in anything that we do.............

Some will take action.............. Most won't.

Are there any tactics/methods that others have found particularly successful in motivating "gunna's" in the investing arena or case studies/stories they would like to share?

Cheers,

Sunstone.

[Jacque]

Sunstone,
You're spot on with the motivation factor. Some people will find excuses to do nothing, no matter what you say or what example you set. That's life. There are simply some people risk averse or close minded to new ideas, and that's fine. It's their decision, after all.

I have found that, though I'm not a preacher by any means, my own enthusiasm has been enough to get some of my family members thinking outside the square, and doing things they never would have done previously ie: buy investment properties, change accountants, question financial so called advisers etc.
It's actually refreshing to talk about something new at family get togethers too :)

I have recommended various books to ppl, and though not all of them have taken my advice to go and read, some have and have changed their financial ways. Very exciting actually. I want my family and friends to retire comfortably so we can all take those cruises together :)