Why you can’t invest now

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.
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
 
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:
 
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?
 
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.
 
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.
 
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.
 
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.
 
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
 
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
 
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
 
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.
 
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....
 
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
 
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.
 
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!
 
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.





:) :)
 
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!
 
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.
 
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
 
Back
Top