I worry about how our children will survive the future financially.

When I was growing up there was no discretionary spending. If you needed something there were no overdrafts, credit cards, personal loans or Afterpay.

Buying a pair of shoes was a plan that took weeks to execute. A pair of trousers were always 1 and half lengths longer than required, then stitched to a length and then as I grew taller the stitches were released.

Today, kids have it all. Including my own. They spend when they do not have any money because banks make more by lending. Afterpay may be interest free but makes money when lenders do not repay. And we live in an Instagram world where spending is shown to be trendy.
And our kids are lapping it up. This worries me.

We were never taught about money in school. What little we did learn was from our parents and they were not all great role models. Some were. Most weren’t.

Now you would think that our Government, state and federal, would think that money, investments, and wealth is an important thing.

It seems not.

According to them my children need to learn the square root of things, long division (manually), and long multiplication (manually). Now forget my kids but I cannot remember the last time I took pen to paper to calculate anything. So, what are the chances that my kids or your kids will? Absolutely none. They will take out Mr Samsung just like you and me making the whole exercise pointless.

What are the chances that my kids or yours will take out a loan, buy a home, a car (probably electric), pay taxes, invest in Super or inherent a lot of cash because of mum and dad’s hard work? Most likely.

And if you know little about money and you suddenly have quite a bit of it what are the chances you will use it wisely? Probably not much.

I also know that the younger they start to understand money the more they will accumulate over their lifetime.

So late last year I decided to take matters into my own hands and thought I would teach my kids aged 12 and 14 about money and specifically investing.

But I also wanted it to be real for them, so I decided to set up two investment trusts, one for each of them but controlled by me. The idea was that in later life, if they become responsible, I can transfer it to them without stamp duty or capital gains tax issues.

I also wanted them to feel connected to their trust giving them the belief that it was theirs. So, I told them to choose a name for their own trusts.

This took them a few days and they choose names totally in tune to their characters. My youngest decided to call his investment trust ‘The Fatty Boom Boom Trust’.

This sounds funny and cute when your 12 but can you imagine him aged 25 going into a bank with his partner and with a serious face asking the bank manager to lend money to ‘The Fatty Boom Boom Trust?

But that is what he wanted so yes, yours truly, set up a trust and went to the bank to set up a bank account in the name of ‘The Fatty Boom Boom Trust’. You should have seen the face of the bank services manager. She could not stop laughing.

Now I wanted to keep things very simple not erratic. The idea was to show my kids simple and boring can be fun but at the same time not scare the living daylights out of them.

So, I invested in 3 index funds. 2 based around Australian stocks and 1 international.

I then sat my boys down and I did some explaining. Fortunately, my kids knew what holding shares meant (just) – they had played Robert Kiyosaki cashflow game many times before, but I went a bit further using Coles as an example.

And this is what I said.

‘When we go to Coles and buy something we are spending money. That is bad for us because we have less money but good for Coles because they make money.

We must go to Coles to buy food otherwise we starve and die (with my kids to make a point you must be dramatic otherwise it does not sink in).

But what if we owned a little bit of Coles so that when people buy from Coles, we get a little bit of the money that Coles makes?’

And that is all it took for them to realise what owning shares really meant.

I then explained why share prices go up and down and what dividends meant.

And then told them I had brought shares for them. And for the last 10 months I have been telling them at random times if they have made money or lost money depending on that day’s trading. I also tell them if dividends have been received.

Over those months they have learnt three things:

• Some days they make money and some days they lose money. When we started if I told them they lost money they got scared and thought they should ‘get out’. Now they realise that losing money is a natural process when it comes to the stock market.

• Like most children my kids get money if they do work around the house. But this process has taught them they get money only if they work hard or ‘put the hours in’.

This is something we are all taught by our parents and schooling. Work hard and you will be successful. I wanted my children not to think that way. I want them to work smarter.

Investing in shares has shown them that they can make money when they are at school or playing a soccer game.

• I reinvest dividends back into the index funds but I want them to understand that dividends is like pocket money – you can spend it on things. So, I give them the dividends to allow them to buy things, but they cannot touch the value of the stocks held.

So, they have an incentive to keep the stock but my youngest did go out to Big W and bought a watch the size of Zambia from his dividends, so I have not quite got him to understand the right way of spending!

During those 10 months I have not really done anything else. We have invested a bit more in those same 3 index funds but that is about it. Simple and boring but my oldest has a return of 14.9% and my youngest a return of 13.7%.

My blog today is not to boast about my investing capabilities, to prove I am a great father or that I know a thing or two about money.

The Government is only interested in making its subjects work harder because hard work means a larger tax intake for the Government. The Banks are only interested in making money for their shareholders. Social media companies are only interested in how much advertising money can be extracted from trendy spending.

The point of this blog is simply to state that our children’s financial future is dependent on what we do for them. Yes, it is our responsibility to raise our children responsibly, but we have the help of teachers and schooling to ensure our kids are on track. When it comes to raising our children financially, it’s down to you alone and many are not sure where to start.

I am grateful and fortunate that I can do what I have done. Many may feel that they do not have the privilege. But that does not mean you cannot plan, teach and make small inroads.

About 15 years ago I had a UK client who was a pensioner and had just become a grandmother with very limited income. She could not decide what gift to get her granddaughter and asked me. She was expecting me to say a baby walker or highchair. Instead, I told her to invest $70 a month in a child trust fund.

I keep in touch with her and last week she told me that her granddaughter’s fund has a value approaching $25,000. Small actions can lead to large outcomes, but it only happened because she took the advice and made it happen with small, tiny steps.

But it is not just about our children. This is just as relevant if you are 18 years old with no kids in sight or 55 years old and need to start investing be that in shares, property or even crypto.

If you are reading this, you will have one of four thoughts:

1. Great article and I will think about it (but maybe never get round to doing that) or
2. I need to do something and do it now or
3. I am happy to work hard for the rest of my life or
4. I don’t need to do anything because I am already on the road of investing and on track.

Your decision will determine where you and in some cases your children will be financially.

If you think you may be number 2 get in touch and we will give you a few options including talking to a financial planner.

If you thought is number 1, then the only thing stopping you do not lack time. It’s the fear of the unknown.

If your thought is number 3, then you know that the thought is not true. Deep down no one wants to work long hours. Again, it’s the fear of the unknown.

If your thought is number 4 then well done, hats off and congratulations. Reply and tell me how you did it because I always want to know the journey people took to set themselves up financially.