She's On The Money - Investing For Kids

Episode Date: May 7, 2024

If you're in a position to start investing for your child, why is it good to start early? Two words - compound interest! Join Victoria and Bec as they chat today about V's two favorite words, but also how to teach your kids about money,  how to get them familiar with the concept of the family budget, child tax rates and so much more! Acknowledgement of Country By Natarsha Bamblett aka Queen Acknowledgements. The advice shared on She's On The Money is general in nature and does not consider your individual circumstances. She's On The Money exists purely for educational purposes and should not be relied upon to make an investment or financial decision. If you do choose to buy a financial product, read the PDS, TMD and obtain appropriate financial advice tailored towards your needs.  Victoria Devine and She's On The Money are authorised representatives of Money Sherpa PTY LTD ABN - 321649 27708,  AFSL - 451289.See omnystudio.com/listener for privacy information.

Hello, my name is Natasha Nabanunga-Bamblett. I'm a proud Yorta Yorta, Kernai, Wolperi and Awadjeri woman. And before we get started on She's on the Money podcast, I would like to acknowledge the traditional custodians of the land of which this podcast is recorded on Awadjeri country, acknowledging the elders, the ancestors and the next generation coming through. As this podcast is about connecting, empowering, knowledge sharing and the storytelling of you to make a difference for today and lasting impact for tomorrow. Let's get into it. She's on the money.

She's on the money. Hello and welcome to She's on the Money, the podcast for people who want financial freedom for themselves and also their tiny, teeny, tiny, little babies. My name is Bec Syed and I'm joined by financial expert and maybe new mum. New mum. Victoria Devine. Isn't that wild? That is so wild. I feel like this episode will be very useful for you.

It's very useful for me. I mean, I wrote it. The information is actually entirely from my brain. but I'm very excited to get further into investing for kids and budgeting for kids and like all of this kid-friendly content because up until now I've always been like no one wants to hear unsolicited parenting advice from a non-parent. Yes that's so true. Well I think. Well I don't even want unsolicited parenting advice let alone from someone who's never been a parent and like Bec having a social media following it's not even that big people just slide into DMs and they're like, by the way, you have to X, Y, Z, like get in the bin. But I'm assuming if you've clicked on this episode, you have come for solicited advice on how to invest for kids.

And I guess it's not going to come as a surprise that it is the front and center of my mind with, I guess, mini divine now in the household. And there is just honestly one so much to get used to as a new parent. And it's very beautiful, but it's a very overwhelming time. But I also love this idea that I'm putting my child first and I am you know putting them in the best possible position and that's been one of my biggest questions like are you investing for your baby what is going on V so I think it's a good time to have this chat my friend absolutely and I know that it does make sense it's good to start early but explain why it's good to start early V well it obviously helps to set up really good habits and you know my two favorite words slay and

Yeah, look, slay is very on board, but no, it's actually compound interest. Yes, yes, yes. Warren Buffett calls it the eighth wonder of the world, and that's a slay in itself. But the earlier you start, the more money your money makes, and like no one is going to say no to free money. Totally. If I said, hey, Bec, your money can make you more money, do you want that? Yeah, you're not going to say no.

Why would you say no? So compound interest is my favorite thing in the entire world. Okay, so let's get into investing for kids. You are correct. we should dive straight into talking about investing for kids. So the first thing I want to talk about is teaching your kids about money and not jumping straight in, right? So I think that there's this very big misconception that feels really overwhelming when it comes to having children where you go, well, if I'm teaching my kids about money, do I have to share what we

earn and what we spend and what we own and what we owe? What does this look like? How will it pan out? And the reality of this situation is no, like you can teach your kids about money with very small amounts and it's not just very small amounts that's actually going to be more constructive for them right like I want you to be able to teach your kid what the value of their favorite box of cereal is how much money is that what does dinner cost on average you know it depends on how old your kid is often they start to really conceptualize money research tells us this not Victoria Devine at the age of seven so they really start going oh you can trade money for goods and services. Wow. Before that, they do understand it, but they don't see it as a thing that can

be earned and spent. Before that, they go, oh, mom and dad tap their card and that's the transaction, right? Like you ask any four or five year old for a coffee at their fake cafe, they're going to be like, that's $50. Like I remember vividly, my niece and nephew had just gotten a cubby house for their Christmas present. And my husband and I, you've probably heard this before, bought them a secondhand kitchen. Do you remember that? I got it on Gumtree and it was like 50 bucks and it came with all of the bells and whistles and all of the, you know, like cups and sauces and like a fake coffee machine from Kmart. Like it was such a great pickup. Anyway, they put that in their cubby house and I went to their cubby house one day and they had a little window

and they were selling their coffees. Oh, lovely. You know, whatever fruit that was made of wood. And I said, oh, I'd love an oat latte. Deadpan got told, we only have soy. And I was like, ah, okay, no worries. Guess I'll have a soy latte. And they were like, that will be $50. Sounds about right. Yeah.

No worries. It was fake money, so I'm happy you would pay. Can I also get half of that wooden orange? Yes, that's $80. Oh, okay, no worries. Yep. So, like, they understand it, but they don't conceptualize it until they're seven. And they go, oh, actually, this is what a coffee is worth, right?

So teaching them small and teaching them young about things, like even getting them to interact. So, all right, Beck, let's go down to the shops. Let's pretend Beck is like 10. How about you do the transaction? Let's teach you about, you know, okay, we used to use cash. Now we use card, but like give them your credit card to tap. Teach them that you have to ask for a receipt. Why do we ask for a receipt? So we can check that everything's correct so that we can cross check and know what we're spending. Oh my gosh, let's look at our family budget. You might've budgeted $100 for that grocery shop. Well, what does the receipt say? Oh, we spent $120. Let's go through that receipt together and go, where did we go over? Or, you know, if it's under talking about that,

what are we going to do with the difference in budget? You do not have to teach your kids about money on a massive scale. In fact, introducing it on a smaller scale makes them feel more empowered and more in control. Another thing that I've seen a lot of families do in our community is giving their kids a budget to cook dinner one night. So I might go, Bec, you've got 15 bucks, all right? You're going to organise dinner. I'll help you cook it. If you can't cook it, that's fine. But I want you to go and work out how much this is going to be. So you've got these kids, they're looking up a recipe. They go, Bec, we really want spaghetti bolognese, right? All right. So we're going to have to get pasta, maybe some mince, maybe some veggies in a sauce. What

does that look like? You want cheese? Great. We probably want to put cheese on top because obvious no-brainer. But $15 for bolognese, that's going to cut it fine, right? You know how expensive it is to get even just a pack of mints these days. Totally. So they might go, oh, we're feeding six people. All right, well, it's two packs of mints. That's probably going to cost you the $15. What can we do instead? And that's where you can teach them about going, all right, well, what if we grated a zucchini and a carrot and chucked that in there and just use one pack of and they go, oh, wow, they can conceptualize and see how that changes a budget. And they genuinely start to learn the value of money because they've got a certain amount of money to allocate towards

this resource that they are creating. And that will help them in the long term realize how expensive the rest of the world is. Because if you teach them, all right, well, a box of cereal is this, you know, having dinner on the table that cost us $15. Look how much we got. We got like six serves of Skadiol and A's. Then when you've got your 12 year old who is a Sephora kid and wants expensive skincare, you go, well, how much is it? And they go, oh, that's $75. Well, that is a lot of money. Like you're not talking to these kids about things that are foreign because they've never been introduced to the value of money. And I think that a lot of people assume that you have to teach a child the value of money by hoarding it all away or having lots of it.

But in reality, it's them being able to conceptualize what you can exchange for money and what you get back and the value there. Because you and I both know, bottle of water, what a waste of money. BYO water. Exactly. If you're a kid and you rock up to the cafe and money's to you endless

because you've never been taught about money, you go, well, I want a bottle of water. You don't go, oh, actually, that's not a good value exchange. Yes. So I think it's teaching them that value exchange that is really, really important. And teaching them on that smaller scale. And I mean, if you've got the privilege of being in a financial position where you can go on family holidays, maybe that could be a bigger budgeting item that you talk through. Okay. We're going to spend $2,000 on this family

holiday. How are we going to break it up? You and I both know already, transport and accommodation is going to eat most of that, right? Yeah. Bye-bye. So we go, are we driving? And the kids go, no, we want to fly. Okay. Well, let's have a look at flights. What does that cost? What's the difference between flying and driving okay once we get there where do we want to stay kids are going to yell out if we go into queensland i stay movie world right okay well how much does movie world cost oh we could only stay there two nights and not go into the theme park yeah like i think it's teaching them the value of money by i guess allowing them to have some level of control how something is spent but you don't have to open up and be like mama earns x amount do you know how

hard she works for that because I think we really need to move away from this idea of forcing children to be grateful. Gratefulness is something that I foster a lot and I hope that my baby is so grateful like for you know everything in life but what do you do as a child if I tell you to do one thing Bec? Well depends on my mood. Usually the opposite right? So if you start telling a kid you have to be grateful mum and dad work so hard for their money they're gonna go great I go to school I work hard. It doesn't make sense to them. Makes sense yet. And also it just makes them feel guilty about actually spending money and thinking about it, where in reality it should be liberating. It should be semi-exciting. It should be empowering. Like, oh my gosh, dinner's going to be 15 bucks.

What are we doing with that? How can we do it? Like, you know, get the kids involved to a point where you go, well, what if we changed the dinner? Like, what if we actually did dal? Like, you know, Beck. You and I love a cheap dal. Dal tadka. Exactly. But that might mean we can get dessert. They can spend their budget however they want because they're the ones creating the meal plan. But really teaching them that exchange between the money that they have to hand over and what they get back for it from a young age is going to be one of the most constructive things ever. I love that V. And so that's what I'm hoping my children will do. I'm also hoping that they will step up and actually cook the food. Like how good would that be? Like little slave labours.

wouldn't hurt not bad not bad I guess when I'm talking about that it's just this idea of being able to conceptualize money so we live in a society where everything's basically on our phones nowadays like you're a cash girl aren't you you like getting cash out my preferred way to have money is cash because it does feel free and I know that's good it does feel free it's not free back it's not free well I was about to teach you this concept and introduce this concept of like you and I right go down to the shops let's say we're buying a top and it's 50 bucks yeah and you put it on your card where's the pain like you tap your card and you've got the top and you're like wham bam thank you ma'am I'll just ignore my bank account sure I'll give you a crisp little

pineapple yeah $50 note I see what you mean and I say to you all right here's your 50 bucks back put it in your wallet we're gonna go shopping and then you see a top and it's $50 are you going to have a harder time exchanging that physical cash or the card. Okay when you put it like that I do probably have to have a little ceremony. You have to have a little thing because I don't want to give a $50 crispy to somebody. Same with a kid and $5. Yeah. So I think that even though we live in this world where everything is online and I definitely think we should be teaching that and just helping kids understand that yeah that's how we transact with money. I think we need to be pulling money out as well and giving it to kids, not necessarily as pocket money. That's a whole

other concept that we will talk about at some point. But, you know, back to our dinner example, I think they should be given the $15 in cash. So they have to part with it. So they have to sit down and go, well, this is physically what I have and this is physically what I will get, because that is what's going to help them conceptualize how we should be spending money, because the pain is involved in the transaction. You are actually physically losing something when we exchange it for those products. And I think that kids need to inherently understand that because otherwise credit cards still there, tappy tappy. It's endless to them because they don't have a bigger concept of the family budget or the family spending. So I think that when we are doing

these things, we need to introduce this idea of loss, like this feeling of you're going to miss something. Because like Beck, if you had to spend 20 bucks on something, but you only had a $50 note, if you're anything like me, you really don't want to spend the 20 bucks because I don't want to break it. I don't like that. That's very true. It's very sad. I don't like it. Kids don't like that either. They don't like getting less back. You get two notes instead of one. So that is kind of fun. Okay. Yeah. That's why they have to be over seven because have you seen the marshmallow experiment? Yes, I think so. Yeah. Where the little kids are put in a room. It's the Stanford marshmallow test. Yep. And they're put in a room and, you know, a marshmallow is put in front of

them. And I'm just going to pretend it's you for a hot second. Beck, I'm going to put a marshmallow in front of you, but you can't eat it. You've got to wait. And if you wait, I'm going to go out of the room for 10 minutes. I've just got something to do. When I get back, if it's still here and you haven't eaten it, I'll give you another one. So double or nothing. I think it's like 60% of kids will fail that test because they do not have the ability to conceptualize delayed gratification. They literally go, I need the marshmallow though, it's just not going to happen. Like I think it's only 12% of total kids if tested numerous times will actually wait for the delayed gratification. It's like us as human beings, like we want it and we want it

right now. It doesn't matter if we're adults. But in that vein, there is also this concept of, I believe it's called conservation. And it's by a guy called Piaget. I did it at uni. And there is essentially seven conservation tasks that Piagents test for, but generally they are required in a certain order. So it's like numbers, length, liquid, mass, area, weight, and then volume. And you should acquire these kind of like tasks or abilities in your brain by the age of 10. And most of them happen between the age of six and 10, which is why I believe that we actually form our money story at seven. So often this idea of conservation is kids can't conceptualize volume and mass and what's fair and what's not. And so a lot of these tests are about, you know,

you have a kid and you give them two cookies and then the kid beside them gets one cookie and they go, is that fair? And they say, no, it's not fair because he has two cookies and that kid only has one cookie. And then they break the kid's cookie who only has one cookie in half and then puts two bits down and says, is that fair now? Yes. Because they have two cookies each. Like there's not this idea that two cookies are different volumes and you've got two full cookies and that kid's got two half cookies. Like they don't understand it. And there's also this other test about liquid where you sit with a kid and you give them a glass of water and then you also give them a short glass and a taller, skinnier glass. And you say, pour it into each and it fits in both. But then you ask

and which has more? Obviously the answer, because it came from the same cup, is none of them. But the kid will always look at the taller, skinnier glass because it's taller and say, well, that one has the most in it. And so kids just lack this ability to conceptualize it. And that goes back to what you just said about like, oh, but if I break the note, then I have two notes. When you were little, that made sense, right? Like genuinely there are tests where you say, this is $50 to a five-year-old, or this is $15. So it's a $50 note, a $10 note, and a $5 note. And the kid will always pick the one that has more, more notes. So they want the $15 because they get two, but that's more than 50 to them in their brain. So they're not able to conceptualize

it. Whereas when you get to that developmental age of between seven and 10, that starts to change. So they start to see that family budget and go, all right, well, I've been given $15 for dinner and if I spend $7 on this, I'm going to have $8 left over and I can use it for other things. Before that, they'd be exactly like what you were explaining. More notes and I get some coins. Like that is helpful because they're starting to utilize money and they're starting to touch it and feel it and become really confident with it.

Like it's not something that scares them, but you are not teaching them the actual skills that they need to manage money as adults. So I think it's important to understand that and what that actually means and teaching them the value of money but understanding that teaching them the value of money can only start once they have this idea of conservation in their head. Sure. Does that make sense?

Yeah, that makes sense. Because otherwise they will just swap you two $5 notes for a $50. You can jib any two- or three-year-old, oi, what if I gave you two cookies and you break one in half? They're like, thanks so much, Mum. God, it's easy to take them for a ride, isn't it? That's like gatekeep girl boss. Yeah.

like that's my way of parenting. And then I think that's when you start to introduce this idea of investing, right? If your child has an understanding of conservation, they are going to start to understand and maybe even dapple in this delayed gratification thing, right? So that's why I wanted to bring in the marshmallow experiment because smaller kids are less likely to be able to wait. They get so antsy. They need the marshmallow now. They know that they're going to miss out on later, but like, it doesn't really matter because I have no level of self-conservation. Totally. Probably no concept of time either. None. But that's okay. We just need to understand their development. But that's where at seven to

10, like at that really pivotal age where they're starting to understand it, why aren't we introducing? Okay, well, if we put this money away, this money would grow to this. And you know, you can get a lot more for that. And they go, oh, that's interesting. And so I think the introducing, investing at that point and being active with it and again we're not being overwhelming we're finding a platform that just makes sense for them is going to be really helpful because not only is it going to increase their financial literacy and their confidence with money but they're going to get wealthy and we want that right like I want my kid to be set up so that they are successful but I also want them to know that they had to work for that and they had to compromise for that and

they had to sacrifice. You know, if they get given money for birthdays, we will be sitting down and going, well, how are we going to spend this? Like, is there a toy you want? And they might go, yeah, yeah, yeah. And I go, well, do you want the toy now? Or do we want to split it? Do we want to save up for the toy and put some of this money away? And we get that later and talk about investing. And I mean, I'll let them make their own decision, but at least I have given them a level of financial literacy so that they make a decision. Because I'm telling you right now, I know that they'll come back and be like, oh, I want to do this now. And I'd be like, I'm so sorry, you already spent your money. Like you already made a decision. Decisions have

consequences. So I think that that is to me really, really important. When it comes to investing for kids and stuff like that, have you started investing for your tiny baby? Yeah. They came out of the womb and I was like, right, sit down. We are investing for the future. So before they were born and I knew who they were, Bec, I had already started to think about this because investing is obviously really, really important to me, but we also need to take into consideration, and we'll talk about this later in the show, like child tax rates and the implications of investing for a kid. So if you're investing for a child, their tax rate can be absolutely astronomical if they're getting investment returns and money into their account that

they're not working for. So obviously this isn't going to apply to them if they're, you know, working their first job at Maccas, but if they have investment income, they basically get taxed at a very, very high rate to make sure that wealthy families aren't laundering money through their kids, if that makes sense. That makes sense. So for Steve and I, we sat down and we were like, all right, well, this is a long-term thing. We actually want to set them up to hopefully by the age of 21, because I'm not giving an 18-year-old access to this money, right? Hopefully by the age of 21, they have, you know, some money set aside for them so that they could invest or they could, you know, maybe buy a first home or, you know, contribute towards a first home because

property is going to be insane by the time that they're 21 or, you know, help them along the way to be more financially secure. But I didn't want that to be at the, I guess, compromise of our finances. I also know that it couldn't go straight in their name. So for me, an investment bond made the most sense because it was tax effective and I do have full control of it. And, you know, wealth transfer is a lot easier and, you know, you can set savings goals and plans that they can be involved in and actually create wealth with. And I mean, at the end of the day, the barrier to entry for the product that we picked was a thousand dollars, but you can contribute whatever you want after that. Sure. And you can like invest a single amount or consistent amounts

over the years. So the plan is if they ever get like birthday money or Christmas money, hopefully it goes towards that because they want financial literacy to be an ongoing conversation and something that they look forward to and something that they can actually access. But yeah, that's where I'm at and I can tell you a lot more about children's tax rates on the flip side but yeah that's what I've done if that helps definitely and I'm not shocked at all V that's very you and I'm very impressed sorry no it's just who I am as a person the second I found out I was like pregnant I was like okay but like what are we doing for their financial future because this is really important your tiny baby's gonna be very grateful they better be if not I'm keeping

the money. Can I have some of that? Yeah, yeah, sure. Nepo baby, but adopted. Perfect. My only hope. Okay, V, let's go for a really quick break. And on the flip side, I'd love to hear more about tax and all this kind of exciting stuff. Okay, welcome back. It is time to talk child tax rates. I never thought I'd ever say those three words together. You know what I mean? I think they're important, though, because I think we all have this grandiose idea in our head that we'll have kids or we have kids and you're just going to open an investment account in their names. And that's really nice and it's really romanticised. But I think we need to preface investing options by, I guess, just laying it out on the table and letting you know what tax

implications are involved. Because at the end of the day, I think that investing trumps savings, of course, but we need to get the ball rolling. And while investing for your child, especially while they are still little, it means that they have so much time on their side, they can create wealth. And we know that the longer you are exposed in the investment market, the more compound interest comes into play. And we know that's the eighth wonder of the world. And that's like, to me, very sexy, Bec. There are tax implications that we need to consider. And I guess the default assumption for a lot of people is let's just directly invest in our kid's name. That makes sense. But it can be quite problematic. So minors can only earn up to $416 annually on investment

income before a tax rate as high as 66% comes into play. So that seems wild. And I said on the flip side of the show, the top end, that it's actually to deter really high income families and parents from attempting to lower their own individual payable tax rates by distributing some of their income and assets to their children. And historically, that was allowed, that was available. And that meant they would skip out on a large chunk of tax because they'd be like, all right, well, my new daughter, Bec, she's getting, you know, $18,000 into her account this year. I'll take it off her once it comes through because it's my money. I'm just using the fact that she is a minor, but I don't have to pay tax on that. And it's not fair for a number

of reasons. One, if you are distributing to a child that should be their income, full stop, end of story. Like that to me is an abuse of power, different conversation for a different time. But also you're skipping out on paying tax. Like you're literally tax evading. That doesn't sit right with me but I guess the other question here is like why would we bother so it does not apply to if your kid goes out at 14 years and nine months and gets their first job general tax rates apply it's investment income that that applies to so don't get the two confused but like obviously a lot of us will look at it and go the simple outcome here is to just save for them let's put some money in a savings account each single month like you know whatever you can it's much simpler

like you could just stash away, you know, 20 bucks a week for 18 years over that time, you'd accumulate what? $18,720 back. So like, let's say you're putting money into an investment account. You're only being taxed on the amount that you make from that investment. Yeah, of course. So it's still kind of worth it. Well, yeah. If you are stashing away 20 bucks a week for the next 18 years back, as I said, that's $18,720. That's a nice amount of money. That's nice. Wouldn't you like to get that if you turned 18? Wouldn't hate it. If your parents had invested it, even with like a conservative rate of return of 5%,

because as you know, like to under-promise, over-deliver. Yeah. That actually would look more like $29,300. Okay. After 18 years for the same amount of money. Yeah, right. I guess the magic ingredient is now compound interest. Sure.

And the money that your money is making is now making money. And to me, that's the financial equivalent of sliced bread. and I think that that is life-changing because you're nearly doubling your money. Yeah. Like it goes from $18,000 to $30,000 basically. Yeah. So I guess it really depends on the path that you're going to choose and I guess your time horizon and the purpose of the investment. I mean, if you're playing the long game and you have 10 plus years or 18 years to play with, you could go and consider an investment bond like I have. Again, not a recommendation and I have to like reiterate that a million times because that was just something that worked for

our financial situation. And I know you will want to know because I get so many DMs like, how are you investing for mini? Like, okay, sit down. But I guess these things like investment bonds are designed to be tax effective investment solutions that can actually build future wealth without hurting me. And I mean, it's often overlooked because it feels like a managed investment. Like that sounds a little bit more complex, but they're usually really easy to get into if you've got less time. Like let's say that your kid's a bit older and we're starting to invest their income that they're earning. 14 years, nine months, let's say we've got like a timeframe of around five years to invest. Maybe going and looking at an ETF on the share market

is a better idea because over the long term, an investment bond does have a few caveats. Like you have to be in it for a minimum of 10 years sometimes to actually get that tax effectiveness, which is so fine, but you need to know the terms and conditions of each option. ETFs, they're exchange traded funds, but they are obviously a quite simple way to diversify your investments. Bec, you've talked about on the pod how you're like, I think that might be something that I'm interested in, right? Correct. And then obviously as time goes on and you look at it and go, well, actually I've only got two or three years. Like maybe a high interest savings account is for you. Like I do not want people taking on more risk than they need to. Like if you have a

very limited timeframe, the share market basically flips every seven years. So if you don't have time on your side, sometimes it's not worth taking the risk, especially if you're like, oh, well, I've got two or three years to, you know, build a house deposit or do this or do that, or, you know, you've got some money aside and you're like, should I invest it? Because my kid's going to uni in two years. I would probably err more on the side of caution because you just don't have enough time for the market to work its magic and compound interest doesn't kick in until seven to 10 years. So it's kind of like compound interest, yeah, it'll give you some dribs and drabs there, but you can't predict the market. I've said it before, I'd be so rich, Bec, if I

could. I'd be the next Warren Buffett. But I'm not though. So I think that we need to be, I guess, a little bit more conservative. Sure. I know that you can't recommend anything, but if I was a parent, where would I go? Like, how do I start? So Bec, probably just Googling it and seeing what options are out there that work for you. Having a think about, well, is an investment bond for me. For some people, they might go, absolutely not, because it's actually quite a locked-in option. Like, there's not a lot of flexibility of pulling it out early. If you're going to work with your child and get into the share market directly and buy direct shares or ETFs or index funds, that could be a really good way of investing, but getting your kid active in it,

because, you know, if they get another $50 at Christmastime, like, let's talk to them about what they're buying. Like, what are they interested in at the moment? Like, maybe we could find an ETF that has their favorite company in it. Like, do you know how many times people like, but kids will find it boring. And I go, but let's reframe this. Does your kid like Disney? Do you know that Disney's on the share market? Do you know your kid could own some of Disney? We could find an ETF that had Disney in it and a few other colorful things that they might be really engaged in and go, wow, you own a part of Disney. And that means when Disneyland does really well and lots of people visit, we actually get paid. Isn't that kind of cool? They've had a really good year. The weather

was really great. All the rides were open. So they made lots of money that year. They're going to then divide that money up between everybody who owns a piece of that company and you're one of them. Yeah, that is actually quite cool. Kids are going to love that. And especially if you can make it make sense to their life, make it make sense to their interests. Not like, well, actually your grandfather invested and it's very important that you pay attention. They're not going to pay attention. No. But how are you going to engage them in that journey that actually makes sense for your family as well? Because I can always guarantee that you're not as excited about it as I am. I'll be like, all right, Saturday morning, let's make pancakes. Also, do you want

to have a look at the share market? And I can give you a little five minute TED talk on what happened. Right. You're not going to enjoy that bit. Not really. The other thing I think when we're talking about investing and kids and money is talking about pocket money. Yes. And pocket money is a privilege. Not every kid should be getting pocket money. And I'm a bit spicy on this. I'm going to get in trouble for this, but I don't care. I'm scared. I don't think kids should be paid pocket money to do chores. I tend to agree with that. You live in the house too. You contribute to the house. Sure. I go to work every day and I come home and I still have to do stuff at home. your job is to go to school every day and come home and look after the household as a whole I

do not want kids who assume that I'm the one that has to empty the dishwasher or my husband is the one that does these things and I'm sure as hell not going to pay them to do something that is just what is for the greater good and for the greater household I will pay them pocket money and this is obviously TBC I might eat my words one day but you go to school and you work really hard and I to give you some pocket money so that you have some financial freedom on the weekend to make decisions of what you want to get up to without having to ask my permission. Yes. So that you can save up for things that you want to purchase so that you can do X, Y, and Z. But I think it's really important to talk about what those rules mean. And I already know, and I've said this on

the podcast before, my kids will have pocket money, but then of that pocket money, there will be an expectation that they break it up. So there will be an expectation that they choose and it will be up to them. How much are you investing? How much are you saving? Like as in into an emergency fund, how much are you saving into a fund for all the fun stuff that you want to do? And also we pay family tax in this house. Oh, I see. And so for me, family tax is this concept that I've seen work for a lot of my clients historically, where you sit kids down and go, all right, well, you have to pay 20% family tax. And so of their $10 that they get every week, they pay $2 to family tax. And that just goes into a jar on the bench. And then every quarter

or every couple of months as a family, we sit down and we count how much money is in the family tax jar. Mum and dad, they also pay family tax. No one gets out of this. And then we make a group decision about the money. That's kind of cute. How are we allocating this fund? It might be $50. it might be $100, it might be $20. It doesn't matter what it is, but we now have a pot of money that the family needs to make a family decision on. And I think that introducing tax for kids really young sets them up for success because at 14 years, nine months, when they go and get their first job, they're going to be paying tax. And I don't want it to be this foreign concept where they go, I'm just missing a heap of my money. What the hell? I want them to go,

oh i've always paid tax i've paid family tax and now i pay essentially big girl tax yeah and that tax gives us a really beautiful infrastructure system a really beautiful hospital system it gives us our roads it gives us the privilege that we have but i want them to inherently understand that those decisions are made for groups so like you know the kids might go really want to go to the water park with the money okay we've got x amount let's go to the water park and spend that as a family, but that money has to benefit everyone. Mom and dad don't like the water park. What are you going to do about it? Do you know what I mean? Getting them to negotiate and understand money and the value of money early, I think that's a really cool way that can actually

help the kids understand, okay, well, we now get to make a group decision. They might go and have little subcommittee meetings. I know they will. If this was me and my sister when we were younger, I would have sat my sister down and be like, all right, we're having a family tax meeting. What do you want? Yeah. Let's be on the same page. So when we pitch it to mom and dad, they have to take our idea. But I want them to be thinking about how this works because it plays out in the real world. Politics, tax, everything's intertwined. And I think that that can be a really, really important learning tool. I don't know how it's going to work out in our family, but as I said, I have seen it work for a lot of our clients and it really helps kids understand

the value of money because they will say a family activity like, oh, family tax, let's go on a holiday. We have $50. That is not going to take us on a family holiday. That might take us out for family brunch. Yeah. You know, mum and dad might say, oh, well, actually, if you wanted to do a family brunch, we might put in an extra X, Y, Z, and then we can do that as a family. And then it becomes an activity that everyone benefits from. Sure. Or you might be negotiating. Whole family really likes video games and you all want to buy a brand new video game that you all share. Like it doesn't matter what it is, but it is a group decision. Yeah. And I think that that's important that they understand that that's how money is allocated. And as I've said on this

podcast six million times, I think it is a privilege to pay tax. We live in a world where we are so supported and the more tax you pay, babe, the more money you're making. That is not a bad thing. Your child has a very bright future ahead of him. I hope so. I think so. Because personality wise, they're going to be in a lot of trouble with me. I highly doubt that. I think this is a really good place to leave it for now. Yeah, I'm done. Do you feel satisfied? I think that's it. If you think that I'm done on kid content, you're wrong. So tune in for the next episode of, you know, investing for kids or savings for kids or tax for kids or whatever it is. Like I'm obsessed and I feel like the more I'm learning and the more stuff that I want to implement,

the more I want to share. So write into my DMs about your kid-friendly money advice. Yep. She's just getting started. See you on Friday, guys. Bye, guys. the advice shared on she's on the money is general in nature and does not consider your individual circumstances she's on the money exists purely for educational purposes and should not be relied upon to make an investment or financial decision if you do choose to buy a financial product read the pds tmd and obtain appropriate financial advice tailored towards your needs. Victoria Devine and She's On The Money are authorised representatives of Money Sherpa PTY LTD ABN 321 649 27708 AFSL 451 289.