No funny stuff, just money stuff The Barefoot Investor holds an Australian Financial Services Licence (AFSL no 302081) This book outlines general advice only It should not replace individual, independent, personal financial advice Neither Scott Pape, the Barefoot Investor nor anyone associated with the making of this book has received any kickbacks, commissions or fees—or even so much as an invite to a corporate box at the footy—for recommending or mentioning anything contained herein We never have, and we never will We are fiercely independent The bottom line: you’re reading the same advice that I’d give to my mum, God love her Disclaimer The material in this publication is of the nature of general comment only, and does not represent professional advice It is not intended to provide specific guidance for particular circumstances and it should not be relied on as the basis for any decision to take action or not take action on any matter which it covers Readers should obtain professional advice where appropriate, before making any such decision To the maximum extent permitted by law, the author and publisher disclaim all responsibility and liability to any person, arising directly or indirectly from any person taking or not taking action based on the information in this publication Dedication For every person who read my last book and said ‘Why the hell wasn’t I taught this when I was a kid?’ Epigraph ‘Just make sure you don’t become a wanker look after the battlers, son.’ —Don Pape The Barefoot Investor Pledge For every ten copies of this book sold, one copy is donated to a parent in financial hardship Who is this book for? This book is written for parents (and grandparents, and anyone else who has kids in their lives) It’ll give you a proven plan to teach kids of all ages By the time you read the last page you’ll know you have a plan that will work with your family Whether your kid is currently listening to The Wiggles or Ed Sheeran, their life will never be the same Let’s ROCK! Contents Dedication Epigraph The Barefoot Investor Pledge Who is this book for? Picture this Growing up Barefoot The day my life changed forever Our game plan Weekly Barefoot Money Meals PART I: First Steps Three Jam Jars Three Jobs Three Minutes The Barefoot Money Meal PART II: The Barefoot Ten Chapter 1: How to Protect Your Kids from Bank Robbers Chapter 2: The Family Treasure Hunt Chapter 3: The Grandparents’ Dinner Party Chapter 4: Breaking the Brat Chapter 5: The Lazy $100 Challenge Chapter 6: Why Your Kids Need Plastic Surgery Chapter 7: The Magic of Flipping Burgers Chapter 8: Barefoot Betty Chapter 9: Uncle Scott’s $453 329 Gift Chapter 10: The Barefoot Ladder PART III: Off and Running The Victory Dinner Your Legacy The Final Goodbye Epilogue Will you help me? Index About the author Praise Also by Scott Pape Copyright Picture this You’ve spent the entire weekend helping your 18-year-old pack up their bedroom and box up their belongings Finally the moment has arrived to say goodbye You walk them to the front door and give them a hug You’ve known this was coming for weeks, but your stomach is still in knots It’s a pivotal moment in your lives They jump in their car, reverse out of the driveway, give you a toot, toot, a wave, and then they’re Gone You close the door, walk into your eerily quiet lounge room, sit down and think to yourself: ‘Did I enough to prepare them?’ Sweet Child O’ Mine Look, I don’t know you And I don’t know how long it’ll be before you find yourself at your front door saying goodbye to your kids But what I know is that it’ll happen a lot quicker than you think One moment you’re changing their nappies the next they’re changing yours So, the ultimate question is this: Will you enough in the short time you have to prepare your kids? And will your kids leave with the financial confidence and the street smarts to seize the opportunities the world has to offer them? Well, the reality is that young people aged between 18 and 24 have the lowest levels of financial literacy of any age group, according to ASIC research In other words—if your kid is normal, they are not prepared Normal is $4200 in credit card debt Normal is making only the minimum repayments, which will take them 42 years to pay off, with a whopping $21 080 in interest Normal is accepting the bank’s offer for an increased credit card limit Oh, okay, sure, and a loan for a new car Normal is working a job they’ve outgrown so they can continue making repayments on stuff they regret buying The bottom line is this: as a parent, the days are long, but the years are quick And you only have a very short time to influence your kids Because once they turn 18, you have to share that influence—with their friends, with their bank, with their Instagram account, with their boss And most of these people don’t have your kids’ best interests at heart but you What really makes the difference? Have you ever wondered what really makes the difference—why some kids fly and others seem to flail? Is it having wealthy, educated, upper-middle-class parents? Is it attending a $35 000-a-year private school you mortgaged your kidney to get them into? Is it receiving a big-arse cheque at their 21st for a deposit on their first home? Is it scoring top marks at school and getting into a trophy degree? I’m here to tell you that it’s none of these things Besides, you and I both know people who’ve had all these blessings in life but have still turned out like Paris Hilton So, what does make the difference? You My promise to you Being a parent is a tough and sometimes thankless job It often feels like you’re making it up as you go along Like you should be doing more Well, here’s my promise to you: By the end of this book you’ll have a simple, no fuss plan that will guarantee that your kids will be confident and smart with money in as little as three minutes a week Someday—many years from now, long after you’ve forgotten this book—my hope is your kids will come to you Maybe they’ll have kids of their own Maybe they’ll finally understand some of what you’re going through now Yet no matter where they are, or what life’s thrown at them, ultimately they’ll be doing okay They’ve got this! Epilogue When my wife, Liz, was a teenager, her father would drag her along to a weekend market, where they had a stall selling vintage clothes It was a father–daughter ritual that taught her the value of buying, selling and making a profit Okay, and it was also a pretty good excuse for father–daughter time, too Liz’s father tragically died just after her final year of high school He never got to see his only daughter become an adult Never got to hug her goodbye at the family doorstep So what became of her? Well, I met Liz when she was 24, and working as a TV producer on The Project I quickly realised she wasn’t like many 20-something kids She already owned her own inner-city apartment, and her own car, and had money in the bank No man was part of her plan There was no inheritance Just grit, determination and money smarts I never got to meet my father-in-law, but I know he’d be immensely proud of the woman Liz has become And I believe looking back at those weekends would have given him a deep sense of satisfaction and peace After all, our duty as parents—the reason we’re here—is to provide for our kids and to prepare them That’s what Liz’s father did And that’s what you’re doing and it matters so much more than you could possibly know Thanks for spending this time with me Now, go make them proud Scott Pape Family farm, July 2018 Will you help me? Parenting is a tough job Everyone wants to see their kids succeed Yet unless someone gives you a financial road map, how are you supposed to know what to do? Look, everyone knows that feeding their kids junk food each day is bad but when it comes to how to raise financially strong kids, where they turn for that common sense advice? After all, it’s not being taught in schools And marketers, banks and corporations are finding ever-increasing ways to target kids That’s why I wrote this book And it’s also why I wrote it in such a way that anyone can apply it: a single parent on Centrelink payments can this with their pocket change and a few jam jars There are deliberately no fancy apps and no specialist knowledge required All it takes is a bit of time from a caring person So, I have a favour to ask of you: If you got anything out of these pages—if you highlighted or circled anything—please pay it forward and give this book to another parent Ask them to read it It could be responsible for changing their entire family tree And just like you’ve done for your kids, the greatest gift you’ll give is that their kids will never grow up and say: ‘If I knew then what I know now, things would be so different.’ This country desperately needs a financial revolution, and it starts with our kids Spread the word Index The pagination of this electronic edition does not match the edition from which it was created To locate a specific entry, please use your e-book reader’s search tools A ‘adulting’, lessons in, 88–89 AMP Growth Investment Bond, 228 Armstrong family, on setting up bank accounts 83 Australia bank fees, 75 credit card debt, 151 share market returns, 208 young adults living with parents, 219 Australian Foundation Investment Company, 227 Australian Scholarships Group, 228 Australian Unity Lifeplan Investment Bond, 228 author’s father chooses author’s name, 69 early life of, 5–7 gives author a BHP share, 7–8 B Ball, Fi and Rob, on the Barefoot Ladder 235 banking credit card statement, 152 marketing to children, 66–68 savings account for home deposit, 216 switching accounts, 76, 78 for teenagers, 70 zero-fee accounts, 64, 69, 81 Bankwest Kids’ Bonus Saver account, 78 Barefoot Burger, 110 Barefoot Betty (dog), 187–188 Barefoot Date Nights, 17–18, 41–43 Barefoot Investor Foundation, vi, vii Barefoot Ladder, 217–218, 222–226 Barefoot Money Meals 44–58, 81, 97, 115, 129, 141, 157, 181, 193, 213, 233 Barefoot Scoreboard, 37–38 Barefoot Ten, 15, 60–63 BHP, author given share in, 7–8 Blow bucket, 70, 71 Breakfast Clubs, 125 ‘buckets’ for savings, 24–26 Buffett, Peter and Warren, 220–221 Bunnings, 247 C car purchases, 231 children see also teenagers; tweens; young people allowing to make mistakes, 92 arriving at school hungry, 124–125 Barefoot Ten goals for, 60–63 buying food for, 104–105 cooking by, 112 employment for, 31–33 financial marketing to, 8, 66–68, 74 funding home deposits for, 219 importance of family meals, 45–49 leaving home with confidence, 250–251 participation in duties, 51 pocket money amounts, 39 promising never to get credit cards, 144 shopping for food to donate, 125–126 teaching ‘adulting’ to, 88–89 training to turn off lights, 135–136 volunteer work by, 118 Choice, 135 chore charts, 31–32 Cleasby, Jess, on learning about money 215 Coles, employment at, 171 Commonwealth Bank credit card statement, 152 Dollarmites program, 66–68 compound interest, 200–202 credit, teaching children about, 151 credit cards removing dependence on, 144, 153–159 ‘reward’ points, 153–154 CUA Everyday Youth Account, 76 D Date Nights, 17–18, 41–43 death, planning for, 242–244 Depp, Johnny, 162 Digital Finance Analytics, 219 documents, important, 245 Dollarmites program, 66–68 Duke, Marshall, 52 Dunedin Study, 27 E education, paying for, 231 employment laws for teenagers, 163 Energy Made Easy website, 139, 141 executor, appointing, 248 F Family Legends game, 52–53, 55, 81, 128–129 family meals Barefoot Money Meals, 17–19, 44–59 celebrating with, 16–19 first payday, 80 importance of, 45–49 Money Meals, 17–19, 44–59 Parents Only Date Night, 41–43 prepared by children, 113–114 shopping list for first, 80 Victory Dinner, 239–241 Family Treasure Hunt, 85, 94–97 Fearless Folder, 242–244 financial literacy Barefoot Ten money skills, 14–15 of young people, 2, 9–11 financial services see also banking investment bonds, 227–229 marketing to children, 8, 66–68, 74, 145 superannuation funds, 204, 206–207 Finger, Lauren and Simon, on Family Treasure Hunt 99 First State Super, 208 first steps in game plan, 13 Flogglebox game, 90 food, donating, 124–126 Foodbank, 124–126 Froot Loops, 87 G game plan, 13–16 Generation Life LifeBuilder Bond, 228 girls getting less pocket money, 39 Give jam jar, 28–29, 130 grandparents, dinner party for, 101, 115 Grow bucket, 71 H Harris, Nicole and Malcolm, on kids cooking, 117 home deposit, saving for, 216 homeless people, giving aid to, 127 ‘honourable mealtime’, 47–48 Hostplus, 208 I ING Orange Everyday account, 69 ING Orange Everyday Youth account, 69, 75–76 ING Savings Maximiser, 75–76 inherited money, investing, 230 interest rates compound interest, 200–202 on credit card debt, 151 internet advertising, 88 investment bonds, buying for children, 227–229 J ‘Jack’, author interviews, 121–123 jam jars for savings, 23–30, 37–40 Japanese meal customs, 47–49 Joan’s Veggie Slice, 109 job interviews, 177–178 Jobs, Steve, 53 jobs for children, 31 K Kasser, Tim, 10, 127 KFC Australia, employment at, 169 L Lancefield Bakery, employment with 172 Lazy $100 Challenge, 133–134 legacies, investing, 230 letter to loved ones, 248 local businesses, employment with, 172 M Maina family, on Money Meals 59 Manley, Fiona, on kids and credit cards 159 marketing to children financial services, 8, 66–68, 74, 145 internet advertising, 88 TV advertising, 87–90 ‘Materialism Intervention’, 10, 127 McDonald’s, employment at, 168, 173 McDonnell family, on negotiating household bills, 143 Zero to Hero Résumé, 173–174, 178–179 McLean, Sophia, on volunteering, 131 ME Bank, 69 Media Super, 208 Michigan State University study, 45–47 millionaire mindset, 104–105 mobile phones, limiting use of, 53–54 Mojo account, 73 Mojo bucket, 71 Money Meals see family meals Mozo, 80, 152 N non-pocket money, saving, 29 O online purchases food deliveries, 103 for teenagers, 79 ‘open book’ interview, 175–176 P Pape, Joan gives birth to Scott, 5–6 Joan’s Veggie Slice, 109 Pape, Liz cooking for, 104 financially savvy, 253 meals made by, 48–49 Pape, Scott (author) about, vii aged 18 months, Famous Pasta, 107 first part-time job, 163–164 interviews ‘Jack’, 121–123 promise to reader, Pape family see also author’s father Christmas traditions, 44 parents control over own money, 92 driving children to work, 188–189 funding home deposits for children, 219 helping children find work, 178–179 helping other parents, 255 lessons in ‘adulting’ from, 88–89 matching child’s investment, 226 Money Meal script, 56–57 role in children’s employment, 165 single parenting, 93 Parents Only Date Night, 41–43 part-time work for teenagers, 34, 160 ‘paydays’, shopping list for, 80 personal loans, 156 pester power, 85, 98 ‘petrol price game’, 136–137 pocket money amounts to give, 39 arranging payment, 56–58 ‘payday’ at dinnertime, 51 for teenagers, 78 uses of, 19–22 withholding as employment incentive, 166–167 power bills, reducing, 135–139 Pratt, Steve, on kids and credit cards 159 private education, paying for, 231 punctuality, 190 R Raiz Kids, 212, 227 recipes, 106–111 references, earning, 184–185 résumés, writing, 173–179 S safe, purchasing, 247 Scott’s Famous Pasta recipe, 107 Screen, Amanda and Talaya, 19, 183 second-hand trading, learning about, 85–86, 94–98 Serviette Strategy adding home deposit to, 224–225 for teenagers, 70–71, 81 share investments for investment bonds, 228 returns from, 208 single parenting, 93 Smile account for teenagers, 72 Smile jam jar, 27–28 Sneath, Gretel and Andy, on kids and work 195 Splurge account for teenagers, 72 Splurge jam jar, 26–27 ‘Start Smart’ lessons, 67 Stout, Hilary, 88 Sunsuper, 208 superannuation, maximising benefits from, 196–210 T Taxi Rank strategy, 167–170 teenagers bank accounts for, 70 choosing a superannuation fund, 206 duties for, 33–34 earning glowing references, 184–185 employment for, 160 explaining work to, 188–189 hosting dinner parties, 112–114 lack of confidence with money, 150 online negotiating by, 134, 137–139 Serviette Strategy, 70–71, 81, 224–225 volunteer work for, 126 The Big Issue, 127 theft from jam jars, risk of, 29 ‘three jam jars’ method, 23–25 ‘three jobs’ strategy, 32–33 three minute parenting plan, 36–37 Tickle Belly Hill, toys, limiting number of, 94 Treasure Hunt see Family Treasure Hunt tweens jobs for, 33–34 ‘petrol price game’ for, 136–137 second-hand trading by, 96 shopping for food to donate, 125–126 U UBank, 69 Uber Eats, cost of, 103 university attendance, paying for, 231 University of Toledo study, 94 V Victory Dinner, 239–241 volunteer work, 118 W ‘We Are the World’, 120–121 Woolworths, employment at, 170 ‘Work Yodas’, 188–189 World Vision, 119 About the author Scott Pape is the founder of the Barefoot Investor For 15 years he’s reached millions of Australians through his national weekend newspaper column, appearances on TV and radio, and bestselling books In 2010 independent research firm CoreData found that: SCOTT PAPE is considered the most knowledgeable regarding financial matters, topping the ratings in the areas of superannuation, investment, taxation, insurance and economics Pape is also considered the most trustworthy, truthful in how he presents himself and in touch with financial matters that affect everyday Australians In 2014 he was chosen to assist with the government’s national financial literacy in schools program He has worked with AFL and NRL teams, struggling single mums and elderly pensioners In 2016 he wrote The Barefoot Investor: The Only Money Guide You’ll Ever Need It has sold over one million copies Scott lives in country Victoria with his family, on their farm, and is often seen belting around in an old ute that doesn’t need to be locked Praise for The Barefoot Investor My wife read The Barefoot Investor quicker than Mum read Fifty Shades of Grey and it transformed the way we manage our finances, which at first annoyed me because I’m a creature of habit but once I got my head around it and saw the money we were saving I kicked my shoes off and jumped onboard the Barefoot Express! —Peter Helliar, presenter on The Project and author of the bestselling Frankie Fish series I read The Barefoot Investor and was immediately blown away It was so easy to digest and everything that Scott said made so much sense I went out and bought copies for all my family and friends and I also implemented a lot of the strategies that Scott recommends This is a must read for all Australians —Turia Pitt, mindset coach, athlete, humanitarian How many times we say, ‘I wish I’d known sooner’? Many Australians will have been saying that after putting in place the very sensible strategies that Scott outlines in The Barefoot Investor It’s the only book I’ve ever read that sets out a money strategy that will actually work So it’s wonderful he’s now doing the same thing for the next generation If I had my way, I’d make this new book a mandatory part of the school curriculum —Fiona Guthrie, CEO, Financial Counselling Australia Yet again, Scott delivers life-saving financial advice in his signature engaging style If you have kids or ever plan to, you must read this book —Mia Freedman, co-founder of Mamamia From the moment we come into the world to the moment we leave it we are interacting with the financial system That is why it is so important that young Australians understand how money works Scott Pape’s important financial life lessons will spark some incredibly positive and powerful conversations in Australian families —Kelly O’Dwyer, Minister for Revenue and Financial Services To paraphrase Winston Churchill, never in the field of financial education has so much been contributed for the guidance of so many by just one person, the author of this book, Scott Pape His ethical approach and his ability to cut through with his direct bold commentary and easy-to-read style of writing makes this second book in the series a must read —Tim Fischer, former Deputy Prime Minister Also by Scott Pape Copyright T he ‘Barefoot’ device is a trademark of T he Barefoot Investor and is used under licence by HarperCollinsPublishers Australia HarperCollinsPublishers First published in Australia in 2018 by HarperCollinsPublishers Australia Pty Limited ABN 36 009 913 517 harpercollins.com.au Copyright © Barefoot Investment Management Pty Ltd 2018 Illustrations © Jeffrey D Phillips 2018 The right of Scott Pape to be identified as the author of this work has been asserted by him in accordance with the Copyright Amendment (Moral Rights) Act 2000 This work is copyright Apart from any use as permitted under the Copyright Act 1968, no part may be reproduced, copied, scanned, stored in a retrieval system, recorded, or transmitted, in any form or by any means, without the prior written permission of the publisher HarperCollinsPublishers Level 13, 201 Elizabeth Street, Sydney, NSW 2000, Australia Unit D1, 63 Apollo Drive, Rosedale 0632, Auckland, New Zealand A 75, Sector 57, Noida, Uttar Pradesh 201 301, India London Bridge Street, London SE1 9GF, United Kingdom Bay Adelaide Centre, East Tower, 22 Adelaide Street West, 41st Floor, Toronto, Ontario, M5H 4E3, Canada 195 Broadway, New York, NY 10007, USA ISBN 978 4607 5687 (paperback) ISBN 978 4607 1066 (ebook) A catalogue record for this book is available from the National Library of Australia The author and publisher thank the following copyright holder for permission to reproduce copyright material in this book: © The Barefoot Investor, John Wiley & Sons Australia (2017): text design All reasonable attempts have been made to contact the copyright holders; the publisher would be interested to hear from anyone not acknowledged here, or acknowledged incorrectly, so that appropriate changes can be made to reprints Cover photography by Isamu Sawa ... achieve all this? With food Weekly Barefoot Money Meals I based my book, The Barefoot Investor: The Only Money Guide You’ll Ever Need , around the concept of Barefoot Date Nights’—where couples... who pay their kids pocket money are only doing it half right Getting them to a few chores and paying them a few bucks is only the first step The main money lesson comes in what they with their... or what the bully who looks at them in the mirror each morning says about them the Barefoot Ten changes their identity, and lifts their vision for what they can go out and achieve They’re