The Barefoot Investor – a best-selling book by financial advisor Scott Pape – is said to be in one in 20 Australian homes.
Pape's new book Barefoot Kids is about children and money.
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Listen to the full interview
- Related: How to help your kids get money-smart (Scott Pape on Nine to Noon, 2018)
Scott Pape Photo: Supplied
Every parent wants their kid to be financially smart, the problem is they have no idea how to achieve it, Pape says.
“I had four children under the age of nine. And I thought what is it that I would like my kids to have learned by the time they leave home?” he tells Jim Mora.
Barefoot Kids is a visual guide to help children navigate the world of money by themselves and save a buck or two.
The book teaches kids how to set up their own money bucket, how to save for something they want and even how to run their own mini-business.
Much of the book centres on children's achievements, not just financially but in their communities, Pape says.
10-year-old Levi is one such example.
“Levi has ADHD, dyslexia and low memory processing. So he finds school really difficult.
“A teacher asked him one day to read something in front of the class and he couldn't do it. And he was bullied, people said he was stupid, 'why can't you read?'
“And then lo and behold, a teacher gave him a reading ruler, which is essentially a normal ruler but with some cellophane in the middle that allows him to focus on one line at a time.
“It was amazing, it was the first time he's ever been able to read.”
Levi went home that day and told his parents about the ruler, Pape says, but they couldn't find one they liked so Levi created his own.
“He has managed to sell about $6,000 worth of these reading rulers.
“Even better, for every 10 he sells, he donates one to lower-income communities or schools so that those kids can use the reading rulers.
“The teacher pulled him up in front of the class again and said, ‘Tell us about your business'. And the kids cheered. And a couple of kids actually bought some reading rulers. So really inspiring stuff.”
Talking to children about money has the potential to be “kinda creepy,” Pape admits.
“It can be kind of capitalistic and consumeristic and all those things that just turn me off.
“What I really care about with my kids is two things; I don't want them to be spoiled brats. And the way that you raise kids that are not spoiled brats is just two things, they need to understand that money comes from working.
"So, they need to get out of bed and do some work. But then the second one is to be generous because we know that the happiest people, the most fulfilled people are those who are generous.”
Pape has jars at home for each of his children to save their own money and another one for them to make donations.
"They still buy lollies and Pokemon cards and all those sorts of things. But if they can slice off a little bit of money and give it away, the experience that they can have from that is life-changing.”
When children are young, stashing cash at home is best, he says.
“It's not that I don't like banks. It's just sometimes I've disliked the marketing that they do to children. I don't like that.
“Kids are really visual creatures. And when you've got a jam jar and they're getting paid, and let's be honest, it's not a huge amount of money, like I pay my kids $1 per year per week. So, my five-year-old gets $5, my nine-year-old gets $9 a week.
“I use the three jars so that the kids understand. They actually see the money, they do the work and they see and they hear the money - the more work I do, the more money goes in the jar.”
Older kids can benefit from bank accounts that are attached to a debit card, Pape says, but never a credit card.
“Hate them …I think they're an absolute rip-off. I refuse to have them and one of the things that I'm passionate about is that I think that every kid going to school needs to learn what a con they are.
“And they need critical thinking so that they can look through these offers that banks market to them so that they can stare these down and understand the true ramifications of compounding debt.”
Financial literacy is a language we neglect to teach children, he says.
“If you're not taught it in school, if you don't talk that language at home, we naturally just expect kids when they turn 18 to be fluent in this language.
“And that's not how the world works. So, these are life lessons that every kid is going to be tested on every day of their life.
“And yet, the fact that we don't really focus on it, that we don't have something that says you actually really need to learn this, to me is kind of bizarre. And it's the reason I wrote the book.”