Continuing on in our series of “5 minutes of kids Finance with…“, we had the delight of sitting down with the lovely Emily Caska from The Avoca Surf House to discuss children’s finance and investment gifting; see her thoughts below!
What would you want your kids to use their investment for when they leave school?
To enable Otis to learn and grow from a very young age and equip him with the resources to do so is invaluable. I’d like to see the investment used for a mix of pursuits – from the traditional acquisitions like property and education, through to travel, the arts and other experiences that will enrich his life.
Are you happy for your kids to receive gift contributions to their investment accounts from family and friends, or would your prefer toys, or a combination of both?
Without a doubt – financial investments that accrue over time. We live in a world saturated with materialism and I’ve always asked family and friends to contribute in less wasteful ways. Children being children and living in a highly disposable society, they are onto the next fad before they’ve even unwrapped the first present (or worse still – are obsessed with watching videos of other children unwrapping presents – something I still find odd). In terms of toys, what Otis wants, Otis already has so the gift of a financially secure future for him is far more important.
iTrust has totally transformed this gift giving process for us – it is streamlined, simple, user friendly for all and enables Otis to directly engage with his savings.
It also provides transparency to the gift giver and a way of contributing that doesn’t expose them financially – something a number of our friends and relatives value.
Would you recommend or gift an investment account for a child in lieu of a gift?
Without a doubt. I still remember the sheer joy of opening an envelope from my godmother with cash in it. By comparison, I can barely remember any toy I ever received as a child. Now more than ever, setting children up for the future financially is critical given the ever increasing costs of living.
I think the beauty of a formal platform like iTrust, as opposed to people just putting money into my account or in a card, is that it provides an interactive tool for all parties that also provides an impressive return – something my good old money in the card never did for me.
Also, the funds in your iTrust account don’t necessarily have to be all held long term – the ability to withdraw is an integral part of Otis’ savings plan and incentive (and a critical part of my bribery to do chores around the house).
What are the benefits for Australian children to learn about investing through an iTrust investment account?
The biggest difference for me between a piggy bank and the investment account with iTrust is the interest component. That’s such a wonderful incentive for kids to not only learn the basics of saving, but to also be rewarded on top. This makes the decision between spend now or save for later an even harder one for kids, because the money they put away now will actually grow over time in their investment account. This sort of compounding is a wonderful benefit for their future financial acumen. I really wish something like this was around when I was a kid – my spending v savings habits would look very different as a result!
Do you consider the environmental impact when giving a gift? Do you think the low carbon footprint and zero landfill aspect of iTrust will appeal to other parents?
Absolutely. We live lightly. we are ethically and environmentally conscious. My parents are thrifty and abhor waste. Then you think of the future, and these principles become even more compelling.
At what age do you think children should be introduced to the concept of money?
The earlier the better! From a piggy bank through to counting money to playing shops to having a chores payment chart to Monopoly, it’s all educating kids on money. I try to use cash with Otis rather than my debit card. That way, he can see the transaction, calculate the difference and really understand the concept better. I feel when I’m using my card, it appears as though an invisible angel pays our bills and the transaction is invisible.
I’ll also only take a certain amount of cash out with us and talk to him about what we will be buying. When it runs out, tell Otis we can’t buy anything else. This forces him to reconsider his choices, to balance purchases according to need versus want, to prioritise now against later and to understand that money is not in never ending supply.
We will also play the “either or” game, most recently at our local cafe. I told Otis he can purchase one thing – say either a hot chocolate or a croissant, not both. The decision is his. I gave him $5 and let him go to the counter by himself. I only took $5 so he wasn’t able to negotiate or charm his way into my wallet. He then learnt to rationalise – and ingeniously, his solution was to buy the croissant, take it home and make a hot chocolate milk there to have with it. Brilliant!
The former Governor of the Reserve Bank said children born today will not be able to afford a house without family assistance; Are you concerned about the financial ability of your children to enter the property market?
I’d go a step further and say that children born in the last 10-15 years will find any form of home ownership incredibly difficult without some form of family support or seriously attuned financial acumen from a young age. Whilst Otis’ generation are indeed privy to unprecedented opportunities, technology and connections, he is growing up in an increasingly expensive world – especially on the property front. It is incredible to be able to ease the stress of that – for both him and me – by setting up an investment platform now that we can not only contribute to but that will also deliver a really impressive return over time. This will grant a future Otis some form of financial freedom or at the very least a handy start up fund that I hope he would continue for his children also to pay it forward.