Wednesday, July 6, 2011

Investing for the Kids

This post is a follow on from my post about Invest. Save. Live with some details of what we do for the girls to get them into the savings habit.

Please note I am not a financial adviser. I am a Mummy Blogger. This is not to be read as advice. It is simply a plan we have, it may work, it may not. Do not plan your future on what you read on my blog. But plan to save when or where you can, cross your fingers, toes and eyes that no shit sandwiches come your way and hopefully things will be ok.

This idea is not my own, I purchased a book five years ago called "How to give your children a $1million each" by Ashley Ormond. The book has a lot more information in it and is worth a read.

But it really is pretty simple.

We have an account set up for each child. We use UBank, usaver online accounts - for no other reason than I liked their marketing material and the rates were good when we were setting them up. This is not an endorsement for them specifically.

The plan is that you put in one dollar per day into the kids accounts, we do $15 per fortnight.

Small children often get small amounts of money given to them, at birth, christenings, birthdays, Christmas and from loving family members. We put nearly all this into their savings accounts. Now that Popps is 5 and is starting to have more interest and understanding in money, she is given some to spend, some to save in her piggy bank and the rest goes to the account. The piggy bank ends up in her investment account in the end though - for now.

In years to come when the girls start their own part time jobs they will be required to add $15 per pay to this investment account too.

But what is it for, what do we get out of giving this to them?

Well, for us it isn't about giving them a car or a house deposit at some predetermined age.

These accounts will be able to show them how to invest money, how to save and how to manage what they earn. It will one day teach them directly about compound interest and the benefits of putting money away, and that every dollar saved now can help in the future.

The money wont be given as a gift at any stage in life, in fact there is no real plan of when we will pass it over, only that when it is the money will hopefully be spent on investments or to give them the freedom to pursue what they are passionate about, they may even be able to consider time off work - but they will be 50 by then!

If we didn't decide to do this five years ago Popps would have about $17.50 in her account, instead it now has just under $5000, of which we have only contributed around $385 a year... see $3000 in interest and adding in some 20 cent coins from Great Granny Iris. There is no way ever we would be able to give her this money otherwise. No Chance. None, Zip. Hell would freeze over with glitter glue and we would be wearing rags to visit it. But we can't access this ever. Not even to upgrade the 1993 Honda to have a working 'wireless'!

Here is a snippet from the book that I like:

If $1 is put aside every day over 50 years, the amount will be $18,250 ($365 x 50). But if that $1 per day goes into an investment fund and stays there it will turn into around $1 million. And that $1 million can produce an investment income of around $50,000 to $80,000 per year which is more than many people earn by working.

Now wouldn't that be nice.


  1. I think this is such a good idea. We have put away a small and manageable amount for our little boy which will be easily matched for B2 when he/she arrives without hurting our budget. It's in a high interest bearing account and we don't miss the automatic deducation.

    I love the idea of teaching kids the value of savings at such a young age. We have no idea what the money will be used for in 20 years or so but will probably encourage its use towards a long term asset such as investment portfolio or a home deposit. We can only dream anyway :)

  2. Hi Clairey

    I'm so glad I read this. I've been planning to write a blog post about money, so it was great to read what you have to say.

    I love the concept of doing something so small - but with 100% consistency, daily - turns into something big.

    Thank you for sharing.


  3. Hi Clairey,
    I'm Carmen from Italy. Today I found your blog (thank to your comment at Retromummy). Reading your post made me realise how much money I spoiled every day, it's time to think about the future of my 10yo son, Lorenzo! I'll try to do the thing you say, open an account for him and filled up with money! Thank you very much , excuse my English.
    Bye, Carmen

  4. good idea , we like to teach our kids that hard work is how money can be made and saving what they make, and learing to save money for later in life . being on farm the kids sell baa poo at the front gate they have to rake hte baa poo from under the shearing shearing and bag it and then up to the front gate $4 per bag, a new bike and scooter has come there way from this. I feel this teaches the kids that money doesnt grow on trees..

  5. Love this Claire. We've done a little bit of this for Bliss but haven't set up anything for Bear yet. Thanks for motivating me to get started properly with it!

  6. Great reminder to bank the coins in the boys' money boxes - no interest accruing sitting in a china pig!

    We've been doing the dollar a day thing for our 2.5 year old since birth - it's such a tiny amount that it's not missed and in time it really does grow.

    I, too, have no idea how we'll give it to him but figure we've got lots of years to sort it out!!

    Love love love the money-related posts.

  7. Thanks Claire! These posts couldn't have come at a better time. I particularly love the envelope idea in the previous post! Joel and I will definitely be doing that from now on. He said also "we don't even have kids and you're already talking about them moving out" - I suggested it would be a good idea for when they need a deposit for a house as they way things are going they may not be able to accomplish that on their own.

    Someone also suggested that you have the one bank account which you automatically put your salary into and then have separate accounts with "guilt free" money - say $100 a week which either one can spend on clothes, xbox games etc no questions asked.

  8. This is something I'm absolutely insistent we teach A as she gets older. Lucky little thing already has a very healthy bank account - we've put all the baby bonuses, centrelink child payments and everything into there for her (figuring, if we don't need that money to live on, we might as well give it to her). Plus we put a small amount every month to give it a constant boost.

    Like you, we're not sure when we'll give this money to her, but we'll just play it by ear.


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