Barefoot Investor: Don’t let your teens be bucket heads when it comes to saving and spending

Engaging teenagers has been the hardest thing I have ever done in my career but in a few short years these kids will be fresh meat for financial institutions, so while they’re still in school, they need to learn how the game works against them, writes the Barefoot Investor.

I saw the door of my study creep open, ever so slightly.

I heard heavy breathing. Whispers. And then … fits of giggles.

It was the school holidays and my sons were bored, so they decided to spy on their old man ‘working’.

And fair enough too. When I was roughly their age, I’d do the same thing with my old man, and I’d watch him counting out great wads of cash (hey, it was the ’80s).

My boys, however, saw me sitting on my office floor playing with three plastic buckets.

I may as well have been in a sandpit (hence the giggles).

Let me explain: this year I’ve been working in classrooms across the country teaching kids about money, as part of my not-for-profit the Barefoot Money Movement.

My Primary School program — called ‘The Jam Jar Project’ — is a rolled gold winner:

Last month I taught it at my old primary school, and the kids nearly wet themselves.

“This is the best class ever and I have a blood nose”, one seven year old excitedly told me.

My teenage program is … not going as well.

In fact, teaching this class has been giving me a blood nose. Repeatedly.

Honestly, engaging teenagers is the hardest thing I’ve ever done in my career. I’m in awe of the amazing work teachers do.

The volatility of the share market has nothing on the volatility of 25 teenagers. We go from boom to bust to depression … in a 60 minute class!

Yet I finally nailed it — with the help of three plastic buckets.

Here’s what I did:

I put a bucket on the table and explained to the class that this bucket represented a bank account.

Actor Johnny Depp (reportedly) doesn’t save money. Picture: AFP

Then I told them about Johnny Depp. He may be a movie star flying around in private jets, but Johnny has a hole in his bucket: money goes in, but it flows straight out the bottom. He (reportedly) doesn’t save. (Which explains why he has to keep making bad pirate movies.)

Then I picked up the other plastic buckets and put them on the table. The solution, I told the kids, was to have two other savings buckets that didn’t have holes in them: one for emergencies (Mojo), and one for savings goals (Smile).

They got the concept straight away.

In the next lesson, I take the metaphor further, and explain that their job is to guard their buckets, and not let anyone drill a hole in them: like credit card companies, Harvey Norman interest-free deals, Nimble loans, car loans, even Afterpay. We go through their glossy marketing, and then read the fine print and show them just how big a hole these products can blow a hole in their buckets.

Here’s the deal: in a few short years these kids will be fresh meat for financial institutions, who employ some of the savviest and sophisticated marketers on the planet. While they’re still in school, they need to learn how the game works against them.

Case in point: we got the class to calculate that an average credit card would take 30 years to pay off.

The looks on their faces, as Mastercard would say, were ‘Priceless’.

Tread Your Own Path!

While teenagers are still in school, they need to learn how the financial game works against them.

Q&AS

DON’T TRY TO PLAY GAMES WITH CRIMINALS

JASON WRITES: I read your column on scams and wanted to share my story.

I got a call a couple of years ago and knew straight away that it was a scam due to the guy’s funny accent, but I decided to play along for fun. I said yes to all of the questions and pretended to be really excited.

After about thirty minutes I jokingly offered my credit card details and even the password to my online banking. I wish I hadn’t.

The guy on the other end of the phone was furious at being mocked. Straight away he went from nice to nasty and told me he was going to slit my throat! I was a bit unnerved but chuckled and said “but I thought we were friends now”. He began to threaten me by saying he knew where I lived and that his ‘boys’ would be around shortly. I doubted this but was still crapping my dacks a little.

I said I had to go now and hung up. The bloke proceeded to ring back about 10 times in a row. I answered once again and tried to laugh and pretend I wasn’t worried. He told me I was the winner of the ‘Golden Casket’, along with a few more threats of throat slitting. So now when I get these calls I’m not a smart alec and say politely “not interested, thank you”.

BAREFOOT REPLIES: Don’t think of them as harmless scammers.

There are reports of Australians who have been murdered in Nigeria trying to get their money back.

The truth is that they’re highly organised crime syndicates that are (collectively) making billions of dollars a year, and they have little patience for being messed about.

In the week after I registered my number with the scam website Bitcoin Profits, I received dozens of phone calls at all hours of the day and night. They’ve even worked out how to make it appear like they’re calling from an Aussie landline. Regardless, each time I politely said: ‘I know this is a scam, please never call me again’ and then I’d hang up. After a week they gave up.

Scammers aren’t harmless, they are highly organised crime syndicates.

NOT WISE TO JUMP ON TO BONG DOT COM

CRAIG ASKS: I’ve been interested in the ‘marijuana boom’, and I’ve seen plenty of advertising from share trading companies about it.

I wanted to ask your professional opinion about it and what companies might be of interest out of the many that are now out there.

BAREFOOT REPLIES: Yes, the medicinal marijuana business is set to explode.

Analysts are suggesting that the domestic market could be worth $6.3 billion a year (including the illegal market), and that the global market could be worth as much as $US146 billion by 2025.

So it’s no wonder that people are jumping aboard the dot bong boom!

Are there any companies that I’d recommend?

No. That’s because I have a very boring, very old-fashioned rule: I only invest in companies that make money — and none of the ASX-listed medicinal marijuana companies are making any money (in fact, most are burning cash).

Look, I have absolutely no doubt that there will be huge demand for medicinal marijuana all around the world. Yet I also have absolutely no doubt that there are literally hundreds of companies trying to meet that supply.

And that’s the (long-term) thing: growing weed isn’t that hard (heck, my old uni mate did it in his dorm room). It’s just another crop, and eventually it will become just another commodity … just with more government regulation.

Medical marijuana will eventually just become another commodity. Picture: AP

MY APOLOGY TO ALL COLLINGWOOD FANS

JAN WRITES: I have followed you for years and recommend you to all who want to listen but wasn’t impressed with what you said about the Collingwood Football Club in the newspaper on Sunday.

Having been a supporter for over 50 years I am sick of people putting the club down. They do a great job in helping the underprivileged, which I thought you would be all for.

BAREFOOT REPLIES: Not. Happy. Jan!

For those who missed my column last week, I wrote about an old bloke who ‘got scammed as a result of ‘looking at an inappropriate website’.

MORE BAREFOOT INVESTOR

I joked that it was collingwoodfc.com.au but said that while he was probably looking at birds, I’m not sure they were Magpies.

Harmless right? Actually no. The Collingwood faithful (including employees of the club!) gave me a shirt-front this week. Jan, I wholeheartedly apologise.

I have no right to take a dig at your great club, especially given that I’m a Demons supporter!

If you have a burning money question, go to barefootinvestor.com and #askbarefoot

The Barefoot Investor holds an Australian Financial Services Licence (302081). This is general advice only. It should not replace individual, independent, personal financial advice.

The Barefoot Investor for Families: The Only Kids’ Money Guide You’ll Ever Need (HarperCollins)RRP $29.99

Originally published as Barefoot Investor: Don’t let your teens be bucket heads when it comes to saving and spending