Newsletter #1 - Best way to save and a conversation starter with your kids
Welcome to my first regular newsletter.
I want to start by saying a massive thank you for subscribing to www.bluetreeblog.com. To get such a positive response to my initial social media posts is humbling. I will also be having interviews with two different reporters over the coming weeks, so it really does show that financial education for kids is a topic worth covering.
I hope you enjoyed the ebook, ‘How to train your kids to become Financial Superheroes’. I appreciate that there is a lot of content in the ebook so I will be providing snippets as refreshers in future weekly newsletters (and on social media). Any feedback on the ebook would be massively appreciated.
Let’s get down to business:
In this first newsletter I want to cover two topics:
What’s the best way to save for your kids?
Starting the conversation with your kids.
1. What’s the best way to save for your kids?
As mentioned in my first blog #SaveAndTell [link to www.bluetreeblog.com/post/save-and-tell], the most important action is to actually start saving in any form for your kids and telling them about it. Even if you put the savings into a box you are allowing them to witness the amount of money getting bigger and bigger each week or month (or whichever frequency you are saving for them). By them witnessing that money getting bigger they will start forming a savings mindset which is missing from so many adults today.
“Good savers become better spenders”
Clearly just putting their savings into a box is not the most optimal strategy as they won’t be earning any return on that money and therefore not benefiting from Compound Interest. For those that aren’t familiar with Compound Interest, it is when you earn a return on your money (i.e. create new money) and then you then earn a return on that new money. Over the long-term, you could be earning more from the new money than your original amount saved.
Therefore, the higher the return you can earn on your savings, the more you can benefit from Compound Interest.
In my opinion, I believe parents should be investing savings for their kids rather than putting the money into the bank. In my second blog, I set out three reasons why this is the case, which include:
More money (probably)
A bank account could make your kids poorer
Those that invest are able to worry less about money.
Here is a link to the full blog where I expand on the reasons why I believe investing is the best way to save for your kids.
Learn more about investing
I appreciate that investing may be scary and a bit unknown to a lot of you reading this. I really want to help show you that investing isn’t as scary as it can be made out to be in the media. Therefore I have put together an Investing Frequently Asked Questions to help those that are new to investing. Here is a link to that FAQ. If there are questions that are not covered in the FAQ then please contact me directly (firstname.lastname@example.org) and I will get back to you asap.
Opening up an investment account
If you do agree that investing is the right way to save for your kids, the next step is to set up an investment account. Again, I appreciate that this might be unfamiliar to many of you so I have created a guide to help, which can be found here.
Telling your kids about these investments
The last step, whether you have an existing investment account or you open a new one, is that you need to tell your kids about this investment so they learn from and witness it growing over time.
I have created a tool to help with this as I feel it is so important and there isn’t much out there to help in this respect. It’s aptly named “the Blue Tree Sharing Tool”. It allows parents who have an investment account in their name to select one of their investment funds and share it with their kids. The tool shows how much is being shared with kids, allows parents to top up each kid’s share each month or, top up when kids get money on special occasions from friends and family.
The Tool is focused on making it easy to tell your kids, so they each get their own page showing their savings now and what they could look like in the future. However, rather than showing them amounts in money terms (as this is boring and abstract for kids), it converts the money to Blue Trees so they can see how many Blue Trees they have now and, allow them to witness their Blue Tree forest grow. One of the advantages of this is that they really do associate the money with trees and therefore if you ask them if they are going to chop down their Blue Tree forest when they become an adult, they are likely to be very protective and say “no way!!” which is exactly what you want to hear as parents.
For more information about this tool, please visit www.bluetreesavings.com
I hope you all start investing for your kids and telling them about these investments in 2020!
2. Starting the conversation with your kids
I’ll keep this next piece relatively short.
The above is focusing on what you can do for your kids but I want to make sure you are focusing on what you can do with your kids. Therefore, the action I would like you take following this newsletter is to sit down with your kids and tell them that over 2020 you will start talking to them about money so they can become Financial Superheroes.
You don’t need to go into lots of detail here. Just open the conversation with them so that money is not a taboo subject (which it can be in a lot of families). This conversation could simply start by you saying:
“Do you know why mummy and daddy go to work?
It’s so we can earn money to pay for all the things we have. The house, the food we eat, our holidays and your toys. When you are older you are going to earn money too. In fact, mummy and daddy are already putting some of our money away so you will have some money when you become an adult.
Over the next year we are going to talk more about money as those that know what to do with their money become Financial Superheroes.
Do you want to be a Superhero?”
At this early stage I just want you to be open that you will be talking to them about money. In future newsletters we can expand on how to approach different topics. By the time they become adults they will be super confident about money. Remember most people don’t get taught about money and go into adulthood and have to learn about money for themselves the hard way.
If your kids are still babies so you can’t really have this conversation yet, don’t let that stop you. You should still have the conversation as you’ll be mentally making a verbal contract to help them, plus it might help them sleep :-)
Again, thank you for subscribing. As I’m so early in this new venture, I would really appreciate any feedback and any suggestions on what you think would be useful to you as parents when considering financial education for your kids.
Lastly, as I want to help as many parents as possible make a positive impact on their kids’ financial futures, please do let your network of friends and family know about Blue Tree. Hopefully together we can do something to ensure that our kids’ generation does not suffer from the same financial stresses that so many young adults suffer from today.
Thanks for reading!!