19 Apr 2013

Next Top Model

I did it.

I entered .... my son into a talent agency.

People have suggested I enter him into one for quite some time now and with me not working I figured why not.

Let the men of this household work while mummy enjoys the life of leisure. Ha! Any parent at home will know that not the case with young children.

It's something for him to do, gets me out and about and I have no expectations, just that I get copies of the beautiful photos he's in, if he ever gets in.

His interview was at North Sydney and prior to his interview I decided to take him to Luna Park. Place was busy as it's school holidays at the moment. He loved all the loud noise, other children about and all the constant movement around him, he didn't know where to look.

16 Apr 2013

Saving for your children (or your family)

One of the first things we did once Eli was born was open an interest savings account.

We opened an account for Eli because we knew we wanted to regularly put away a small amount of money or savings explicitly for him. At this point in time Ian and I can't agree on whether it will be an account to fund costs associated to his development such as education, his extra circular activities, purchase of his first car etc. Or whether its money we will give to him at say his 21st birthday and let him decide on what he would like to spend it on.

I would like to do the latter and let him decide on what he would like to do with the money. Hopefully our guidance will allow him to make a well calculated decision on what he would do with it.

Teaching your kids about money (or the value of it) early is very smart because they have the greatest asset of all .... time.

What is an interest savings account? It is an type of account which generates interest based on the balance available on the account. The interest is usually calculated daily and paid to the account on a regular basis. It's works similar to a credit card where interest accumulates based on the balance sitting on the account.

The interest rate is usually aligned to what the RBA (Reserve Bank of Australia) sets the official interest rates to be, if anything its likely lower - wished they would do that to credit cards.

Putting your savings into this type of account is highly recommended because your money is making money just by keeping it in there, this is known as compounding interest.

Here's a question for you, what would you rather have? A million dollars right now or a cent doubled every day for 30 days? Write down your answer. Most people would choose the 1 million dollars but when you actually do the maths and doubled every cent for 30 days you would have $10,737,418  losing out another 9 million dollars in the long run.

If you picked the cent, then you thought beyond the obvious. You understand the value of letting your money grow, multiply and compound over time.

Simply put, compounding interest is when you gain interest not only on the money you put in, but also gain interest on the interest your money has already earned.

Children have the greatest gift of all when it comes to investing — time is on their side. It’s never to late or too early to start investing. It doesn’t matter if you have a newborn or a teenager; they have many years to enjoy the benefits of compound interest.

For example if you saved and invested $1000 on your child’s first birthday and never invested any more, just look what compounding can do over time:
$1000 invested for 5 years at 5% = $1,595.92.
$1000 invested for 10 years at 5% = $1,628.89
$1000 for 20 years at 5% = $2,653.30

The power of compounding interest becomes even more powerful when you start to adding regular contributions.

For example if you saved $50 a month on your child, look what compounding can do over time:
$50 a month after 5 years at 5% = $3,481.15
$50 a month after 10 years at 5% = $7,924.07
$50 a month after 20 years at 20% = $20,831.55

If you had just put the $1000 or $50 a month away for many years all you are left with is what you have saved.
$1000 after 20 years = $1000
$50 a month after 20 years = $12,000 

Of course the outcome can change if certain variables also changes such as:
  • Interest rates - rates fluctuate up and down. Unlike a credit card, ideally you want higher interest rates for interest savings accounts.
  • Contribution frequency and amount - circumstances changes and you may be able to contribute more or less then what you set out to put away. The higher the balance in the account the greater the compounding interest works. 
  • Time - Compounding interest works best the longer you leave your balance untouched. Obviously you will have a more money if you saved for ten years versus three. With each year the balance grows and so does the potential interest earned.
There are many interest savings accounts available in the market, here are my tips for choosing the right account to open for your child(ren):
  • No fees or low fees. Most savings institutions have a no-fee account for youngsters. 
  • High interest rate. What would be ideal is a high-interest savings account with at least 5% interest (or close to what the RBA sets official rates at), compounded daily and deposited monthly. You will find some deals with even higher interest rates. Just be sure to check the account to see if that rate is an introductory rate that might fall considerably after the a period of time.  
  • You should be on the lookout for bonus offers. Some banks offer a higher interest rate during months when no withdrawals are made. If the money will not be used for several years and you don't plan to touch the balance, these offers are ideal.
Here are some useful sites and links that helps compare the different children's accounts available:
  • InfoChoice: Provides a list of all products available on the market and allows you to arrange listing on what you're after such as max interest rate or max monthly interest. As well as provide a snap shot of features of each products and expected fees. 
  • Mozo: Site which researches the latest financial products as well as allow members to rate and reviews products. Results and rating adjust based on reviews received. 
  • Canstar: Excellent short article you can download on a review completed by Canstar in June 2012 across 34 different banks, building societies and credit unions on the various savings accounts they offer.

2 Apr 2013

12 Weeks

> First OB appointment.
> End of first trimester.

> Pregnant finally. After seeing my formed baby dancing for us during our last ultrasound. Also unlike the first pregnancy I now want to capture the smallest moments of my pregnancy. 
> Joint looseness, if such a term. I can easily crack my neck and back and find it relaxing when I do.
> Peed a little when I sneezed while fast walking in public. Need to practice my kegal more ... doing it right ... now.
> Overall a feeling great first trimester, although felt really slow however just realising its April today and I've got another six months to go.

> Good News! Slowly informing friends of our little secret. 
> Public vs. Private hospitals.
> Holidays, Hawaii

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