Money, Money, Mommy!
Dear Future Moneyqueen👋
Happy Sunday & happy Mother’s day to all the mom’s and soon-to-be-moms among you all!
Today is Mother’s Day in Germany and since that’s where I’m from, this is the Mother’s Day that I will be celebrating. So, as I’m approaching my due date, I want to reflect and share how I’m approaching this new phase of my life, keeping finances and investments in mind. But don’t worry - There will be some good stuff even for those of you who don’t have children. So read till the end! 😉
A woman goes through an incredible transition during these 9 months of pregnancy. Not just physically, but also mentally. From one day to another, she is responsible for another human being. And this new set of responsibilities comes with a new set of excitements but also challenges, worries and fears.
Fears, I didn’t know I have.
Ever since I can imagine, I have a good relationship with money. I’m fortunate enough to have grown up in a family where money didn’t seem to be a cause for concern.
We never talked about money, but it also didn’t feel as though money was a problem. We went on holidays multiple times a year, lived in a beautiful house with a garden, had plenty of after-school activities and overall had a pretty good childhood, as my brother and I would reflect. A life that, as I realised growing older, I took for granted.
Once I started working and earning money for myself it dawned on me, that I never really appreciated how much my parents must have worked for us to be able to have this kind of lifestyle.
During my final years of high-school I started working in a call centre and as a waitress. I was able to save a majority of my income for a big trip I wanted to do after my graduation. So, when I graduated high-school I travelled to Australia doing “Work & Travel” for 9 months.
While in Australia I worked on a watermelon farm, in a hostel, as a promoter distributing flyers and as a waitress. The concept was simple: Stay in one place for a couple of weeks, work and earn money, spend very little and then take a break and travel the country.
It was an amazing experience, and one that definitely changed how I thought about money and my finances. This was the first time I had to take full responsibility, budget accordingly and keep track of my spendings and it laid the foundation for everything that followed thereafter.
In fact, I remember one time calling my dad because I was running out of money. He offered to borrow me some, but asked that I first try finding another job. At the time I was not amused, but in retrospect I’m grateful for it. It forced me to look harder and find another job - which I did.
So, what does all of this have to do with my journey of becoming a mother, you ask?
One question that keeps popping up during the course of this pregnancy is “how can we make sure our daughter is well prepared financially?”
By this I don’t mean, how can we earn enough to make sure she will never have to work. In fact, even if we did earn that much, I would still make sure that she finds a way to earn money herself. I strongly believe it’s important to have this experience as it will give her confidence and a sense of independence.
What I mean by “well prepared financially” is this:
I want her to develop a positive money mindset & good financial habits
I want her to learn the importance of saving and investing as early as possible
And I want her to be able to take time off after school to travel, explore, start a business, do whatever her heart desires so that she can find her own path
I don’t know exactly how we’re going to achieve all of the above.
But I do know some things for sure…
We will start with this:
💸 We will open a brokerage account in her name, which she will gain access to when she turns 18. The advantage of opening it in her name, rather than keeping her investments in my account, are especially for tax reasons. She will have her own yearly tax free amount and since she won’t have any income, will have no or very low tax obligations on capital gains.
💸 We choose a diversified ETF (ie. MSCI World ETF, FTSE All-World ETF) and set up a monthly saving plan. If we were to invest 200€ every month over the next 18 years and estimate an average yearly return of 6%, she would have 77,470.64€ in her portfolio by the time she turns 18.
If she were to keep the money in her investment account and continues the monthly contribution of 200€, she would have a total of 757,438.22€ by the age of 50!
Of this, 637,438.22€ is interest alone. If this sounds too good to be true, take a look at the calculator here. This is the power of compounding and the reason I fell in love with investing!🔥
“Compounding has a snowball effect. It is just a tiny ball of snow at the very start, but it can turn into an avalanche over time.”
― Naved Abdali
💸 Any money gifts she will receive from family or friends, will be invested
💸 I would love for her to make a similar experience as I did travelling through Australia
💸 We will open up the conversation about money, investing and the importance of taking care of her own retirement as early as possible
There’s a lot more to write about, but to make sure this newsletter doesn’t take too much of your time, I’ve decided to split it up in two parts.
So, stay tuned for next week’s edition, where I will dive deeper into how I’m planning to teach our daughter good financial habits, the power of compounding & my love for investing. 🫶
Enjoy your Sunday & don’t forget to share this newsletter, if you have other women in your network who could benefit from it!
xxx
Anouk
Das ist ein toller Artikel... ich wünsche dir einen schönen Muttertag als werdende Mutter alles Gute... ich bin zwar keine Mutter, aber genau diese Schritte würde ich als Mutter für mein Kind tun und dies ist es auch, was ich immer wieder empfehle. Ich denke, dass ein wichtiger Aspekt auch ist, wie man sich als Eltern zeigt... und deine Eltern haben dir etwas vorgelebt, von dem du heute profitierst🙂... ich freue mich schon auf den zweiten Teil. Liebe Grüße Katja