Stories in philanthropy

“One of the worst things you can do is leave your kids large amounts of money”: The Barefoot Investor

Scott Pape, aka The Barefoot Investor, reaches millions of Australians every week with his pull-no-punches take on personal money management. More than a million people own a copy of his book, “The Only Money Guide You’ll Ever Need” which still tops national bestseller lists. He’s since turned his attention to family finances and has plenty to say on the topic of giving: “Giving is so important. Whether or not you get this whole thing called philanthropy doesn’t matter. What matters is that you embed the values of giving in your children because that’s how you raise decent humans.”

Nicole Richards, February 2019

 

Keeping it real is what The Barefoot Investor is famous for. Still, I’m surprised when my phone rings at precisely 9:00am on the morning of our scheduled interview. The caller ID is clearly visible and there’s no publicist, assistant or minder laying out the parameters of the interview or asking me to hold the line. Instead, there’s a laidback caller who introduces himself as Scott Pape and seems genuinely enthusiastic about having a chat.

Unless you’ve been living under a rock for a decade, you will have encountered The Barefoot Investor phenomenon in bookstores, on TV or radio, in a syndicated column or in person should you cross paths with one of the hundreds of thousands of Barefoot disciples.

Pape’s fame is such that he was the subject of a New York Times profile story in June last year. Not that he would’ve read it. He doesn’t read anything that gets written about him.

Pape, who still lives on a farm outside Melbourne, is a regular visitor to Omaha, Nebraska for the Berkshire Hathaway annual shareholder meeting dubbed ‘Woodstock for Capitalists’. The culture of philanthropy that is deeply engrained in the US is something that has stuck with him.

“Buffett is one of the greats,” Pape says reverentially. “He always says, ‘To whom much is given, much is expected’ and I think that’s right – you’re wealthy but you’re also expected to give back.”

“Just by birthright, being born in this great country of ours, we’re in the top percentages and we have to give back.”

Giving back is something Pape believes needs to start at a young age. With three young kids of his own, aged 1, 3 and 5, Pape surveyed 10,000 parents among the Barefoot community, asking them, ‘What’s the number one fear you have for your kids?’

“The number one fear that came back, by a large majority, was the fear that their kids will grow up to be spoiled, entitled brats,” he explains.

“That surprised me because I thought the biggest concern would be whether or not the kids could afford to buy a house. I understand it though because it’s a fear I have too. We just got back from a family holiday in Fiji and while we were there we went to one of the villages and my kids saw how difficult life is for some of the people there.

“Still, when I was growing up, we never went overseas, we never went anywhere as kids - nor did my parents. My parents had their honeymoon in Swan Hill!”

“Giving is so important. Whether or not you get this whole thing called philanthropy doesn’t matter. What matters is that you embed the values of giving in your children because that’s how you raise decent humans.”

Pape’s approach to raising the level of financial literacy and generosity in the next generation begins with jam jars.

“It’s not about getting the sitar out and sitting around in a circle,” he says. “It’s about raising empowered, grateful children. The jam jars are a third, a third, a third [spend, save and give]. It’s about having a conversation about values: ‘In our family, we give’ or ‘In our family, we look after people.’”

“With my own family, we focus on financial literacy. One of our biggest donations goes to Financial Counselling Australia and the story we give to our kids goes back to the bushfires.

“When our house burned down, a lot of good people came out and helped us and it’s our job now to give back because our family believes everyone deserves a chance to get back on their feet.”

“My five-year old, who is just going to school this year, he comes to book signings with me and he understands that dad wrote a book that helps a lot of people get back on their feet financially. That we help people who don’t have a lot of money.”

Pape has long been a supporter of microloans through Kiva and says they have been a useful tool that helps kids understand the concept of giving.

“Microloans are great because the kids can get on the computer and look at them,” he explains. “They become tangible.”

“Food is another really tangible thing. When kids are hungry they understand what that feels like –don’t worry, we feed our kids! Hunger is something that’s powerful and tangible and you can go to the pantry and give away stuff. When you’re shopping you can buy food that can be donated - kids can understand that.”

Pape’s support of Foodbank includes a donation of 20,000 copies of The Barefoot Investor for Families to be distributed through the Foodbank network.

“There are a lot of families who are using Foodbank and you want to get this book into the hands of those families who are really struggling. I’ve also donated 10,000 copies so that every school library in Australia can have one on their shelves.”

 

Inhibiting the inheritance

On the issue of handing down a lot of wealth to children, Pape is unequivocal: “I think one of the worst things you can do is leave your kids large amounts of money.”

“I believe it’s a poisoned chalice,” he says. “I won’t be doing that.”

“Think about it - if you say to your kids, ‘You guys need a million dollars or two million dollars because you can’t fend for yourself’, how does that help? Why would you leave a 25-year old ten million dollars so that they never have to get out of bed or contribute towards a fulfilling life?

“If you have values you believe in as a family, those values are so much more powerful than the alternative of ‘We’ve got a sh*t-tonne of money and we’re going to fight over it ‘til we’re in our 60s.’

“Giving is one way to teach values, empathy and gratitude and gratitude has a direct linkage to happiness and wellbeing.”

“I’m not perfect,” Pape hastens to add. “It can be really hard to teach these values as a parent because you’re fighting against marketers who are brainwashing kids to believe happiness comes from the Octonauts or Paw Patrol.”

Pape credits much of his thinking on the question of ‘How much is enough’ to his mentor and friend, Arun Abey, who wrote a book on the topic.

“A lot of the stuff I talk about has been blatantly copied from him and I say that with genuine love,” Pape says.

“Some of the stories I get from very wealthy families would make your hair curl in terms of the lack of perspective on what this wealth is and how it can be used. When it comes to the economics of enough, there’s a decreasing amount of happiness you get for every dollar. Having values and a cause worth fighting for is a much stronger thing to leave your kids.”

“Money doesn’t make you happy,” Pape says matter-of-factly.

“I’m happy to have sold a couple of million copies of the book but what has genuinely made me happy is that 10 percent of the proceeds go to Financial Counselling Australia. The feeling that I have the power to help people and to change things I believe in is really powerful.”

 

MORE:

Philanthropy that holds itself accountable: Philanthropic Impact Pioneers

Why foundations can afford to fail often and badly: Diana Leat

More reach, greater impact: How FRRR is helping philanthropy get funding to places it couldn’t reach on its own

 

Photo: The Barefoot Investor

Stories in philanthropy

Find the latest stories and developments in philanthropy from around Australia

See stories