It’s no secret that children pick up many habits from their parents. Along the same lines as inheriting a fear of snakes, kids find it easy to recognise patterns in money saving behaviour and mimic them. And with research showing that one in four Aussies suffer from financial stress, it’s important to educate kids about the importance of saving money early in life. School doesn’t necessarily equip them with the financial knowledge they may come to need when they’re adults so here are some key ways to teach them.
It is important to educate kids about the importance of saving money early in life – Bessie Hassan
Pocket money teaches them to save
Every parent has a different approach and opinion on pocket money. While some parents incentivise based on number of chores completed per week or day, others choose to pay a fixed amount. This can take the form of half the child’s age (which keeps it fair across multiple children), or whatever suits your family situation best. The aim is simply to provide your children with a consistent stream of income – no matter how small – to teach them how to save it. Whether you choose to restrict it and hold onto it in order to prevent spending, or let them manage it themselves, is completely up to you.
Remember to be serious
Fortunately – or unfortunately, whichever way you look at it! – when you sit children down to talk about something serious, they usually listen. So it’s a good idea to plan what you’re going to say before you talk to them. Don’t try to wing it! It’s important to explain carefully that you think they deserve the responsibility of earning a bit of money and that you respect what they want to purchase with it. Whether you would prefer to start them early (e.g. age five) or later (e.g. age 10) is your choice.
Set goals with them
Kids respond incredibly well to goals. If they’re working with you to save money for a purchase they’re really looking forward to, they’ll be much more likely to stick to their budget than blow it on lollies. Give them a realistic target to achieve, and put a plan in place for how long it will take. If their birthday is coming up, it might be a good idea to encourage relatives to give them a bit of a push as well, but this is up to you. Also, consider an incentive; for example, let them know that when they hit a certain amount of savings, you’ll double it if they’ve been well behaved. This lets them know you’re working with them to help them achieve what they’re aiming for.
Open a high interest savings account
There are some fantastic banking options for children. Commonwealth Bank Youthsaver Account, Westpac Kids Reward Saver, ANZ Progress Saver, NAB Smart Junior Saver, and Suncorp Kids Savings Account are a few good places to start. Something else to consider is proximity of the branch to you, and it’s important to note that your kids probably won’t be able to access their accounts without your help until the ages of around 12-14 (depending on the bank).
Set a good example
When you’re out shopping, make sure your kids don’t see you spending money all the time. As you shop, try to engage them in conversations about money; for example, point out when you’re comparing prices to find the best value. This is something they’ll need to learn over time but you could speed up the process by demonstrating these sorts of actions. Along the same lines, it’s a good idea not to demonstrate frivolity; if they ask you for lots of things while you’re shopping, remember to say no every once in awhile.
Educating kids about money doesn’t have to be a scary or daunting task. If anything, they’re likely to be excited that you trust them with money and will be happy about it. As long as you set goals and are realistic with them, you’ll be helping them grow into financially responsible adults. Good luck!
About our Guest Expert :
Bessie Hassan is a Money Expert and mother-of-two at Australia’s most visited comparison website, finder.com.au