Teaching children how to save from a young age could help set them up for life. When you are a kid you think money grows on trees, or at least your parents have an endless supply, however the reality is quite a stark difference. Starting a savings account for your children can help them build great life habits and prepare them for the real world.
Children’s savings accounts
While most online savings accounts are restricted to adults, there are many kids’ savings accounts that offer under 18 year olds great rates and savings incentives
Kids savings accounts can help teach your children the value of saving money while watching it grow and enjoy the rewards from saving for a goal. There are many different ways kids savings accounts offer incentives to encourage saving and it varies between financial institutions. For instance, some kids savings accounts can have a miniscule base rate and a large bonus rate that is only awarded if certain criteria are met such as a maximum number of withdrawals and a minimum amount of money deposited each month. Fees and charges can also differ so it’s best to compare kids savings accounts online to find the best value for money
Encouraging your children to save
- Pocket money: This old charm works great for getting your children to recognise how to earn money, instead of just being given it.
- Open a bank account: Start a junior savings account for your child. These accounts don’t charge fees and offer a high interest so your little one can watch their money grow and save for their own goals.
- Goals: Sit down with your kid/s and work out what their goals are, what they would like to buy and work out a budget with them.
- Set budgets: If you give your children money on holidays make sure you tell them how much they have to spend and that there will be no more once they have spent it.
- Set money challenges: Give them money to go shopping with and tell them they can keep any change left over. This will teach them the value of looking for ways to save and get them to see the costs of certain items that they may not have considered.
- Teach them banking: Take them to the bank to deposit their own money and teach them to read their bank statments so they learn responsibilty and understand the savings process.
It’s important to do your research on tax payable for children’s savings accounts. Contact the Australian Taxation Office (ATO) to see how income earned in your savings account will be treated for tax purposes.