It’s important to teach children about good money management so they are money savvy later in life. Showing kids basic steps such as how to set up a savings account, use a budget and shop around for the best price will establish money habits for life.
Read on for our guide to raising money conscience children that will help mum and dad, too.
Piggy bank basics
One of the most fundamental tools you can pass on to your children is how to manage money and it’s never too early (or late) to start. Children can learn how to save coins using a money box before they even learn to count change, according to the federal government’s Money Smart website.
Once the kids’ piggy bank is full, open an online savings account or children’s savings account and make regular deposits together so they can watch their balance grow.
It’s equally important to let children spend part of their savings, says financial expert Mark Bouris.
“It’s important that kids understand that saving is as important as spending. So a trip to the bank with their savings is a good start. But also let kids buy what they want – within reason. If they want a toy and have saved for it, let them have it,” he said.
Even kids as young as pre-schoolers can learn the value of money by saving for small goals. Try showing them how much $2 can buy at the supermarket and help them understand the difference between things they need and things they want.
Chores and financial reward
Pocket money can be a great idea, but largely useless unless you also explain the concept of budgeting to your children.
Bouris encourages parents to sit down with your kids and explain that if they get $10 a week in pocket money they should save part of it – put it in the bank – and leave some cash to buy the things they want.
“There should be a balance of short- and long-term goals,” he said.
A good principle, he said, is that kids should not be given pocket money for doing things that are part of being in a family, such as putting away toys or brushing their teeth, and so on.
“If it’s for bigger jobs like helping dad wash the car or giving mum a hand cleaning the house, that’s more appropriate.”
Do you have the right cover?
Aussies are pretty good at insuring the material stuff, such as our cars and homes. But many are reluctant to get insurance for the most important things, according to financial advisor Scott Pape.
There are three types of insurance that all Australians need, he said.
“The first is income protection: over the course of 65 years there’s going to be a one-in-two chance that you’ll have a least three months off work so you need to insure against that,” he said.
The second, he said, is total permanent disability insurance for the times when you fall ill or have an accident, which renders you unable to work. The third is life cover.
“All three of those you can get through your super fund. So give [your provider] a call, ask if you have enough and how you can get some more.”
Bouris also encourages all families to take out private health insurance if they can afford it.
Help is there, if you need it
Around 113,000 Australians are missing out on the Parenting Payment despite being eligible to receive it, according to a study conducted last year.
The Australian Tax Office holds relevant data that could be matched with Centrelink customers to see which families were missing out. For more information visit humanservices.gov.au, the department also has a network of social workers to support families.
Or if you’re struggling to meet home loan payments or just need a help getting your everyday finances in order, the first step is to contact your financial institution.
Some Aussies may benefit by refinancing to more suitable accounts and loans, which could free up hundreds of dollars each month. To find out more visit a free comparison site such as RateCity. Or for more advice talk to your financial advisor or a free financial counsellor.