The ability to manage money is a valuable life skill – it brings certainty to our lives and minimises our exposure to risk. Research by the Commonwealth Bank Foundation found that poor financial literacy indicates a greater chance of being unemployed, earning a lower income or experiencing bankruptcy.
Teaching the value of saving at a young age can help children grow into financially savvy adults, but it requires a concerted effort by parents. Thankfully, there are simple steps you can take to ensure your children grow up to be savers not spenders.
Teach by example
Kids learn by mimicking the adults around them, and that’s no different when it comes to money habits. Include your children in discussions about saving for the family holiday or a new car (to teach them the value of saving towards a goal), or even in planning the weekly shopping list (this teaches them how to avoid the common spending trap of impulse buying).
Don’t think of it as bribery but rather as a way of rewarding good behaviour – consider matching your kids’ savings to encourage them to save more money to buy big items, such as a bike or their own iPad, instead of you buying it outright for them. This way they get what they want and they learn the power of saving along the way.
Use the power of pocket money
Kids can easily blow their weekly pocket money in one go. To help them learn the value of money, encourage them to set aside a percentage of their pocket money every week – not just every now and again. This teaches them that saving is something that requires regular and consistent habits.
Setting up a savings account for your children is a great opportunity to talk to them about the value of saving, and you can choose one of the many savings accounts specifically for children. One example is the no-fees Bankwest’s Children’s Savings Account for kids under 15 years old, which you can also link to the high-interest Kids’ Bonus Saver account with 5.75 per cent interest per annum.
Take advantage of the digital age
You don’t have to go it alone. Just like adults now have access to various budgeting tools online and in digital form on their smartphones, there are also helpful money apps to make saving easier for kids. Options include Virtual Piggy and Make It Count, both of which allow young children and teenagers to keep track of their pocket money, their spending and to set savings goals.