June 30, 2011
Teaching your children financial literacy at an early age creates behaviours that will carry them throughout life and effective lessons can be as simple as managing pocket money or a savings account.
Children will quickly learn lessons that all money - not just yours but theirs too - is limited and that they will benefit most from putting some thought into how it is spent or saved.
A good time to introduce your children to money management using pocket money may be in kindergarten or the first years of school when they may be exposed to their first independent transactions - at the canteen.
Help them to earn more
If earning a few dollars per week isn't enough to save for the things your children really want (such as an expensive pair of sneakers or an iPod), teach them about delayed gratification. Things mean more when you have to wait for them, but on a $10 per week allowance many kids may give up their savings quest if their goal is months away. So you might need to give them an added incentive to save, which you can do in a number of ways.
One good way to kick-start a savings schedule at home with your children is to match every dollar they save with another of your own. By doing so, you'll help them reach their goal faster and reduce the odds of them quitting along the way.
Another is to open a children's savings account and teach them about different rates of interest. You'll be able to show them that the 1 or 2 percent interest they earn at their local bank is five times less than they could be earning by depositing their pocket money into an online bonus saver.
Some of the best children's savings accounts rates as at June include Bankwest's Kids' Bonus Saver with a rate of 0.1 percent and a bonus interest rate of 10 percent when you deposit between $25 and $250 each month and maintain an agreed minimum balance. ANZ's
Progress Saver for Kids is another good option with a rate of 0.01 percent and bonus rate of 6 percent when your child adds $10 each month and has no withdrawals.
If your children are required to earn their pocket money by doing small jobs around the house, a good way to help them boost savings is by offering extra jobs for extra work. They will soon realise that money has to be earned. Just don't make the payoff too quick, because you want to groom a saver!
Related savings account links