Money mantras for families to live by

Money mantras for families to live by

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.

 

 

Did you find this helpful? Why not share this article?

Advertisement

RateCity

Money Health Newsletter

Subscribe for news, tips and expert opinions to help you make smarter financial decisions

By signing up, you agree to the ratecity.com.au Privacy & Cookies Policy and Terms of Use, Disclaimer & Privacy Policy

Advertisement

Learn more about savings accounts

How to make money with a savings account?

Savings accounts make you money by earning interest on your savings. The more money you deposit, the longer you leave it in the account, and the higher the account’s interest rate, the more interest you’ll be paid by the bank or financial institution, and the more your wealth will grow.

To make sure your savings account makes money and doesn’t lose money, it’s important to maintain a large enough minimum balance that the annual interest earned exceeds any annual fees charged on the account.

How much money should I have in my savings account?

A good rule of thumb when working out a minimum balance for your savings account is to make sure that you’ll earn more in annual interest on your savings than what you’ll be charged in annual fees.

If you’re saving with a specific goal in mind, prepare a budget so the interest you earn on your deposits will help you efficiently reach this goal. Online financial calculators may be helpful here.

What is a savings account?

A savings account is a type of bank account in which you earn interest on the money you deposit. This makes it one of the easiest and safest investment tools.

Can you have a joint savings account?

Yes. Joint savings accounts can be useful for two or more people wanting to combine their savings to meet shared financial goals, including spouses, flatmates and business partners.

Some joint savings accounts require all parties to sign before they can access the money. While less convenient, this extra security can help encourage all parties to meet their shared financial goals.

Other joint savings accounts allow any of the account holders to access the money. These accounts can be convenient for financially responsible couples that trust one another implicitly. 

How can I get a $4000 loan approved?

While personal loans and medium amount loans don’t offer guaranteed approval, there are steps you can take to help increase the likelihood of your application being approved, including:

  • Fulfilling the eligibility criteria (providing ID, proof of residency, proof of income etc.)
  • Checking your credit history (you can order one free copy of your credit file per year, and make sure that there aren’t any errors that may be bringing down your credit score)
  • Comparing carefully before applying (making multiple loan applications can mean having your credit checked multiple times, which can look bad to some lenders and reduce your chances of being approved by them)

Can you set up direct debits from a savings account?

It’s not usually possible to set up a direct debit from your savings account to cover ongoing expenses or bills, as savings accounts are structured around growing your wealth by earning interest on regular deposits, and discouraging withdrawals.

Some transaction accounts allow you to set up direct debits and also earn interest, though you may not enjoy as much flexibility as a dedicated transaction account, or get as high an interest rate as a dedicated savings account.

How do I open a savings account?

Opening a savings account is a relatively simple process. If you’ve found an account with a suitable interest rate, you’ll just need to get in contact with your chosen lender via a branch, phone call or hop online to begin the process. 

You may be required to provide:

  • Personal details, including identification (driver’s license, passport etc.)
  • Tax file number
  • Employment details

What is a good interest rate for a savings account?

A good rule of thumb to keep in mind with savings accounts is to look for a rate that is higher than the CPI inflation rate. This number is constantly changing, so check the Reserve Bank of Australia’s page. If you aren’t earning interest above this then the value of your money will go backwards over time.

How to open a savings account for my child?

Some banks and financial institutions allow parents to open a bank account for their child as soon as it is born, and start depositing funds to go towards the child’s future.

Children’s savings accounts generally don’t have fees, and are structured to help develop positive financial habits by limiting withdrawals, encouraging regular deposits, and earning interest on the savings, similarly to standard savings accounts.

Who has the highest interest rates for savings accounts?

As banks frequently change their rates, the most accurate way to know who currently has the highest interest rate is to use a savings account comparison tool.

How does interest work on savings accounts?

The type of interest savings accounts accrues is called compound interest. Compound interest is interest paid on the initial deposit amount, as well as the accumulated interest on money you have. This is different from simple interest where interest is paid at the end of a specified term. Compound interest allows you to earn interest on interest at a higher frequency. 

Example: John deposits $10,000 into a savings account with an interest rate of 5 per cent that he leaves untouched for 10 years. At the end of the first year he will have $10,512 in savings. After ten years, he will have saved $16,470.

What is the interest rate on savings accounts?

As banks frequently change their rates, the most accurate way to look at interest rates on savings accounts is to use a savings accounts comparison tool. When you look at the savings rate check what the maximum and minimum rates are. Often banks will offer you a promotional rate for the first few months which is competitive, but then revert back to a base rate which can sometimes be less than inflation. Ongoing bonus rates are often a safer bet as they will keep rewarding you with the maximum rate, provided you meet their criteria

Can you direct deposit to a savings account?

Yes. You can make one off payments or set up regular direct deposits into a savings account. This can be organised easily through online banking or by making deposits in a branch. Talk to your lender to find out the easiest way for you to set up direct deposits.

Can I overdraft my savings account?

A lot of savings accounts won’t let you overdraw. Some will allow this feature but you’ll need to apply first. It’s best to read the fine print and check with your lender whether this is a feature they offer. It can be a helpful addition, but as your lender can charge you a fee as well as interest for going into negative numbers, it’s best to avoid overdrafting when possible.