A parent's guide: Teaching kids about money | Savingsaccount | InfoChoice
Subscribe to InfoChoice to receive


Special offers
Exclusive offers
Market data, trends and insights



Subscribe
A parent's guide: Teaching kids about money

A parent's guide: Teaching kids about money

We develop our attitudes to money when were young. In fact, experts believe that by the age of seven, children have learned many of the concepts that will go on to inform their later financial behaviour. So, what can you do to make sure your child has a healthy attitude to spending and saving right from the start?

Teach kids the concept of money

Money management is based on the simple rules of addition and subtraction. That means by the time your child starts school theyre usually old enough to learn about it.

But being smart with money requires more than just an understanding of numbers. Its also important to teach your child about the difference between a need and a want.

One of the most effective ways to do that is to teach them early on that money is limited theyll almost always need to choose how to spend it and how much to save. And that means instituting a pocket money regime.

The truth about pocket money

By late primary school, more than half of Australian children receive pocket money, according to the Australian Bureau of Statistics.

The question is, on what basis do you award pocket money? Do you make it automatic or do you link it to chores? The jury is still out on this.

Some people think that paying children to do chores teaches the importance of working for money. Others believe it rewards children for doing tasks they should be doing anyway. Theres not one right way to handle pocket money; its whatever suits your family

Teach your children how to save

Its one thing to learn that money is limited, but another to learn how to save within the confines of the money you have. So how can you teach your children to save?

One approach is to use an old-fashioned piggy bank. Another is to open your childs first bank account; this can help kids to understand banks and interest along with general saving and spending principles.

Make sure you shop around to find the account most suited to your child's needs. Some providers offer incentives to attract young savers.

It's also important to take your child into the branch to open the account. This can help your child feel involved in the process and gives them the opportunity to ask questions.

To encourage your child to save, work with them to set tangible savings goals, such as buying a game or a bike. You could then use a savings chart so they can see how their money is progressing against the overall saving objective.

Moving into longer-term investments

When is it time to move beyond compound interest and start talking about the world of stocks and other investments?

Dont leave this too late. It depends on your childs comprehension abilities, but generally, by late primary school your child may be able to understand the basics behind how the share market work.

As a practical lesson, consider helping your child put some of their savings into the shares of companies they recognise and understand. For instance, your child probably already knows and uses products of tech companies, games manufacturers and entertainment companies. Its worth choosing more than one company so your child doesnt think all stocks perform in the same way.

Investing in stocks can help to teach children to think long term (no doubt their share prices will fluctuate day-to-day), as well as about the concepts of risk and reward.

Its never too early to start teaching the value of money and how to manage it well. In fact, the younger you start with your children, the more likely you are to set them up well for the rest of their lives.

Begin by finding the right children's bank account for your young saver.



Previous Article  Next Article

Savings Account Selector

State
Savings Amount

Term
Account Type
Account Type
 




Featured Savings Accounts

Institution Product Max. Rate (%) Details
Citi Online Saver (2.85% Variable intro rate for 4 months on balances up to $500k) 2.85 Go to site
Maxi Saver (2.80% variable for first 3 months) 2.80 Go to site
Maxi Saver Account 2.80 Go to site
Savings Maximiser (Base rate 1.50%p.a + 1.30%p.a Standard Bonus Rate = 2.80%p.a on balances up to $100K) 2.80 Go to site
Maxi Saver (NSW, ACT, SA & NT) 2.80 Go to site
Maxi Saver (QLD, VIC, WA & TAS) 2.80 Go to site
Institution Product Max. Rate (%) Details

Based on promotional or introductory rates for an online savings account of $5,000. For information on how we've selected these “Sponsored” and “Featured” products click here.



Advertisement

Find out more



Twitter Facebook

© InfoChoice Pty Ltd ABN 93 061 105 735 AFSL and Australian Credit Licence number 349445

Although we cover a range of products, providers and services we don't cover every product, provider or service available in the market. The information and products contained on this website do not constitute recommendations or suggestions to purchase or apply for any particular product. Products included on this site may not suit your personal objectives, financial situation or needs. Please consider whether it is appropriate for your circumstances, before making a decision to purchase or apply for any product. If you are considering acquiring any financial product you should obtain and read the relevant Product Disclosure Statement or other offer document prior to making an investment decision.

Go to top