Five ways to raise money-smart kids
TEACHING your kids to be smart with money might be one of the best investments you ever make. The skills they learn now will help shape their future spending and saving habits.
Newcastle Permanent's Coffs Harbour Branch Manager, Erica Farag, is a big believer in teaching kids smart money habits as early as possible.
Here are Erica's top five tips to help shape your children's future spending and savings habits:
1. Saving for a goal
In life, it's important to teach your children how to set a goal and how to reach that goal. These questions will help you set a saving goal with your kids:
- What do they want to buy?
- How much money will it take to get there?
Explain to them why saving for goals is important.
2. Pocket money
Now that you have a goal in mind, develop a pocket money system to help your kids reach their goal.
Setting up a pocket money system helps children understand the value of money. When you work hard, you get something in return.
"Earning money from small jobs around the house like helping you wash the car, cleaning their room or putting away their toys neatly, means they understand the 'work for financial reward' concept," Erica said.
"Drawing up a saving thermometer is a great visual representation of how much they are saving and how close they are to reaching their saving goal."
3. Explain how banking works
After your child has successfully reached their saving goal/s, you can talk about where you keep all your money.
Erica believes educating children on what a bank account is, how to save money and what they get out of it is really important.
"If they don't understand what the account is or how it benefits them, they won't want to do it," she said.
"For parents, it's always beneficial to go into the branch or online to find out the finer details like what are the interest earnings, any fees or charges and how they can access or monitor the child's account.
"A great idea is to get the new account connected to the parent's internet banking, so both parent and child can see the savings grow."
4. Create their first account
Piggy banks are a great way for kids to save their money, but they aren't the only option.
Erica spoke about combining the piggy bank concept with a bank account.
"Combining the two saving options helps kids understand the different methods of saving.
"Often piggy banks are used for small or short term goals, while savings accounts might be used for bigger goals."
The Newcastle Permanent Smart Saver Account has no ongoing account keeping fees and provides a simple-to-use first account for children who want to start putting money in the bank.
For parents, you can access the account in-branch, via card or internet banking, where you can easily help your child manage their money and watch their savings grow.
5. Have conversations about banking
One of the best places to discuss smart money tips is in the supermarket.
"The supermarket is a great place to teach children about finance, for example, how you save money when you buy a cheaper brand of flour, how EFTPOS works, or what a debit card is when you're paying for the shopping," Erica said.
"It could even be as simple as going to and explaining to your child what an ATM does the next time you need money out.
"Every conversation you have now is important to raising money-smart children."
For more great tips about how to have money smart kids, head HERE. Or if the kids aren't so little any more, here's a quick guide with some great banking tips for teens, students and young adults.