*This post is brought to you in collaboration with People's Choice Credit Union.
Teaching your children all about finances is one of the most important steps you can take as a parent. Life is expensive for us all. The sooner your kids learn the value of money, saving and money management, the sooner they can get a head-start on pursuing their dreams in the future. The small steps we take from day one, can help to set our kids on a strong foundation financially, for life.
The best thing you can do right now, is make sure you start small and be pro-active about saving with your children from a young age. It will certainly 'pay-off' in the long-run.
Here's some excellent tips for starting your kids off in the right way, for a savings future that can really flourish.
For the very young, 0-5 years: Open a great child-friendly bank account with a good credit union. Credit unions are run by members, keeping customers and owners at the same level. Credit unions typically offer far better rates and largely fee-free accounts, especially where children are concerned.
For these younger age groups, setting up a savings account from birth will really help with kindergarten and school costs. Do consider opening one early as the years pass quickly. Before you know it, the education costs are rolling in with your growing child. Be prepared!
For children aged 5-12: Build a foundation around the concept of money in these years. Provide your kids with a simple piggy bank to start them off. Kids in this age group will enjoy earning money for great behaviour or helping out around the home and garden. Consider paying an allowance to your child on a weekly basis. Paying a dollar per year of age, per week is fairly standard. Decide what works for you and your kids. Having their own cash will help kids learn to spend within their means - a valuable life lesson to teach.
Teach your kids about the different denominations of currency and how 'it all adds up.'
Many school's offer a weekly banking program which is also a great method of getting money into an account. Make sure the school's choice of bank or credit union is fee-free or simply do it yourself through your own preferred institution.
Kids of this age-group are quite willing and capable of filling out their own banking forms under your guidance. This can be a great motivator for them. Take them along to the bank with you and let them do the whole process themselves. Let them see too, the progress their saving is making in their passbook so that things stay exciting for them.
Teaching kids in this age group to become savvy shoppers is vital. When at the supermarket, show your child how to compare the prices. Start with the simple things they love. All supermarkets have labels which show each product's price per gram or kilo. Show your kids how this works and use it to your advantage also, to save on your weekly shopping bills.
Teach your children all about the concept behind wants versus needs. We all want everything - it's human nature. In the real world though, we need to budget. It's okay to have wants (and lots of them), but needs must and should always come first. This concept sits at the very foundation of having a savings plan that works and it is an important life lesson to foster.
For ages 13 to older teens: Kids of this age are ready to really apply themselves when it comes to saving, spending and learning the ways of the world. Their costs grow along with them and they are very particular about the items they desire.
From here you can set your older child up with a debit card of their own, so that they can access their own cash at call, as required. High school-aged kids will have greater independence and will need to access cash more frequently to keep up with their blossoming social lives.
Make sure you remind your older child to spend wisely and only as required. Also teach them to use their online banking and to regularly check their statements for errors or activities that may not be their own.
Teach your kids all about credit and how it works, as well as the greater economics of the world. Take them along when shopping and show them the life skills of how to use an ATM and how to use EFTPOS and take cash out.
Kids of this age may wish to do odd jobs around your home which pay a higher rate than a simple allowance. Encourage this! You will benefit too. Extra cash can help them weigh up their needs versus wants, especially when they have to pay for an expensive desire for themselves. (It's funny to watch how kids will re-think their purchase when the cash is theirs in their own hand!)
Your teenager may decide to get a job for more independence and experience. It's an exciting time for them. Don't pressure your teen to seek work unless they feel ready themselves though. I like to think that study is priority in this age-group. Instead, (if employment outside the home does not suit) continue to encourage them to help out around the home more for any extra cash they may require. Perhaps they can cook a few meals or tidy something that is in dire need, for example.
As teens begin their senior years, the topic of obtaining a Learner's Permit and a first car begins to crop up with an exciting regularity. Hopefully there are already some decent savings to back up this important purchase in their account, but if there's not enough to cover the purchase of a fairly new and safe car, your child may need to seek the assistance of a low interest car loan. People's Choice Credit Union offer some very competitive rates and it's easy to apply for a loan online.
Encourage your teen to learn to invest wisely and educate themselves as much as possible about the finer points of saving. Their maturity is there in the teen years, to see the foundation of the earlier years in action.
Remember, with kids of all ages, start young and continue to work at it alongside them. Learning to be money-wise is a lifelong skill and all of us can continue to improve on our knowledge no matter what our age.
If you yourself are looking at a large ticket purchase right now, you may wish to check out this handy personal loan calculator on the PCCU website.
How do you teach your own children about money and saving?
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