It’s never too early to start teaching your kids about the importance of earning, saving and spending money. After all, according to ASIC’s MoneySmart website, the significance of developing positive financial skills from an early age will set them up for the financial challenges of adulthood and establish good money habits for life.
But where to start? We’ve put together three important financial conversations you’ll be able to have with your kids before the school holidays wrap up.
Conversation #1: Introducing pocket money
Pocket money is a great way of introducing your kids to developing money skills for the first time, and it allows them to practice goal setting and financial independence. But the big question is just how much money should you give your kids and how often? According to the Raising Children Network, dishing out pocket money to children as young as five helps them start learning the value of money, as they can then make choices about what they want to spend their money on - whether its toys or going to the movies.
Ultimately, the allowance you give your kids depends on what you think is sensible. Some parents choose to match how much money they give their children to their age - for example a five year old gets $5 a week and a nine year old gets $9 a week. Other parents may choose to put price tags on jobs around the house such as $10 for washing the car or $5 for making their beds.
Although be sure to set some guidelines when giving pocket money to your kids, and explain to them what their money can be used for and what it can’t be used for. Let your kids use their pocket money or birthday to pay for small expenses like lollies at the school canteen so they can get an idea of how far their money goes.
Conversation #2: Their first bank accounts
Many Aussie kids are first introduced to the idea of bank and savings accounts through school banking programs, but what could you do at home? One great habit to make sure your children are learning from a young age is the value of saving money, and a great way of doing this is by setting them up with their own savings account. This gives them a starting point to grow their pocket money to become interested in the idea of saving at a younger age.
Opening up a savings account can show kids just how much their money can grow even by putting away a little bit at a time. Good habits begin at home, so encourage your kids to stash away a portion of their birthday or christmas money into a savings account so they the most out of their savings.
Starting up a bank account for your kids can also give you the opportunity to go through the fundamentals of money management such as bank statements which can show them money going in and out, as well as the interest paid. Depending on your children you could start as young as primary school age, but by the time they reach high school they should understand the value of real-time money management do develop future habits.
Conversation #3: Kid-friendly bank accounts
Finding ways to get your kids interested in the importance of money can be tricky but with the help of technology, children can now learn the importance of managing money digitally (with mum and dad’s control, of course).
One option is the Commonwealth Bank Youth App which allows children to create lists of chores on the app and tick them off as they are completed in exchange for pocket money, giving them a hands-one approach to savings and budgeting.
For a non-bank alternative, Spriggy is a prepaid debit card and mobile app that gives children and parents hands-on experience with saving, spending and budgeting. The debit card allows children to purchase with their own money, and the app gives them the ability to choose how they want to allocate their pocket money - whether it’s onto the card for spending or into their savings account.
Think your children are ready to take on the world of banking and personal finance? Give their savings a kick start by checking out our list of kids savings accounts.