Savings for children - the Mozo guide
Bringing up a savings-savvy kid could save you a fortune in averted financial delinquency later on, so it pays to get them excited about hoarding their, alright, your cash in the best kids savings account around.
Children's bank account features
The key kid features you'll want to look for include:
- No fees: Most children's bank accounts don't have monthly or maintenance fees, which might otherwise eat a hole in their pocket money.
- Bonus interest rate: Many savings accounts for children offer high interest deals, typically with a couple of conditions such as: Minimum monthly contribution No withdrawals. It’s important to make sure you are fully aware of all these conditions before opening the account so that it suits both you and your child.
- No maximum monthly deposit: Often, higher-interest children's savings accounts will impose a maximum deposit (eg, $250); so if you may be making irregular (and large) contributions look for flexibility here.
- Child-friendly facilities: From statements and online graphs to show how much they're saving to special tools such as the Commonwealth Bank's 2019 Mozo Expert Choice Award winning Youth App.
- Various access options may only apply from the age of 12: Online or phone banking withdrawals EFTPOS & ATM Direct debit facility
If you need a little extra guidance on how and where to get these features from the best providers check out our 2019 Mozo Experts Choice Kids Savings Account Awards.
How to find the right children's account
There are several different types of high interest accounts for kids, with different types of bank traps you’ll want to sidestep if your children are going to save up faster (and, yes, support themselves sooner).
So, here are some simple things to keep in mind in order to give your child the best saving potential.
- Regular deposits: while it is always tempting to take out a high-interest savings account, when it comes to children sometimes the minimum monthly payment may be unachievable. Be realistic with both yourself and your child’s savings ability, and make sure that you are regularly depositing funds or setting up an automated deposit to get full benefit from your selected kids savings account.
- Different options: In some cases choosing a regular savings account for your child over a specific kids savings account could be the better option to get a higher interest rate. Be mindful though as usually this account would have to be held in your name rather than your child’s so any interest earned is included in your taxable income.
- Interest Rates: Rates can change for kids savings account, like they would for a regular savings account. Every year have a look at what interest rate your child receives and compare it to other similar accounts to see which has the best deal - if you need to make a change, make it!
4 ways to help your kids save money
Sometimes it can be hard for parents to teach their children about the importance of saving and how to create money conscious spending habits.
But there are some tricks to keeping your little one in the loop with their savings and helping them develop their financial knowledge from simple piggy banking to real big kid banking.
1. Let your child manage as much of their money as possible: If a child feels like they are in charge then it’s more likely they are going to take more away from the experience. If you give them pocket money in cash let them decide how much they want deposited in an account and how much they want to keep in a money jar. This way they can start to gage what percentage of their weekly earnings they actually need and help develop regular savings habits by making weekly, fortnightly or monthly deposits.
2. Help your kids set goals: Goal-setting is a huge part of a child’s life whether it’s at school, on the footy field or with their savings. If there is something in particular they want, like a fresh set of roller blades or a blow up unicorn for the pool, lay out a framework where they are the ones saving for it. Show them that financial goals are achievable through putting money away regularly - their first purchase won’t be their last but it may be the motivator to get the ball rolling.
3. Lead by example and show them how saving done: Many parents know that children will do and say exactly what they have heard or seen before, and saving is no different. Give them real-life examples of how saving works - whether it’s teaching them to choose low-cost items at the supermarket or explaining the varying costs of petrol at the servo, reinforce the importance of making saving-savvy decisions and eventually they’ll get the idea.
4. Allow your child to make mistakes: Making mistakes is the best way to learn, so if your child uses the entire contents of their money jar on the school canteen instead of depositing in an account that’s meant for a new guitar, let them realise where they went wrong and help them develop a plan to avoid the same event happening in the future. If having too much physical cash around is too tempting for them, discuss depositing a higher percentage of their earnings every week in their kids savings account.
Hop over to the Kids Savings Accounts hub for the tips and tricks of child bank accounts. Or leapfrog to the 2019 Mozo Expert’s Choice Kids Savings Accounts Awards to find the best children's savers in the financial playground.