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For many of us, our first experience of banking and savings was the school Savings Account Program. However, in 2019, the Australian Securities and Investments Commission (ASIC) raised concerns that these accounts had little lasting impact on children’s savings behaviour. All parents want their children to be better-off than they were – more secure and financially independent, but the big question remains: where do you start? Ushering your children toward financial security can be a simple three-step process focused on kids financial education.
Step 1: Create Good Habits
Start early; learning to save is one of life’s great lessons. In an increasingly cash-less society, it can be difficult for children to understand the value of money and how to save. Here are some ways to help them develop good kids financial habits:
- Providing a piggy bank for very young children, or a glass jar through which they can see their savings mounting up.
- Teaching the difference between needs and wants. Lead by example with your own savings habits.
- Involving them in the household budget; compare prices at the supermarket and demonstrate bill-paying.
- Paying pocket money for age-appropriate chores and helping them to create a mini-budget, apportioning money to:
- Spending on anything they want.
- Donating to charity to instil a sense of community and empathy.
- Saving for a goal; helpful in teaching kids restraint and how to avoid impulse buys.
Step 2: Inform
Nothing is free; water in the tap, electricity, and even the internet don’t just happen by magic. One of the best ways to teach kids about responsible money handling is to explain debt and the consequences for not meeting financial obligations, which segues neatly into a discussion about personal credit scores. Here are some tips to help kids understand the concept of a credit score and improve their kids financial literacy:
- Brush up on your knowledge first.
- Don’t focus on numbers; explain that it’s about financial behaviour over time.
- Avoid complexity and keep the information age-relevant.
- Use examples. Discuss mistakes you’ve made in the past and explain how you rectified them.
Step 3: Consider Where You’re Saving
Record-low interest rates have taken the fun out of savings, but don’t let that stop your kids from calculating how much they can earn from the right type of account. The Moneysmart website has savings calculators that kids can play with and learn from. Here are some ways to enhance your kids financial understanding of savings:
- Research the right account. The banking and finance industry offers a plethora of accounts specifically designed to encourage kids to save. Help them research the account that will suit them; consider fees and interest.
- Explore online resources. Searching online will reveal a range of websites, blogs, and apps dedicated to engaging and educating kids about money and savings.
The Impact of Kids Financial Habits
Introduce your kids to good habits while they’re young, and you’ll be setting them up for success. Finding the most child-appropriate plans and accounts that specifically suit your child’s needs can be a minefield. Your financial adviser will be happy to work with you as you guide your children into a financially secure future. By focusing on kids financial education, you can ensure they grow up with a strong understanding of money management.
Conclusion
In conclusion, fostering good kids financial habits from an early age is crucial for their future financial security. By creating good habits, informing them about financial responsibilities, and considering the best savings options, you can help your children develop a strong foundation in financial literacy. This comprehensive approach will not only prepare them for financial independence but also instil a sense of responsibility and smart money management. So, start today and guide your children towards a financially secure future with a solid kids financial education.
