Kids saving $$

Teaching your kids about $Money$ today

Things have changed since we were kids. When was the last time a kid knocked on your door offering to mow your lawn for $2 or you saw a lemonade stand?

These days it’s the pocket money we pay our children that teaches them about the value of money – whether it be spending it or saving it! How we pay it can provide an important lesson to them for later in life.

Here is a suggestion. Rather than handing out cash each week, why not open an online savings account for your child (separate from what the school offers). Let me show you why.

If you open an online account and deposit  $1000 to start them off, then give them $7 a week pocket money paid directly into the account (keep in mind pocket money will go up with CPI but this is only an example), after 10 years your child will have $5965 including $1325 in interest earned (based on 4%pa).

Or you can ramp it up a bit. Say instead you contribute $25 per week for 10 years. At the end of the 10 year period they will have $17,468 in their account (based on 4%pa) including $3468 in interest alone.

There are several changes which will affect the interest payable at the time of saving, but the true value is in the lesson taught. Your child will see their balance continue to grow exponentially via online banking, and as their savings grow so too may their goals and aspirations of what they want to spend the money on.

When choosing a savings account look at what is available in the market as some accounts may pay 0% interest, while others will pay up to 5.45%pa. Keep in mind that research is the key to these online savings accounts, however, most will teach children the key to saving money. Many products will pay higher interest the less you withdraw as long as you continue to contribute regular payments each month.

So next time the kids ask for their pocket money in cash, why not show them the statement with the savings you have started for them, and see which payment method they would prefer?