FAMILY & RELATIONSHIPS
Developing your child’s savings habits
12 September 2018
This article is part of the Suncorp ESSI Money Family Challenge in partnership with the Financial Basics Foundation, an independent charity working to educate young people to better understand money and finances.
Talking to your family about money isn’t always the most entertaining subject, but it’s important to cover the basics and teach children the value of money – and the importance of savings.
With a bit of information, the task of teaching your children to save money can be made a little easier. Why not get your kids to set some savings goals and think about how they want use their money, hopefully it will help them understand that saving money can be a very rewarding and satisfying journey.
It all starts with understanding the secret of saving: compound interest.
Learn to love compound interest
The first thing your kids will need to know when it comes to saving money is a term called compound interest. It’s what will make their money grow.
Simply put, when someone makes regular deposits into a savings account (and doesn’t make any withdrawals) the total amount in the account will usually continue to attract interest. That’s more money on top of the money you’ve already put in there.
Get your kids to start saving early
If your kids start putting money into a savings account early on in life, their balance will have more time to grow. Even a regular deposit of $5 a week will teach them how saving works and be enough for them to start to see their bank account go up!
Want to know more?
Download our fact sheet on how to get the most out of your bank accounts and your savings.
Choosing the right bank account
Choosing the right bank account for your child is an important first step. Essentially, there are two main types of accounts to consider: everyday transaction accounts and savings accounts.
Everyday transaction accounts
If your child has a job then this would be the account they would get their wages deposited into and gives them easy access to their money. Try to find an account with a wide range of features to use, such as internet banking, ATMs, BPAY and direct debit. Some accounts have low or no fees!
Savings accounts offer higher interest rates than everyday accounts and this can help you reach your finance goals faster. Here are some questions you might like to ask yourself when considering a savings account for your child:
- What’s the interest rate and how often is it paid?
- Are there any account fees?
- What are the minimum and maximum account balances, if any?
- If I withdraw money, will I lose interest?
Tips to help your kids save better
Saving money often takes time and commitment, but it’s not impossible. Here’s what you can start doing to see those numbers rise:
- Figure out what your child needs
- Compare the savings accounts of different providers to see what deals are out there
- Read the Product Disclosure Statement (PDS) before you sign up to anything
- Make sure you’re clear on the difference between earning interest and paying fees and teach this to your kids
- Your kids needs will change over time, so do some research to understand how the different types of accounts can help them as they get older.
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The Financial Basics Foundation is a non-for-profit charity focused on educating young people in money and personal finances. Their vision is, “that all young Australians are financially capable and can manage their finances now and into the future.” For more information visit financialbasics.org.au
This is general information only, current as at 20 November 2017 and is not legal or financial advice, nor is it intended to be legal advice or financial advice. It is not a recommendation or advice in relation to the Suncorp Group or any product or service offered by any company or entity in the Suncorp Group and does not take into account a person’s objectives, financial situation or needs. Before acting on this information you should consider the appropriateness of this information having regard to your personal objectives, financial situation or needs. The information is intended to be of a general nature only. We do not accept any legal responsibility for any loss incurred as a result of reliance upon it – please make your own enquiries.