Time for the talk: Kids' money management skills in a digital age
Parents, it’s time. Time to sit your kids down for the talk - the money talk that is. Whether it’s getting to grips with the concepts of goal setting and budgeting, or introducing practical financial products like savings accounts and debit cards, giving children access to financial knowledge and tools early on could prove crucial later in life.
And what better time to start a conversation about the importance of financial literacy then during Global Money Week 2018, which runs this week from March 12-18.
Since 2012, nearly 25 million children from 137 countries have been reached by the financial education Global Money Week promotes, with around 30,000 Aussie kids set to be included in education programs in schools and community groups.
This year, finance brokers and other partners of the Mortgage & Finance Association of Australia (MFAA) will give up their time and financial wisdom to thousands of children, which Marissa Schulze, Global Money Week’s National Ambassador, said could be invaluable in helping instill the right skills and behaviour from a young age.
“Many young Australians fail to get the financial literacy education they need from their school or their parents,” she said in a recent interview with news.com.au.
Why is teaching kids about money so important?
According to ASIC’s MoneySmart, 54% of Australians between the ages of 15 and 74 have a numeracy skill equal to or below a ‘level two’ on a scale in which ‘level five’ is the highest standard of numeracy.
This is of particular concern given that, as MoneySmart notes, money is becoming increasingly “invisible”, thanks to the uptake of credit cards and online banking.
“Not seeing money exchanged for purchases makes it harder for kids to get their heads around what things cost. They might see this invisible money as an abstract and unlimited resource rather than real money coming in and out of their family's bank accounts,” ASIC stated in its teaching kids about money guide.
Given this increasing invisibility, ASIC suggests that it’s even more important to gradually introduce children to the concepts and principles of financial management from an early age - whether that’s by creating a shopping list, a particular savings goal or promoting critical thinking of advertising.
Finding the right kids saving account
When it comes to setting a savings goal with your children, part of the engagement and satisfaction they can get comes from depositing and seeing their money accumulate in their own saving account.
But how do you go about choosing the right kids saving account option? Just like regular savings accounts, there are plenty of kids saving account options to choose from, each with contrasting features and rates.
Three of the big four banks offer specific savings accounts for children - including the Mozo Experts Choice-winning Bump Savings account from Westpac (2.30% bonus interest rate), Commonwealth Bank’s YouthSaver account (2.30% bonus interest rate) and the ANZ Progress Saver account (1.71% bonus interest rate).
But in the same way you shop around for your own banking products, it can also be worthwhile to compare kids savings account offers from a range of providers, with Endeavour Mutual Bank offering a 5.00% interest rate (on balances up to $5,000) via their Kick Start Saver* account and bcu offering a 3.50% bonus interest rate with their Scoots Super Saver account.
Think it could be time to have the money talk with your own kids and get them set up with their own savings account? The recently-released Mozo Experts Choice Awards for Best Kids Savings accounts is a great place to start, or if you’d rather compare other options for yourself, check out the Mozo Kids Savings Accounts Hub.
4 things to consider when choosing a kids saving account
- Fees: While many banks will waive fees on kids savings account, some do charge for account keeping and branch withdrawals, so look out for an account which is completely fee-free!
- Interest rate:Like regular savings accounts, there are significant differences between provider interest rates. Depending on the way your child will use their account, a bonus interest rate could be the most rewarding option - just make sure you’re aware of any conditions they’ll need to fulfil.
- Age restrictions: Kids saving accounts are generally available up until the age of 18, though in some situations the maximum age limit is 12, while other youth accounts are available up to the age of 25.
- Kid-friendly features: Many banks provide free interactive tools and games to help kids get to grips with saving and banking, though if you like the idea of more hands on tools like the Mozo Experts Choice winning Commbank Youth app, you’ll need to sign up for an account with that specific bank.
*Product no longer exists (as of 18/12/2018)