You should also consider putting your child in charge of their own money early on (with guidance of course). This can be a fantastic way to teach them the importance of budgeting and saving. Let’s break it down.
Say the school holidays are coming up and your child’s friends are planning an outing on one of the days.
You could help them estimate the total cost of the excursion and how much spending money they’ll need on the day. Then, start budgeting for it out of their weekly pocket money in the lead-up to the holidays.
Chat about how a savings account can help your child reach their goals faster – showing them the importance of separating their ‘savings’ from their regular transactions.
They can also name their savings account according to what they’re saving for, and you can help them set up automatic transfers to their savings account so they can put money away regularly.
While your child may find the process frustrating and slow, it’s important that they understand the value of money. It’s a good idea to come up with creative ways for your children to earn some extra cash, instead of ‘topping up’ their account.
You can also teach them the value of not touching their savings and watching it grow over time with a term deposit. They can choose a term which suits their needs and earn interest by locking away their money for that time.
Keep in mind that you need to be 18 to have a term deposit, so if your child is a minor this isn’t an account you can put in their name.