Kids money no minor matter
Kids money no minor matter
By Frank and Muriel Newman
Westpac has been asking some interesting questions about kids and money. Their “Money and Kids Report” provides an insight into the link between pocket money and financial awareness. We think it’s important that kids (and once-were kids) make the connection between work, income, saving, and investment early on in their lives - and the sooner the better.
For kids “work” comes in the form of “chores”. Westpac found those chores took on average 2.4 hours a week, typically on things like: looking after family members (babysitting), cleaning their bedroom (isn’t it amazing how quickly it can become messy again!), washing the car, mowing the lawns, feeding pets, doing the laundry, doing the dishes, and taking out the rubbish (it was pleasing to see that chimney sweeping was no longer a common chore!). Most started chores at 6 years old.
The report says, “Pocket money for most families starts when a child is 6 years old and is usually up to $10 until 12 years old. 13 – 15 year olds, on average, get $11 to $20”. (We can just see it now – protest marches through the house with placards demanding a minimum living wage!).
There is no doubt that those who save as a child, are much more likely to save as an adult and become mortgage free.
We think there is more to teaching good money skills than just focussing on child chores, and that was one of the key messages in the report: if parents want to teach their kids good money habits, they not only need to give them pocket money, but they also need to teach them how to save it. Here are some of oily rag suggestions:
· Let kids “bank” their savings. In other words, if they can think of ways to save money around the home, let them keep say half or a quarter of the savings.
· Don’t call their allowance “pocket money”, call it a “wage” for the good deeds they do to help out around the house and their contribution to a happy oily-rag home life. Jobs like doing the dishes, vacuum cleaning, dusting, watering the plants, washing the car, mowing lawns, setting the table, cooking a favourite dish, and so on.
· Encourage kids to save towards a certain goal. Write a goal and the amount on a label and stick it onto a jar, then see how fast they can fill the jar!
· Play money games at home. The Monopoly board game has often been credited for inspiring property tycoons!
· Start a KiwiSaver account for kids and let them see for themselves the ‘miracle’ of compound interest - and take advantage of the government’s $1,000 kickstart!
· When gift giving, think about giving an investment – a term bank deposit, a KiwiSaver account, shares in one of the big name companies, or, if you have spare land, some livestock to raise.
· When shopping, give them the responsible job of checking prices and making sure you have bought the best value. A calculator will be essential so they can compare different packet sizes. Not only will it be a valuable shopping lesson, but their maths will improve! (TIP: a calculator may be required for the tricky calculations like cost per gram when comparing different packet sizes.)
· Involve the young ones in power savings. Check out your average power bill for each month of the year, and share the savings around those living in the household. The lesson may be as simple as turning off the lights when leaving a room. Get the kids involved in the rewards of saving electricity and you will have them acting like highly motivated power savings devices!
Learning the savings habit early will bring a life-time of rewards. Besides thrift, pocket money can teach kids other important virtues such the value of hard work and personal responsibility – lessons that will help them throughout their lives!
Do you have a favourite money-saving tip to share with readers? If so, please send it to us at www.oilyrag.co.nz or write to Living off the Smell of an Oily Rag, PO Box 984, Whangarei.