One of the greatest gifts you can give your child is teaching them good savings habits. With June being youth month it is the perfect time to start with some savings basics and then look for teaching opportunities.
Children are eager to learn as they grow. If parents can teach their children positive lessons about money from a young age, saving money will become part of a child’s normal development and saving for the future is likely to become a habit. Early financial education can be the first step on the road to financial freedom.
“Parents need to lead by example – start off with the basics and then look for teaching opportunities,” says Neil Thompson, Head of product and customer value proposition at African Bank.
The younger we start the sooner youngsters will begin to understand value building up to an age where they can be shown more complex financial concepts.
Thompson says a fantastic starting point is to open a family account for your child where that child has some level of autonomy. “Then when your child receives birthday money, or cash from chores, have them put some into the bank to save for bigger ticket items. If your child is old enough for an allowance, encourage them to direct a percentage into savings. Check the balances often: your children will enjoy watching their money grow. These days most children and teenagers all have a smart phone. Modern mobile banking apps are easy to download and will enable your children to learn about financial matters just that much faster.
African Bank for example has recently launched its new MyWORLD account, an exciting option for those interested in shared banking and it takes less than three minutes online to open an account! “You can manage your finances anywhere at any time, together or individually, using cellphone banking, the African Bank App or internet banking,” says Thompson.
This type of account is great for families as it offers up to six accounts, five of which you can share with family with no monthly account fees. Thompson says it is a great option as this account has South Africa’s lowest banking fees and well as offering South Africa’s best savings rate on any positive balance.
Children under 18 can be assigned a Power Pocket to transact with the consent of their parents. Using this example, parents will receive their in-branch instant issue debit card for their primary account. They will also be able to get the instant issue debit card for the Power Pocket account for their nominated Power Pocket User, in this case, their child. Parents can also open a Savings Pocket for a nominated Savings Pocket User. “If you have two children for example each child could get a Power Pocket and a Savings Pocket and transfer funds as and when needed,” says Thompson. The best news is that it call all be done online. This is free-to-use with zero data costs. “Your online banking profile will be linked to internet banking, our App and cellphone banking,” he explains.
Five top benefits of opening a bank account for your child who is under 18:
- Exposure to the world of finance: With their own account, children will soon learn why parents keep saying “money doesn’t grow on trees”. But, they can watch their own money grow if they work with it responsibly.
- Easy does it: At African Bank, your account can be linked to theirs, so instead of frantically scratching around for tuck money because you forgot to draw cash, you can simply make a deposit into your child’s account each week. You can also do this for special occasions or school trips they need to pay for. It’s also great for Uber rides and you never need to worry your child could be stranded.
- Responsible spending: When the money is gone from their own account, they will learn to understand this is because they chose to spend it. With this realisation will come more self-control.
- Feeling mature: It is a big thing to have a bank card with your name on it. Your child will feel mature and want to show you and their friends they are a responsible little bank customer.
- Better than a piggy bank: We all grew up with these but they were mostly flawed because they could be “broken into” so easily. By being a bank customer, your child has access to the wonderful world of saving. They can set goals and work towards these to afford the things they really want.