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Posted: 14 days ago by Mark Bouris

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Teaching kids to be money savvy

Mark Bouris on teaching kids to be money savvy

Photography Chris Warnes

It's important to teach children the value of the dollar so they are money savvy later on in life. Finance expert Mark Bouris answers all your kid-related money questions...
Once the kids' piggy bank is full, should we encourage them to spend their money? If so, what should they spend it on?
It's important that kids understand that saving is as important as spending. So a trip to the bank with their savings is a good start. But also let kids buy what they want — within reason. If they want a toy and have saved for it, let them have it!
Are education funds (such as Australian Scholarships Group) worth using?
Education funds are a savings strategy just like managed funds, term deposits and high-interest savings accounts. If budgeting isn't your strong point, education funds are a good guarantee that you'll have the money you need when the kids start school. One important rule of thumb is to make sure you look at the fine print to understand the fee structure you'll be expected to pay.
My kids have asked for some pocket money — is it a good idea?
Pocket money is a great idea, but largely useless unless you also explain the concept of budgeting to your children. Sit down with your kids and explain that if they get $10 a week in pocket money, they should save part of it — put it in the bank — and leave some cash to buy the things they want. There should be a balance of short- and long-term rewards.
Will my children learn the value of the dollar if I pay them to help with chores?
A good principle is that kids should not be given pocket money for doing things that are part of being in a family, such as cleaning their teeth, picking up their clothes and so on. If it's for bigger “jobs” like helping Dad wash the car or giving Mum a hand cleaning the house, that's more appropriate.
Is private health insurance for families worthwhile?
I would encourage all families to take out private health insurance if they can afford it, as well as making sure Mum and Dad have life insurance. It can have a detrimental effect on kids if one parent dies or suffers a trauma and the family is put in a precarious financial position.
Any advice for setting up a kids bank account?
Don't do it online! Go to a bank and take the time to open an account with your children so they understand the whole concept of saving and banking. Explain how the bank “gives” them money just for leaving money on deposit with them.
Write in
Send your finance questions to Mark Bouris at mark@reallivingmag.com.au

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