Should I be Saving Money for my Kids?

I get asked the question “Should I be saving money for my kids?’ all the time. Well, actually – I get asked what’s the best savings account for kids more specifically.

And the response is always quite different to what I think people are expecting!

My first question to ask is why? What is the purpose for doing this?

• Is it to teach the kids the value of money?

• Is it to teach the kids how to save?

• Is it to give them a windfall at a specified age in the future?

• How old are they?

Once we have ascertained the purpose – which in all honesty for the first 2 it is usually a yes – and once we know their age we can start to work out a strategy.

If your kids are not old enough to use a debit card my view is that there is little point in anything other than a clear money box – this way you can give the money for chores, they can put their tooth fairy money in there and see it growing right in front of them.

I kinda like the clear ones with a lock & key!

And when they want to buy something with it – they can see it disappearing. It’s a powerful exercise that simply cannot be achieved with a savings account. Not only that you don’t have to worry about paperwork, tax, passwords and all that other administrative painful stuff you probably avoid for yourself let alone your young kids adding to that burden!

Once they are old enough for a debit card, I highly recommend something like a Spriggy Card – a brilliant concept to teach them about money – getting it, saving it & spending it!

Now let’s come back to the 3rd question – ‘Is it to give them a windfall at a specified age in the future?’

If this is something you want to do I need you to answer this next question VERY honestly.

“Are you on track to retire with an owned property and at least $250,000 (or pounds or USD) in cash (superannuation or retirement savings) OR if you don’t/won’t own a property at least $750,000?”.

Here is my reason for asking. Quite frankly – if your kids are happy and healthy they DON’T NEED YOUR MONEY. (In answer to the question ‘Should I be Saving Money for my kids? In this case? No!).

Just like you had, they have their whole life in front of them with a world of opportunity awaiting them.

What they really need is this – and I promise you, these are worth more much more:

1.    For you to set the example of looking after yourself as the first priority- seriously, do you want to be living in poverty in your retirement? Do you want your kids to see that as their example?

2.    To teach them how to make money, save money (minimum of 20% every single pay cheque) and grow money by investing – giving them a handout is not going to do that for them.

Now let’s say you answered yes to my killer question above then knock yourself out – find the savings account with the highest interest rate (as at September 2020 interest rates are pretty abysmal so maybe considering the easiest bank to deal with and usually great interest rates such as ING would be best) or if you have a lump sum already then a term deposit or managed fund (Investsmart is worth a look if you’re thinking of investing – low fees, great performance).

As ever – please reach out to me if I can help you with anything to do with your financial security and achieving financial freedom – you can get in touch here or take a look at my programs – if you’re not on track with your retirement savings I deeply encourage you to take action. 40% of single women in Australia retire in poverty…please don’t let it be you.