Early Starters: Banking And Savings Guide For Kids

Oct 29, 2020
By Staff writer

”Start them young.” We always say this when we want kids to develop a habit or skill that they can later use as adults. Financial literacy is one of these life skills, and they will surely thank you for it when they grow up! 

Money talks may be complicated especially when you put banking and investment in the mix. However, there are simple ways to get kids started with savings, banking, and investment. Make it fun and interesting! Read on to learn more.

Be the reference point

Teach kids that saving is a good habit by setting an example yourself. It’s a proven practice that kids will copy what you do especially if your behaviors are rewarding. This is called social learning. You need to show and let them understand that saving money has its perks so that they’ll imitate what you do.

Tip: Get a piggy bank and display this on a spot where your kids can always see it, like in the kitchen or beside the television. Intentionally show them everyday (show them it’s a habit!) that you’re saving your extra coins in it. Encourage them to put coins in it — they’d love that! When it’s full, take out the coins and count them with your kids. Reward them by buying something that they like with the coins you’ve saved. 

This shows them the concept of compounding interest, in that regularly saving money adds up over time. Let them learn by giving them their very own piggy bank, and setting goals for what they want to save up for!

Needs and wishes

How did we, as adults, learn how to save? By knowing the difference between a ‘need’ and a ‘want.’ While we can postpone our wants, we can’t postpone our needs because our survival depends on them. The rule of thumb: if you can survive without it, then it’s a want. Teach your kids the difference between needs and wishes when you’re out shopping for groceries. 

You can start by, say, showing them the value of meat versus the value of candies, and explain why buying meat is more important. Show them the prices of goods you buy and how you’re budgeting your money for groceries. This shows them how much you’re spending on groceries, and why you’re spending more for the necessities in your home over the luxuries.

Let them earn it

Let them know that money really doesn’t grow on trees. Whenever they do something desirable like doing chores or finishing their homework on time, you can reward them with money. This teaches kids that money is earned. When they realize how much effort it takes to earn money, they’ll appreciate the habit of saving! 

Open a bank account for kids 

Don’t wait until their teen years for them to open a bank account! The best way to teach kids financial independence is to get them a bank account early on. They can navigate how money is saved in the course of time, just like in a piggy bank! Once they’re a bit older, you can hand them an ATM so they can learn to manage their own money. 

There are many banks in New Zealand that have bank accounts for your kids. Some of them such as ANZ and ASB won’t charge some fees that apply to a regular savings account. 

Enroll them to a Kiwisaver account 

When you feel like they’re ready, take it a step further by introducing them to investments. It’s another way for them to earn money when they’re older. And what better way to teach them about investments, than with a Kiwisaver account!

Simplicity and Juno are examples of Kiwisaver providers that let you enroll your kids. 

You can explain in simple details how the money grows when in investments. Introducing them to investing early on makes them way ahead of the game. When they’re adults, they would be more confident in deciding where to put their money. 

The best thing about Kiwisaver accounts for kids is some of the fees that normally apply to a regular account aren’t applied. This way, your kids can grow their money faster.

What Kiwisaver fund is right for your kid? 

It’s easy to look for Kiwisaver providers that offer accounts for kids. The real challenge is finding the right Kiwisaver fund for your kid over various offers. One thing to remember is you can’t opt out once you’ve enrolled your kid, so if you want to stop the contribution, you should request for a savings suspension. 

From the get-go, you should choose a Kiwisaver fund that aligns with your budget and financial goals for you and your kids. Make the right decision by comparing Kiwisaver funds with glimp!

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