One quarter of Aussie children don’t have savings accounts
ALMOST one quarter of Australian children don’t have savings accounts, robbing them of a chance to learn valuable financial lessons at an early age.
New research from Westpac has found that 70 per cent of children are given a savings account before they are four years old, but 24 per cent of children aged under 12 miss out.
Money experts say it can potentially affect children’s grades at school and their ability to set and achieve goals later in life. It’s never too early to start saving, they say.
Westpac’s research found that two-thirds of parents worry about how financial savvy their children will be when they finish school, and 78 per cent say it is more important for today’s children to save money than when they were children.
Westpac head of youth and millennial markets Ashley Gray said almost nine out of 10 parents and grandparents believed that savings accounts for children set them up for success later in life.
“There can be significant long-term benefits for a child, regardless of your socio-economic status. It’s not about the value of the money,” he said.
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Mr Gray said research had found that children whose parents were savers — regardless of whether they were on high or low incomes — tended to be more upwardly mobile.
“The psychology behind it is that if they have money set aside, they believe a better future is possible, and as a result they do better at school,” he said.
Mr Gray said savings accounts could be operated online, as long as children saw how they worked. “Whether it’s physical cash or digital money is less important than learning the right behaviours,” he said.
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Patrick Canion, an ipac financial planner, said he preferred cash as a teaching tool for children to physically take it to their bank, “particularly now with everything so electronic”.
“Anything you can do to make money real, tangible and teach kids good money habits is going to benefit them. That’s way more important than the amount — it can be $2 or $200,” he said.
“The Baby Boomers are the most affluent generation we have had, and they’re the ones who grew up with kids’ savings accounts.
“I know parents who have paid pocket money for chores from when their children were four or five.”
Westpac has noticed a trend of Australians opening savings accounts for children earlier in life, with children aged zero to five saving $15 a month and six-to-12 year olds saving $39 a month.
Its research also found that of the parents who didn’t set up savings accounts for their children, 60 per cent did not regret it. Mr Canion said that response was a self-justifying statement because very few parents would “put their hand up and say I didn’t raise my kids as good as I could have”.
“Be the real example of good money management and tell your children what you are doing to the extent that they are able to comprehend it,” he said.
Next week in Dollars & $ense: How parents can contribute now for their kids’ financial future.
News Corp Australia in partnership with Westpac’s Bump initiative, presents Dollars & Sense - a three-part series to help parents plan for the costs of having a family and raising financially savvy children. For its 200th anniversary, Westpac is offering a $200 Bump Savings account to Australian children born in 2017. For more information visit Westpac.com.au/dearbump
Originally published as Kids miss out on dollars and sense