Of course you want to raise your kids to be healthy and wise, but what about wealthy? What can you do to help your little ones grow up to join the millionaire’s club?
You’ve heard all the clichés about how to teach your children good money habits that will set them up for life, well, some of them are true. Here are some obvious (and a little more obscure) things you can do to set your offspring on the path to riches.
- Water the sponge
Yes, it’s true. Children learn what they live. They are great big sponges who absorb everything that goes on around them, even when you think they’re not looking. If you are good with money, they will pick up on your habits. If they see your successes, they will be motivated to follow in your footsteps. So get motivated to be a good money manager, if not for yourself then for the next generation.
- Open an account before they’re born
If you’re even thinking about starting a family and you have the opportunity to open a savings account with a lump sum, it’s a great way to give your children a kick start. Consider using a tax return or bonus. If you can start with a $2,000 lump sum and then save a further $60 per month, within 10 years you will be able to save around $18,000 (assuming an interest rate of 5.75%.
Today’s best savings rates are Bankwest’s Regular Saver at 6.5% and the UBank USaver at 6.01%. These rates include bonuses and conditions apply but it’s always worth chasing the best rate available.
- Start their retirement savings
Did you know children can have superannuation? Anyone under age 75 can make personal contributions to a superannuation fund, according to the AMP. Of course benefits like the superannuation guarantee and government co-contribution won’t kick in until your child is working and earning over certain thresholds but you can make contributions on their behalf. Even $20 a week from birth to retirement age is sure to make a difference.
- Involve them in financial decision making
Ask them to check prices on items in the supermarket so they understand the value of money. Talk to them about budgeting. Start a piggy bank system for special family projects such as holidays or entertainment treats.
- Make them your beneficiaries
If you want to make sure your children have as few financial hassles as possible make sure you have adequate life and income protection insurance, that your superannuation beneficiaries are up to date and that you have a current will.
- Discourage debt
This is particularly important in the teen years when they need to manage mobile phone and internet bills. Develop a savings ethos by helping them to set realistic goals and showing them how to achieve. Get them into the habit of saving 10% of their pocket money and then 10% of the wage from their casual job.