It’s never too early to teach your children about money, and the value of saving. Although tricky – the idea of ‘putting money away to pay for something can be tough for kids to understand – with a little help, and some fun games and tools, your kids will be saving before you know it.
Best bank accounts for children in South Africa
Most banks offer specific bank accounts for children. Click on the following links to access information and application details for children’s savings accounts from various banks:
Standard Bank’s (sum)1 bank account is ideal for kids 16 years and younger: https://www.standardbank.co.za/southafrica/personal/products-and-services/bank-with-us/bank-accounts/our-accounts/(sum)1-account
FNB: https://www.fnb.co.za/invest/my-first-savings.html
ABSA: https://www.absa.co.za/personal/bank/youth-student-banking/megau-account/
Nedbank: Get a Nedbank4Me Account for kids | Nedbank
Stash for kids
Liberty has Stash for Kids which is an extension of the Stash tax-free investing app, which has been specifically developed for budding investors under the age of eighteen. The app can teach kids valuable life lessons about savings and investments, not to mention potentially providing a tidy lump sum for them when they grow up.
Parents and guardians can open an account in the name of their children, investing in their future, tax-free, by saving small amounts of money whenever they want via their stash app. The app allows parents to build a tax-free investment balance for their children from when they are born until they turn 18. With no fees, no tax and the benefit of time, your child’s investment has an opportunity to grow, providing them with the best financial foundation you can offer.
You can open one investment account per child – Each child will have a tax-free investment in their name but managed by the parents or guardian through the Stash app. Stash does not interact directly with the child and does not take any instructions from children. You, as the Guardian/Parent of the child, manage the child’s Stash for Kids investment account and are responsible for facilitating contributions into the child’s investment account on their behalf.
As a guardian, you must have an active Stash Tax Free Investment account in your name before opening a Stash for your kids. Your contributions to your own Stash tax-free Investment account are subject to your own annual and lifetime contribution limits. To learn more about Stash for kids, click on this link: https://www.liberty.co.za/stash-for-kids
How to encourage saving money
To avoid the next generation making bad financial decisions and to help them enjoy financially fit lives, children need to be taught the essentials about money. This doesn’t mean filling your child’s head with financial facts and figures, but rather offering them age-appropriate money lessons.
Good financial skills are vital to ensure we can get through life as adults without too many pitfalls. From making a savings plan to guarantee security after retirement or as a backup in case of emergency to avoid falling into a cycle of debt, a healthy understanding of the concept of money is essential and it is important to start implementing these lessons from a young age.
Here are five simple ways to teach your children about saving money:
Get a piggy bank
This form of savings is more meaningful for younger children who can’t add or count too well. Keep the savings visible: you can try the old jam jar system as a savings mechanism for both short-term and long-term savings and allow them to even draw pictures to illustrate what they are saving for – like a toy guitar or teddy bear for short-term saving and perhaps a trip to an exciting destination for long-term purposes.
Take them to a bank to open their account
This helps kids understand where their money is going and introduces them to the concept of financial institutions. In doing so, you help your child prioritise short-term and long-term savings. ABSA has an account that assists you and your kids on this path – MegaU – a bank account for 0-19-year-olds. Not only is this offering designed to give the youth control over their money, it is also the only account on the market which is truly free. This means that there is no monthly fee. There are several perks to opening this account too, like free monthly movie tickets, free data and meal discounts.
Model good spending and saving habits
As parents, you have the biggest influence on the way children save or spend. Examine your spending habits: next time you dash out to get the latest designer handbag or shoes, ask what message you are sending to your impressionable children.
Show them the money
We have to remember that children today don’t see cash and financial transactions the same way we saw them when we were growing up, so we have to consciously make sure that children understand cash as the basis for learning more about money later. When giving children an allowance or income, give the money in denominations that encourage saving. For example, if the amount is R50, give out five R10 notes and encourage that at least one be set aside for savings.
Also, talk about money in front of your children. Many people avoid this, but if you have healthy discussions about money in front of them, they are more likely to develop the right attitudes towards savings.
Teach the difference between a want and need
Talk to them about how adverts are designed to make them feel a need for the item they are selling – and how to differentiate between what they want and need. It will stand them in good stead when they are adults. Teaching your children how to save is an important step to prepare them for financial responsibility and a secure future.
