One of the challenges that stood out from last weeks MoneySmart Week Challenges was the Start Early Challenge. Starting your kids on a positive financial life journey is something that isn’t taught in school and is the sole responsibility of parents. Take a second to reflect on what your personal financial journey has been to date and ask yourself would you want that for your kids.

The Start Early Challenge

What are you teaching your kids about money?

What are you teaching your kids about money?

Today is a great day to start role modelling  great money management skills to your children.  Teach them from an early age how to look after their finances. You’re kids might still be at school and/or living at home, you might think they don’t need to worry about money yet. But nothing could be further from the truth. Developing good money skills early in life will increase their options, prevent them from getting into financial trouble and help them achieve their goals sooner whether that is buying an X-Box or saving to move out of home.

Your guide to completing the Challenge

We’ve taken the steps from the Start Early SmartMoney Challenge to give you a heads up on some tactics to go through with your children.

Step 1 Write down your money goal

Step 2 Plan your income

Step 3 Separate your savings

Step 1. Write down your savings goal

It’s very easy to spend whatever money you have when you don’t have a clear goal to strive for. To create a focus for saving, write down what the goal is (e.g. to buy an X-Box before Christmas or to save enough for a nice dress for the end-of-year formal).

There are several elements to a good goal:

  • The goal
  • The cost
  • The timeframe
  • The ongoing costs

For instance:

The goal

Cost

Timeframe

Ongoings

X-Box

$200

3 months

Games between $29 and $99 each

Formal dress

$350

6 months

$60 dry cleaning

Once you know what you want, how much it will cost and when you want it by, you can work out how much you will need to save each week to be able to make your purchase.

Using the example above, saving for the X-Box will require $17 a week, over 3 months. Saving for the formal dress will need $15 a week over 6 months. Remember the ongoing costs also.

Having a clear goal will help you make choices between spending now or achieving your goal.

Step 2. Plan your income

It’s really very simple to save more. You either need to :

  1. Spend less; and/or
  2. Earn more

If you already have a regular income, consider if you could realistically spend less. To do this, it’s a good idea to keep a diary of what you actually spend your money on. Then make an informed decision about where savings might be found. ASIC’s MoneySmart has a free app called TrackMySpend which makes it easy to keep track of spending.

It’s a good idea to talk about financial goals and options on reaching it with your kids. Depending on the circumstances, there might be ways to earn some extra money. Perhaps offer to do some more work around the house to earn pocket money? Also consider charging for services to do dog walking, car washing or babysitting in the neighbourhood. Or encourage them to get a job with a local business or shop.

Step 3. Separate your savings

Whether it’s a piggy bank or a bank account, it’s a good idea to keep savings out of your wallet or purse where you can easily be tempted to spend whatever money is available.

A great idea is to find a high-interest online savings account that doesn’t have a debit card attached. This way you can put aside a set amount of money on a regular basis and earn interest on your money.

If you have any suggestions or a story to share on how you talk with your kids about financial literacy, please join us on our social platforms.

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