By Dee Chan, Financial Advisor
We all want the best for our kids. Life throws many challenges at them as they grow up and one that is becoming more and more important is navigating the financial side of things – dealing with money in an ever-changing world.
Wireless-based technology allows children from alarmingly young ages to do everything online, usually via a mobile device. Having instant access to the world is an expectation for many youngsters nowadays. What child doesn’t know what an “app” is?
Growth in apps related to money
There are literally thousands of apps available; hundreds are money-related. It’s a popular and growing market. But with so many to choose from, which ones are good for kids, and which ones are good for parents to teach their kids?
There are several types of money apps available, and their practical use depends on your child. The proactive approach is one that the kids manage themselves to earn pocket money. Some include specific chores or jobs that can be entered in and “ticked off” as they are completed, further teaching children about the responsibility of earning their rewards. This in turn adds up their pocket money for a handout at “payday”. This type of app is for the disciplined child (and the trusting parent!).
An app alternative
A more reactive approach for parents to adopt is the automatic transfer. Once a bank account is established, pocket money is deposited each week or month and even reversed if jobs have not been completed. Supervised logging in (by an app on a mobile device as well) to review savings progress is a fantastic exercise for the child as they can learn the “ins and outs” of cash flow and compound interest. They can track their spending so they have a real-life concept of what is happening each month.
Although this may involve an initial trip to the bank branch, a single account can be established with sub accounts for each child. This keeps it simple and all with one login. It can also be combined with an app.
Children develop their own money ‘habits’ early. Their money personality shines through (spendthrift or hoarder, for example) and by understanding these and finding the right tools and resources, parents can coach children to make smart decisions that carry through to their teens and adulthood. It’s a bonus that combines their love of gadgets!
Dee Chan is an authorised representative and credit representative of AMP Financial Planning. Blueprint Planning Pty Ltd (ABN78 097 264 554), trading as Blueprint Wealth, is an Authorised Representative and Credit Representative of AMP Financial Planning Pty Limited, Australian Financial Services Licensee and Australian Credit Licensee 232 706.
This article contains information that is general in nature. It does not take into account the objectives, financial situation or needs of any particular person. You need to consider your financial situation and needs before making any decisions based on this information.
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