How can I help my daughter learn about saving by managing her First Communion cash?
Question: My daughter has just made her First Holy Communion. She has received a lot of money from friends and relatives. I would like to use this opportunity to help her develop some good habits around saving and spending. Have you any tips on how I should go about choosing a savings account for her - or any suggestions on how I could help her to manage her money? Roisin, Carlingford, Co Louth
Answer: One of the best ways to help children learn about money is to encourage them to open a savings account. Banks, credit unions and the Post Office offer kids' savings accounts. If the account has online access or a savings book, you can show your child at any time how her savings are growing.
The key to continuing the savings habit long-term is to keep it fun and keep them involved. Many financial institutions have entertaining characters and online resources which can help to make saving fun and interesting for kids.
Encourage your daughter to keep up good financial habits. Once she opens a savings account, encourage her to save some of her pocket money regularly. Encouraging her to put money aside, either as a lump sum or in a regular savings plan, helps form the saving habit.
Pocket money can help children understand what money can buy them and that, if they want to buy something big, they will have to save up for it. It is important that they understand that they will need to make these choices, and it creates opportunities to have discussions about what they plan to do with their money.
The important thing about pocket money is setting out the rules in advance - how much will they get and on what basis it is given. For example, do they have to complete chores to earn it? It is important to remain consistent with these rules as it helps children develop an understanding of the value of money.
Aine Carroll is Director of Communications and Market Insights with the CCPC (www.ccpc.ie)