How Communion money can help teach your children the value of saving
The wrongs and rights of monetising a religious event aside, the first serious cash-in-hand transactions of many young people's lives represent their baby steps into the world of finance, writes Sinead Ryan
It's their first foray into a formal church rite (that they can remember anyway) and also the first time they'll get an introduction into the money-making opportunity that donning a little white dress or smart suit and rosette can be. Yes, it's First Holy Communion season. Towards May, the celebration will turn to Confirmation and the by-now savvy kids will have their sights set on profiting from the day out.
Getting children aware of money is both a good and a bad thing. Monetising a religious event aside, whatever their haul from eager relatives, it's a good time to start a conversation about the importance of savings and how banks and money work.
The amounts involved are not insignificant. Research shows that the average child receives €455 for Communion while Confirmation can be even higher as grand-parents, relatives and neighbours shovel notes into kids' outstretched hands on their big day. The eight-year-olds may well be over-whelmed by it all, and while letting them buy a treat or memento of the day is important, encouraging them to open a savings account is a great way of letting them know this matters too.
What they'll also learn is how the tax system works, as DIRT tax is fully payable (at the rate of 41pc) on all children's accounts, as is stamp duty on ATM withdrawals (max €5 p.a.), just like for grown-ups.
When they get to the teen years, they may want to get an ATM card (not all banks offer them), or a student account, which normally carries a lower interest rate for savings, or the option of a current account instead. This may be vital for accessing credit later on when they hit college, so it's a great idea to get them started.
Children still need to abide by the legal money-laundering restrictions when opening an account. That means identification in the form of a birth cert or passport, proof of address (a letter from the school can suffice) and their PPSN. Some banks only allow children to be 'named' on the account, with the adult retaining control, while others are specifically in the child's name.
Other options include the Post Office and the Credit Union, which teaches children about borrowing in later life and the importance of a good savings history.
Here are some options for children at all ages which are worth considering.
* It's never too early to start, and even for tinies having a savings place is a great idea, whether it's a jar, or a piggy bank. Put a picture on it of what they'd like to save for and it will encourage them to search for spare change. Add an incentive by offering to pay half if they save half.
* Put up a jobs chart at home and they can pick paid tasks they want to do. Alternatively, have a money jar in the kitchen that everyone puts spare change into toward a family day out, or a meal in a favourite restaurant.
* Pay pocket money; it really helps them get a grasp of spending vs savings. If they splash it all in one go, don't top it up, but they have to save for their treats.
* Talk to your children about budgeting and family finances. It's important from the youngest age to know money has to be carefully minded.
* Most banks allow 7 - 12-year-olds open their own account (see table), often paying better interest rates than adult accounts.
* ID and parental permission will be required.
* Encourage them to put away a set amount from their pocket money and from birthday and Christmas gifts.
* Make sure they have a savings goal. While saving for its own sake is fine, it's more likely to succeed if it's for a specific purpose, like a new bicycle, or summer holidays.
* Once they hit teenage years, a current account becomes an option. This allows children to get an ATM card in some cases to withdraw cash and buy online. It's a good idea to discuss this with them, and make them aware that tipping into overdraft is a no-no and that they need to be careful of their card and never disclose their PIN to anybody. It's also a good time to discuss online safety and the dangers of giving your card details over the internet.
* All banks have great apps which can be downloaded so kids can keep an eye on their account (and so you can transfer cash to them if needed!).
* There may be freebies on offer, or incentives to encourage them to save, but it's a good idea to look at a range of banks.
* Students don't have to pay any transaction or quarterly fees on accounts while they are in full time education, so luckily, charges won't be an issue ... yet!