Thursday 22 March 2018

Introducing young children to the basics of saving money

Fergal O'Leary
Fergal O'Leary

Fergal O'Leary

One of my aims for this year is to teach my children about money. The problem is I have never been great with money myself, so I am not sure where to start.

My kids are old enough to get pocket money now and I want to teach them sensible money skills. At the moment, they don't really appreciate the value of money, as I pay for everything for them. I am particularly keen that they learn the importance of saving a little for a rainy day, but it is hard to explain this to kids. What is a good way to get them interested in saving?

John, Blackrock, Co Dublin

Pocket money can be a great way to start teaching children about money. It doesn't have to be much as long as you explain how much they will get and how - for example, is it earned?

A great way to help children learn about savings is to have three jars with the following labels: "Spending" - for buying something straight away; "Savings" - for a short-term saving goal such as saving for a sports jersey and "Future" -money that is put away and can't be touched until some future date (perhaps spending money for a summer holiday).

Every time your children get money, they can decide how much they would like to put into each jar. Over time, they will begin to understand how to manage money and will be ready to open their own bank accounts. Banks, credit unions and post offices offer children's accounts, which are free and can be opened with as little as €1. Once the account is opened, you can encourage your children to lodge money from their savings jars into their account each week.

Remember, you too need to be disciplined when teaching your children about savings - there's not much point in having your children save for something if you continue to pay for everything yourself.

I have been saving for over a year now to buy a new car. I will need to borrow some money as well, but want to keep my loan to a minimum.

I have been in to a few dealers and a couple have offered me finance to buy the car using a personal contract plan (PCP).

The monthly repayments with this type of arrangement are really low and I can also afford the initial deposit, but I feel there must be some catch.

Would you recommend this type of arrangement and how does it differ to a car loan from a bank?

Derek, Salthill, Co Galway

First off, talk to your bank or credit union as well as considering the finance offer at the dealership. Make sure that you are aware of all of the types of finance available to you.

With any finance agreement, it is very important to take some time to compare the total cost and the terms and conditions of each finance deal - to see which works best for you.

A PCP is a type of hire-purchase agreement so it is important to remember that the finance company is the owner of the car, and you are hiring it from them - so you will not own the car until the final payment is made under the PCP. PCPs may sometimes have relatively small monthly repayments, which can be very appealing, but they may have a larger final payment at the end of the agreement. If you are thinking about signing up to a PCP, check to see what, if any, final or "balloon" payment is needed at the end of the agreement. Always look at the total cost (deposit to be paid, interest rate and final payment) of the agreement and understand when and what payments are due.

Fergal O'Leary is director of consumer help at the Competition and Consumer Protection Commission

Email your questions to or write to 'Your Questions, The Sunday Independent Business Section, 27-32 Talbot Street, Dublin 1'.

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