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Your Money: How to help children get cash savvy

It's never too early to start learning about finance - and parents can make it fun

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Good habits: Teaching your kids to plan for the future

Good habits: Teaching your kids to plan for the future

Good habits: Teaching your kids to plan for the future

With all of this year's communions and confirmations postponed, hundreds of children will be disappointed not to get dressed up and celebrate the religious rite of passage this month.

Many will be just as upset at not filling their coffers either, with the event the most lucrative in a child's life. 

Of course in time, they'll all get there, so this week I thought I'd look at the opportunities for kids to learn about finances, especially as so many families will be on reduced incomes themselves and having serious conversations at home about money. 

Central Bank research has shown that Irish people have very poor financial literacy. We are bad at understanding and choosing products like insurance, mortgages and car finance.

We don't interrogate suppliers enough, and are very reluctant to discuss how much we earn, or perhaps how much we owe, also. 

It's never too early to start, and far from shielding our children from difficult issues, we should be discussing them openly, in an age appropriate way, using it as a way of teaching them about savings, banks and credit. Most financial institutions reserve their best interest rates for children's accounts; if they get them early, they know hardly anybody bothers to switch banks later.

They offer gimmicks, toys and fancy apps to encourage them to become customers (see panel below), and there are lots of ways even tiny children can learn financial lessons that perhaps their parents left too late.

Here are some fun ideas, especially while in lockdown, where you can start.

Under 7

- Teach your children about coins - how they add up; they can work out how many 'brown' coins equal 20c or 50c, for instance.

- Get a colourful piggy bank (even a plastic box with a lid they can paint is fine), and put any spare change into it. It's about forming a habit; the amount isn't important.

- There are some nice books on the basics of money ('My First Book Of Money', 'The Kids' Money Book', 'Time and Money', 'Megan and the Money Tree').

7 - 12 years

- This is the age to start paying regular pocket money. However, set the ground rules in advance, and, just like your employer, no bailouts if they spend it all on day one. Consider paying an amount equal to their age (an eight-year-old gets €8, for example. If you can't afford this weekly, then monthly is fine). Agree what they will now pay for themselves (eg treats), and what they will save (half is a good start). 

- Help them open up a simple account: Revolut Junior has just launched a debit card for kids with (paying) adult members which lets them have their own control, but money can be put in only by the parent. The post office allows accounts from age seven, as do many credit unions. A number of banks also allow junior accounts for deposits. 

- Set savings goals. It's not enough to just 'save up'. What is it for? When will you have saved it? Perhaps you can agree that you will pay half if they save half toward a specific item they want.

13 - 17 years

- Teenagers should have their own bank account, not least because many will start summer or part-time jobs. They will get a debit card and now is a good time to teach them about running a current account (and not running into an overdraft).

AIB, Bank of Ireland, Ulster Bank and PTSB all have fee-free banking and teen/student accounts for this age group, with downloadable apps to keep control. Only the listed parent can send money to a Revolut Junior card. Teach teenagers about data sharing and financial scams. There's no such thing as 'free' access to a site like Facebook; the cost is in pop-ups and ads. Financial expert Frank Conway, of MoneyWhizz, claims each user is valued at €250 to the site and its advertisers. It's a good time to converse about that and other social media.

- Pay teenagers a monthly instead of weekly allowance. It makes them budget better, and again, agree what they are now responsible for buying for themselves (eg clothing, phone credit, treats) and do not bail them out except in an emergency. Your employer wouldn't for you.

- Setting up a savings account (or two) alongside the current account (it's free) encourages discipline on savings whenever they get 'paid'. Savings shouldn't be something you do with spare money. Putting it away makes it harder to access. 

- It's a great time to discuss DIRT (children's accounts are not exempt), taxation and how your money is used in wider society. 

Family Finances

Talking about bills and debts is very important. You don't need to create worry with kids, but letting them know how much things cost is vital. Discuss utility bills when they arrive. Let them see what the shopping costs. Dissect receipts and add up their weekly or monthly spend.

Shortcuts: The best savings accounts on offer for youngsters

Easy access, great interest rates on savings, and welcomed with open arms. No wonder banks like small children; chances are if they get them locked in early, they’ll never move. Here’s what’s on offer.

Bank of Ireland: Young Saver account (0-12-year-olds) offers a whopping 2.5pc AER on savings up to €5,000, easily the best on the market. The Second Level current account is for students over 12, and comes with a debit card once they’re 14 and again, 2.5pc AER on savings up to €5,000.

AIB: Junior Saver is an account for 7 to 11-year-olds, offering 2.01pc AER on balances up to €1,000. The ‘Student Saver’ is for over 12s with the same good interest rate.

Ulster Bank has the uFirst Youth account for under-11s with savings earning 0.95pc AER. The UrMoney account for 12 to 17-year-olds gives the same rate, and a debit card.

Permanent TSB has the Safari Saver for under-12s, but just 0.15pc AER on savings. The Teen MyCash account is for 13 to 17-year-olds, improving to 0.5pc AER and with a debit card.

An Post: Cyril the Squirrel’s savings book is still around, stamps cost €1 each and migrate to a full account when the book is filled.

Revolut: Junior Revolut is available to kids whose parent has a Premium or Metal account, offering a debit card for ages 7 to 17.

Bear in mind DIRT is payable at 33pc on all interest earned, and while there are no transaction or account fees, Government stamp duty of 12c per ATM withdrawal (max €5) is payable also.

Irish Independent