Give the gift of a nest egg
26 Mar 2019
Spending a small fortune on Easter eggs for the grandkids again? Why not do something different this year? Ditch the usual chocolate tradition in favour of the kind of egg that could last a lifetime: a nest egg.
Easter can be a terrific opportunity to introduce your grandchildren to the joys of saving.
Often an early experience with saving will help them build the skills they need to be financially resourceful in life.
When you’re saving for something it always helps to have an end goal in mind. So start by talking to them about what they might like to save for and how much it might cost.
Starting early
Felicity Cooper, a financial planner and founder of Cooper Wealth Management, recommends making sure they have some “skin in the game” can help the saving message to sink in.
While you might give them a little financial kick-start at Easter to get the ball rolling, any further contributions to their savings goal could be connected to their own savings.
For instance, you could agree that if they manage to save up to a particular amount you will match their savings.
“One of the biggest hindrances I see is that unless children actually understand the value of money coming in, it’s hard to understand the value of money going out,” Cooper says.
“For example, they are not having to understand how many hours their parents worked to get the $140 they are spending.
“If it is all about the spending, they are only getting one side of the equation.”
The exercise is a chance to contribute to their financial education in other ways. For instance, you could show them how putting their money somewhere with a higher interest rate or leaving it for a longer period of time can help their savings to accumulate faster.
Go online
Using online savings calculators are a great tool to demonstrate the power of compound interest.
You can then help them to look for a children’s savings account with a good interest rate and not too many restrictions. The best ones will have no account-keeping fees or transaction fees and they will help educate kids on financial matters too.
Cooper says opening a savings account is a great way to get children into a very early habit of putting some of whatever money they earn or receive into savings.
You can teach them too that they have a choice to spend their pocket money or financial gifts on lots of small items. Or they can hold off and buy a bigger or longer-lasting item.
It’s also an opportunity to discuss other ways they could make a little extra money with the likes of a neighbourhood cake stall, washing cars, or mowing lawns.
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