Off to a great start: Saving tips & accounts for kids
Saving is the money that is not spent or deferred consumption but is put aside.
It also involves reducing expenditures, such as recurring costs.
There are many ways of saving such as a deposit account, a pension account, an investment fund, or as cash.
Account for your kid allows you to teach your kid about saving, bank charges, transactions, and interest rates. Most kids are given money daily when they go to school. Opening an account for them does not only benefits you, but it helps your kid to be able to keep some of their pocket money and save it for future purposes.
You can save money for different purposes, including buying an important asset, saving towards your children's school fees or do other personal things. You can also save by opening account for kids and the money in the kid's account will be used for kid's purposes only.
The reasons you should start saving for your kid
Every parent has a dream of seeing their kids graduating and become a professional in a better paying job. But this dream can only be successful when you start a savings plan early, even before your child begins elementary school. Which will help you reduce the burden of taking on high debt to pay for his or her higher education? Saving also helps your kids when you have died, or you no longer have the means to financially take care of your kids.
6 Money-saving tips in Australia
Before you get deeper into saving for your kids, there are savvy adjustments you can make that will save you money so that your saving goal can be successful. Adjustment including:
1. Saving on food
Food is so expensive in Australia. You should limit dining out more often, cut back on alcohol and coffee, plan your meals and shopping for in-season local food.
2. Save on electricity
Australia has the most expensive power in the world so electricity bills are financially draining. You should be extra careful when using electrical appliances, turn them off immediately when you are done using them. Unplug large appliances if you’re going away for a long time.
3. Save on transportation
Limit using your vehicle all the time when you live a city with good public transportation.
4. Save on entertainment
Most Australian communities have public events that will not cost you a penny that offers great alternatives to paid entertainment like dining out, going to the cinema or seeing a show.
5. Save on fitness
In Australia, there is no need to pay for a gym membership. You can get fit in the great outdoors.
6. Save on clothing
Avoid buying clothes all year round. Wait until there are the best deals. The end of the financial year (June) and after New Year often has those deals.
Types of saving found in Australia
According to the report made by the Melbourne Institute’s Annual Household Income and Labour Dynamics our median household income has fallen by 0.76% from 2009 to 2019. Money is proving to be tight for a wide range of Australians, so you should spend it wisely while saving for your kids.
Here are the different forms of saving:
- Saving plan; a saving plan keeps you motivated with information, advice, tips, and reminders to help you reach your savings goal.
- Saving automatically; it is the easiest and most effective way to save, and it puts extra cash out of sight and out of mind. Automatically saving means that you have a process in place to save at regular intervals, whether that’s monthly, weekly, or daily.
- Saving Account; make use of a savings account, to deposit a certain portion every time you receive a windfall, such as a work bonus, inheritance, contest winnings, or tax refund.
- Participate in a local Investment Development Account (or IDA) program; participate in an IDA program where your savings are matched. You typically receive at least $1 for every $1 you save, and sometimes much more. You could save up to $25 saved each month.
The benefits of saving for your kids
Saving for your kids results in you living a stress-free life. Without worrying about how you will provide for them in the next decade.
- Your kids will never go to bed hungry; in life, you cannot tell what will happen the next day but when you saved enough for your kids you will never worry about where their next meal will come from when you are no longer working.
- Their education is secured; most kids are struggling to further their education due to a lack of funding. Saving towards their education will guarantee them a bright future. nothing will ever prevent your kids from successful.
Things you should consider before opening kids account
A savings account helps boost your child’s financial accountability. A parent will be required to sign on as a joint account holder. The account will be accessed by both the adult and the kid. Consider a tax-advantaged college savings plan if you’re saving for college. Pay full attention to account fees, features, and rates.
Account for kids in Australia
A kid account can help manage the vast costs of raising children in Australia. Having a child is expensive. According to the Australian Institute of Family Studies shows that for low-income families it costs an estimated $170 per week per child.
A person who is under the age of 18 cannot open a savings account on their own. A parent can open the account on the kid’s behalf, and you will be required to show their birth certificate and passport. Kid’s bank accounts are known to have better interest rates.
The ATO has strict rules over children’s savings accounts to stop parents from putting money in for their gain.
- Non-excepted income (unearned income) between $416 and $1307 is taxed at 66%
- If non-excepted income (unearned income) exceeds $1,307, the total is taxed 45%
The consequences of teaching your kids how to save
Learning to save helps a kid set goals and shows how earning interest helps money grow over time. Teaching your kids to save will help them throughout their lifetime. They will be able to avoid debts and set aside money for when they need it most.
Saving tips & accounts for kids
Knowing all the important saving tips will let you live a happy life far away from loans. It will ensure that your kid's future is secured regardless of what will happen to you. An account for kids will help your kids to be financially smart.
They will know when and how to spend money.