Aussie kids receive an estimated $1.5 billion a year in pocket money from their parents – so suddenly everyone wants to be their best friend.
For years, the CBA has produced savings schemes for kids and virtually dominated the market.
Now, other banks and a new online site is set to challenge that position – and re-ignite the argument about what kids should do with their pocket money (and should they earn it!)
Having a bank account is where kids learn about money management and start on the road to financial literacy. Yet one in four Australian kids is without a bank account.
This is according to Westpac, which commissioned research showing that while 70 percent of children are given a savings account before the age of four, as many as 24 percent of the under 12s never have an account.
This is despite the fact that nine out of ten parents and grandparents, along with just about everybody else, overwhelmingly believe that having a savings account is a good thing and can teach children important financial lessons.
The Westpac research claims that children of parents who are savers, regardless of their income level, tend to be upwardly mobile.
78 percent of parents Westpac interviewed said it is more important for today’s children to be active savers than it was in their own childhoods. Housing affordability probably has a lot to do with this.
It’s no coincidence that Westpac has commissioned this report because it has launched its “Bump” initiative, where the bank is offering $200 to seed a savings account for kids born this year.
The bank is challenging the long held dominance of the CBA, which has around 330,000 school kids in its CBA Dollarmites savings accounts.
Fintech start-up Pennybox also wants a slice of the kids market with its new app, which aims to teach them about financial literacy as they save.
The app allows parents and kids to propose chores and tasks and be paid in pocket money, in cash.
All this is tracked on a multi-account system on a phone, accessible with a PIN number.
There is an educational component, with all transactions linking back to a financially based syllabus.
I wonder if there is anything on the syllabus about the dangers of buying smashed avocado on toast, and how spending money on that will set you back in saving for a property?
In the meantime, here is a list a good kiddy savings accounts to get the ball rolling:
|Account||Description||Standard variable rate||Bonus rate||Total maximum rate||Maximum age allowed|
|Bankwest Kids’ Bonus Saver||Ongoing, variable 4.75% when linked to a Bankwest Children’s Savings Account and deposits of $25 -$250 are made each month||0.01% p.a.||4.74% p.a.||4.75% p.a.||15 years|
|Bankwest Children’s Savings Accounts||Ongoing, variable 2.50% p.a. when you link to Kids’ Bonus Saver from Bankwest. Available on balance $20,000 and over
|2.5% p.a.||n/a||2.5% p.a.||15 years|
|BCU Scoot’s Super Saver||Ongoing, variable 3.50% p.a. when you deposit $20+ each month and make no more than $5 in withdrawals within the same month. Available on the entire balance.||0.75% p.a.||2.75% p.a.||3.5% p.a.||13 years|
|Commonwealth Bank Youthsaver Account||Ongoing, variable 2.30% p.a. when you make at least one deposit with no withdrawals each month. Available on the entire balance.||0.01% p.a.||2.29% p.a.||2.3% p.a.||18 years|
|People’s Choice Young Saver Account||Ongoing, variable 2.55% p.a. when you deposit $5+ each month and make no withdrawals within the calendar month. Available on the entire balance.||1.45% p.a.||1.1% p.a.||2.55% p.a.||18 years|
|Suncorp Kids Savings Account||Ongoing, variable 2.75% p.a. when you deposit $20+ and make only one withdrawal each month. Available on the entire balance.||1.5% p.a.||1.25% p.a.||2.75% p.a.||18 years|
|Westpac Reward Saver – Under 12||Ongoing, variable 1.85% p.a. when a deposit of any amount and no withdrawals are made each month. Available on the entire balance.||0.01% p.a.||1.74% p.a.||1.75% p.a.||12 years|
|Bendigo Bank PiggySaver Account||Ongoing, variable 1.25% p.a. Available on the entire balance. Designed for kids under 12.||1.25% p.a.||n/a||1.25% p.a.||12 years|