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Setting kids up for success!

If you’ve got kids in your life, you may be wondering how you can set them up for success. Whether it’s your child, a younger sibling or a niece or nephew – you can play a positive role in their life, helping to educate them about money and set up them up financially for the future below.

Director and financial adviser Josh Lee has a great video on options to save for school fees you can watch below.

1. Teach kids about money

It’s important to talk to kids about money and educate them on making, spending, and saving money. 


There’s a clear lack of financial literacy in Australia and unfortunately the school curriculum, while touching on finances, does not invest nearly enough time into the subject.


So how can we talk to kids about money? The key is to make it fun, light-hearted, and not too serious. The best starting point is to get kids to understand that things cost money!


Moneysmart.gov.au has some great tips on how you can start to talk to kids about where money goes. You could play board games that include money like Monopoly Junior and The Game of Life.


If your kids receive pocket money, you can create a simple budget together. Or give them a piggy bank to help them visually grasp how money can accumulate when you save.


As kids get older, you can start to talk to them about more complex concepts like paying tax. The key is to keep it fun and age appropriate, for example use a pizza to explain tax when they receive their first pay.


Money should never be a one and done topic. Make sure you’re talking to kids frequently and in different ways about money. Make it something they can ask questions about so they can learn and understand.



2. Savings accounts for kids

Once kids get a bit older and start to develop an understanding of money, you can continue their journey by setting up a separate savings account in their own name.


Whether you have the means to regularly contribute to their account, or you get them to contribute a percentage of their pocket money or pay from a casual job, it can be a great way for them to start to understand how savings accounts work.


With interest rates now sitting at around 5%, they’ll be able to watch their account grow each month from their own contributions, as well the interest they receive from the bank. They’ll also be able to work towards any future purchases like a first car, university, or maybe even the start of a home deposit.



3. Investing for kids

If you want to give your kids a head start by investing on their behalf, you’ll need to consider your time frame and goals to determine the right structure.


For example, if you’d like send your kids to private school and you have 10 years to save, you may want to consider an investment bond. Investment bonds are vehicles to invest that are tax favourable. This means the entity, rather than you, pays the tax at a low rate. 


At the 10-year mark, you can take a tax-free income or transfer it to your child’s name without paying any tax. You could also set it up in your child’s name and there will be a vesting point when it will go to them, for example when they turn 18.


Alternatively, if you have a shorter time frame to save you may want to use a traditional investment or savings account. It’s important to consider your level of risk and time frame. This is where it can help to seek financial advice.


It's important to note that you need to make sure your own financial situation is sorted before you start investing for your kids. Once you’ve got the foundations in place, then you can focus on helping your kids invest. 


It will also be a balancing act as your finances change overtime. If you’re considering investing for your kids, check out these steps below:


Step one: fix your own finances first, make sure you’ve got your foundations in order.

Step two: think about your goals, time frame and risk profile.

Step three: consider how much you’re earning, how much tax you’re paying and what the right structure may be for you.

Step four: take action or better yet, seek advice from a financial adviser who can help create a personalised roadmap to achieve your family’s goals.


Our Directors Steve Sloane and Josh Lee, recently recorded an episode on Investing for Kids on our podcast The Winner's Playbook. Check it out below.


General advice disclaimer: The information contained within this post is general in nature and does not take into account your personal circumstances. Please reach out if you wish to discuss your personal situation.

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Link Wealth Group

We formed Link Wealth Group because we noticed so many financial advice practices overcomplicate the financial planning and mortgage process. It doesn’t have to be difficult! We know we can provide top-notch easy-to-follow wealth advice to Australians in a way that also empowers you to be in control of your finances and your path to financial freedom.

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