Tips to get your kids saving money

Encourage your children to think about how their savings will compound over time (Getty)
Encourage your children to think about how their savings will compound over time (Getty)

It is Money Week. Here are three tips for helping your kids to become smarter about saving and the value of a dollar.

Pay you kids for doing jobs around the house. It will help teach them about the connection between hard work and material reward.

Speaking of hard work, the kids might tell you they had to do too much work for the amount you agreed to pay them. If so, they start developing another useful skill - negotiating. They can haggle with you over how much you will pay them next time.

Hopefully some kids will take this further and embark on a career as a budding entrepreneur. You have probably seen the teenagers who sell Christmas trees every December, or the children who set up a lemonade stand. Encourage this. It can be fun and rewarding.

You will want to encourage your kids to save their money. But they are going to want to spend some of it too, and that's fine.

So when they go to buy something, encourage them to shop around and compare prices to find the best deal.

You could even make them an offer. If they find the item somewhere else for less, you will pay them the difference. Even better, encourage them to put that bonus payment into a savings account or an investment fund like KiwiSaver.

Encourage your children to think about how their savings will compound over time. You can do this by opening a savings account, a KiwiSaver account or another type of investment fund.

Encourage them to think about the way the money will grow over time thanks to the power of compounding interest, or compounding investment returns.

Here is an example - if they put away $50 per month from age five for 20 years, they could withdraw a deposit from KiwiSaver for their first home of $18,000 at age 24 (assuming annual returns of 4 percent on their investment).

There is another way to get them interested in KiwiSaver. Explain that they are really buying small slices of a whole range of different companies. Give them some names they will have heard of, like Apple, Facebook, Disney, Google or The Warehouse.

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