By Dr Thomas Brennan
South Africans aren’t known to be great savers and investors. It’s up to us to teach our children to do better in a spend, spend, spend culture. But most parents don’t know how.
For this reason, Franc, an award-winning app that helps South Africans save, invest and learn about investments, has developed child accounts that parents can link to their own account.
It takes a few clicks to open an account and then a few seconds more to open a linked child profile (all you need is a birth certificate). To ensure that no one is tempted to access this money, it’s also possible to lock the account for a specific time.
Christmas is a good time to give a meaningful gift. Instead of yet another silly toy, give the gift of compound interest by starting to save and invest early for your kids. When their next birthday comes around, and you get queries about what to give your child, you can let grannies, uncles and friends pay a small gift into the account. They simply use the child’s reference when depositing.
The account can be funded with a stop order, once-off deposits via EFT or instant EFT or even directly from the parent’s own Franc account. Let your child see the benefits of long-term savings by opening an investment account.
Consumers are often intimidated because investment products are so complex.
Franc has minimised the complexity by narrowing the investment choices to just two funds, the Allan Gray Money Market (cash) and the Satrix 40 ETF (shares).
The Allan Gray Money Market Fund available on the app provided a return of around 5.2% over the past 12 months.
The Satrix 40 ETF has returned 10% a year on average over the past 3 years and 9.2% on average per year over the past 10 years.
Franc also offers simple educational content so you can improve your financial knowledge. For those who prefer not to use an app, it will soon be possible to invest directly from a Franc web portal.
Here are 6 key ways to teach your kids to become money savvy
- Expose them to the cost of everyday items. Involve them in the shopping list and shopping to a budget.
- Encourage the use of their pocket money to buy special items such as a particular toy.
- Introduce the concept of interest on money that is saved. Show them the benefits of consistent long-term savings by opening an investment account with Franc where you can see interest earned.
- Involve your children in planning family outings and holidays on a budget.
- Entrepreneurial discussions at the dinner table can involve men and women who are successful and what they did to achieve their success. Brainstorm creative business opportunities and how failures can help on the way to success.
- Role model the behaviour you would like to them to emulate such as living beneath your means, shopping for specials, saying no to credit etc
Dr Thomas Brennan is the founder and CEO of Franc
BUSINESS REPORT