This discussion is of a general nature and does not constitute financial advice.
We celebrate academic excellence but the skill that will really benefit a child later in life is the ability to budget and save, says financial expert Liz Koh.
"The most important gift you can give your children is to teach them how to manage their money and how to save," she tells Susie Ferguson.
Photo: Cottonbro / Pexels
Some people go through their whole adult life unable to budget and save money, Koh says, and these are important subjects she recommends parents start talking to children about early.
The piggy bank is a good way for a small child to start learning about the idea of delayed gratification in relation to money, she says, and later their own bank account will be a "teaching tool".
The right age to open the account will depend on the child but by the age of 10 most kids are ready to open a special child's account which is supervised by a parent.
Most banks offer savings accounts designed for children that are very low on fees and set up to allow for less parental supervision as they get older, Koh says.
Rather than setting up a bank account for a child and forcing them to bank their birthday money in it, she recommends parents use it as a teaching tool for budgeting skills and the importance of saving.
Koh warns against using a child's bank account as a place to save money for their future.
Rather than siphoning money off into an account with a really low rate of interest, she recommends throwing it at your mortgage and drawing it down later.
"Avoid that trap of thinking that you have to put money in a separate pot for your child for later on. You're better off getting yourself into really good financial shape so you can help them down the track."
With interest-free student loans available, helping an adult child buy their first home is a better move than saving for their tertiary education, Koh says.
In the two years before moving out, teenagers should ideally be using their own bank account to manage their own personal finances.
"It's a really good gift to give your children before they leave home."
