Are you taking cash out of your kids’ savings account?
8 Feb 2019
Aussie parents admit to withdrawing a total of $1.3 billion from accounts that have been set up for their children.
While more than 50% of Aussie parents have set up savings accounts to help their kids get ahead financially, four in 10 admit to taking money out of these accounts (a total of $1.3 billion in fact)1.
At first glance, the figures are perhaps a little gobsmacking, but the main reasons parents said they were doing this were to cover everyday expenses, like buying groceries and meeting rent and mortgage obligations2 (so, rarely to fund a visit to the pub or nail salon in other words).
We look at what else came out of the 2018 Mozo survey and what potential things parents could do as an alternative to taking from their kids’ future funds.
What are parents spending their kids’ money on?
Some of the stats revealed the following3:
- Around 50% were using kids’ savings on necessities (groceries, rent and mortgage)
- Around 40% were spending this money on unexpected costs (hospital, vet, mechanical bills)
- Around 30% were using the cash on big-ticket items (family holiday, TV, computer, new car)
- Around 20% were using the money to renovate, with 10% using it to invest.
The research indicated that while parents were thinking ahead and recognising the importance of building up a savings fund to cover things like their children’s education, first car or even home deposit, parents were struggling with the rising costs of living4.
On top of that, one in five parents wasn’t putting the money back, creating a $268 million hole in the savings set aside for kids, which emphasised savingwas a struggle for many families5.
Handy hints that may help on the money front
Here are some possible tips that may assist on the money front if you’re not across them already.
1. Create a budget
If you’re looking for somewhere to start when it comes to creating a budget, try jotting down into three categories – what money is coming in, what cash is required for bills and what might be left over for the fun stuff. This will help you identify where there may be room for movement.
2. Avoid using your credit card where you can
Sure, credit cards can be convenient, but they’re often more expensive than other forms of credit as they usually charge higher interest rates, which means you could end up potentially paying back a lot more than what you initially borrowed.
3. Write yourself a grocery list
Writing a shopping list based on what’s at home and what you plan to cook during the week means you can avoid buying more than what you need and purchasing items you can probably go without.
With food wastage leaving the average Aussie household out of pocket by anywhere from $1,0366 to over $3,5007 every year, it’s worth some thought.
3. Take public transport
Estimates show that catching public transport may be up to four times cheaper than travelling by car, and it reduces the cost of buying, maintaining and running your own vehicle8.
4. Call your providers’ competitors
Research shows a typical household could save over $1,000 on their electricity bill every year just by switching from the highest priced plan to the most competitive on the market9.
Now apply that thinking to your mobile, internet, gas, car and credit card as well, and you realise the potential savings you could make annually, simply by shopping around.
5. Roll your debts into one
Multiple debts can mean multiple fees and interest charges, which is why consolidating debts into a single loan with a lower interest rate may save you a lot of money, depending on what you owe.
6. Sell your unwanted stuff online
According to the annual Second-Hand Economy Report, commissioned by Gumtree, 89% of Aussies have around $5,000 worth of unwanted goods just lying around the home10.
7. Change your light bulbs
Energy-efficient light bulbs use about 25% to 80% less energy than traditional incandescent light bulbs and generally last three to 25 times longer11.
Not only that, energy efficient appliances across the board—fridges, washing machines, microwaves and air conditioners—can literally save households hundreds of dollars a year in running costs, with such appliances accounting for up to 33% of people’s home energy use12.
8. Take your own food and drinks
If you’ve been to the cinema or a football game recently, you’ll probably agree, this is a sure way to reduce what you fork out on snacks and beverages.
Similarly, making your own coffee, buying a reusable drink bottle and taking lunch from home each day can make a huge difference to what you spend when you’re at work.
9. Cut down on the sneaky spending
If you wore a new outfit Saturday that you insisted you bought ages ago, you’re not alone—Aussies fork out nearly $3,000 a year on purchases they hide from their other half13.
Topping the list for hidden purchases are clothing, followed by gambling, junk food and cigarettes14.
10. Look for dining out specials
If you like to go out and don’t see that changing anytime soon, the good news is there are plenty of places where you can find two-for-one offers and other cheap deals.
Apps like TheHappiestHour could give you ideas and you may even find some new venues you haven’t tried along the way.
11. Turn to fashionable friends
If you’ve got a special event coming up and want to wear something no one has seen you in before, raid your mate’s closet or go online where you can hire designer label outfits for a fraction of the cost. Accessories can also do a great job of making the old look new again.
12. Establish an emergency fund
You don’t want a busted phone or car tyre, let alone a bad landlord leaving you financially stranded, so try putting aside a little amount each week or where you can to create yourself an emergency stash of cash.
You may want to work toward having three months’ worth of your salary stashed away, but see what works for you.
13. Forget about the Joneses
The pressure to stay up-to-date with your friends (and even celebrities if you’re spending too much time on Instagram) can be a subconscious motivation behind many poor financial decisions.
Try to keep in mind the old adage—too often we buy things we don’t need with money we don’t have to impress people we don’t like.
Where to go for more insights
If you’re looking for more tips and insights for the year ahead, check out the AMP Financial Help Hub.
If you have school-aged children, you might also be eligible for school subsidies if you’re in need of financial relief, so check out our article to see what you might be able to claim.