Early birds who save the worm will benefit later
1 February 2007
One of the easiest ways for young people to still realise the great Australian dream of owning a home sounds simple, but isn’t being practised as much as it should be according to the Managing Director of Credit Union Australia (CUA), Mr Graham Olrich.
Mr Olrich said despite recent news reports on how hard it will be for young people to buy a home in the future, with spiralling property prices, the key to ensuring it would be a possibility for them was to start learning sound financial practices and values as soon as they could. He called on parents to help make this happen earlier.
“It sounds simple, and is,” he said. “However, not enough young people are heeding this advice. Discretionary spending is great if you have everything else in order, but homes in the future will cost more than generations will have ever witnessed before.
“I’d like to encourage this trend to start with parents who can introduce their children to financial responsibilities so they understand the dangers of getting into debt, why it’s so hard to manage it, and why good fiscal management will help them build a brighter future for themselves.
“As a parent, I know how much people want to protect their children from the issues they’ll face growing up – often for as long as they can - but confronting financial responsibility should start as soon as they understand math.
“Today, we’re seeing more and more young people suffering financial hardship at a very young age and the key to breaking the debt cycle is education.
“The sooner a child comes to understand the basic principles of managing money the better, as the increasing availability of credit cards and the growing complexity of financial products can catch young people out easily.”
Mr Olrich said some of the key lessons to educate young people about included setting budgets, the benefits of saving and the difference between debit and credit and said there were simple exercises parents could utilise to help this learning.
“Give children pocket money to teach them the value of saving and waiting to afford items they want. Help them set a goal as to what they would like to buy and then sit down with them and work out how long it will take them to realise their goal.
“This is also a good time for them to establish their first bank accounts, learn how to open an account, witness the funds accumulating, learn about compounding interest and start to understand the difference between credit and debit and how to read a bank statement.
Mr Olrich said bank accounts for young people were simple and many offered extra benefits such as bonus interest rates, online access, no monthly fees, flexible transactions or even package deals with facilities for savings and transactions.
