Have you signed your child up for KiwiSaver? Here’s why you might want to consider it?
David Boyle signed up his younger children for KiwiSaver accounts when the scheme was first set up in 2007. He knew then they wouldn’t get any regular government or employer contributions. So why sign them up? “For us, it was to get our children into the habit of saving regularly,” he says. Boyle probably knows more about financial education than most, as the former general manager of education at the Commission for Financial Capability. And he’s keen to share that with his children, now aged 24 and 22. “We set up small direct debits and showed them how a little bit over a long period of time can build up – if you don’t touch it.”
Improving financial literacy
Kendall Flutey, the co-founder of Banqer, a platform used in 800 schools to educate children about money, says education’s the easy part. Practical application, and forming those good habits and behaviours around money, is much harder. Research shows financial behaviour can form from as young as seven years old, she says. Boyle says through a KiwiSaver account, children will start learning a bit about markets, investments, and managed funds. They’ll learn how their money can go up and down, and they’ll get a better return for their money than if it was in a bank account, he says.
How much to put in?
If you want to add contributions to your younger child’s KiwiSaver account, Flutey suggests starting with NZ$10. It’s an easy amount that children can understand. Large amounts are lost on them, she says, and when it comes to education, the investment figure is irrelevant. This also means that contributing won’t break the bank balance, and you can add more when you’re able to. But you’d have to watch how much you’re paying on fees in these accounts – they could be eroding your child’s savings. A good age to sign up your child would be when they can sit beside you and learn about it, Flutey says. This is a better approach than setting them up an account at birth and then telling them about it on their 18th birthday, she says. “If they’ve gone on that journey that whole time… I think it’s far more effective.”
How under-18s sign up
First, you’ll need to contact the provider you want your child to join. If they’re under 16, you can only enrol them if all their legal guardians give consent. Also, if your child was born in a non-English speaking country and is under 16, you’ll need a translation of their birth certificate. Each parent or guardian’s ID must match the name on the birth certificate, and if the name is different, you need to show a marriage certificate, name-change paperwork, or a guardianship order. If they’re between 16 and 17, one of their legal guardians must co-sign the form.
Originally published in Juno Magazine