Hello,

Welcome to our November issue of the parents' MakingCents enewsletter. This edition features a host of new ideas to help you better manage your finances, including taking advantage of higher interest rates and some hints for your festive season budget. We hope you enjoy the read.

Santa has arrived early for Aussie parents, with a treasure trove of useful hints and tips on good money management now available on the MakingCents website.

The MakingCents website (www.makingcents.com.au) is helping parents navigate the money maze, with a new section entitled 'Money Topics for Parents'.

Packed with sensible information, Money Topics is designed to help parents make better use of their money. Some of the topics include; recognising and avoiding scams, how to deal with banks and other financial companies, plus ways to keep track of your cash.

You could enjoy big savings with the hints and tips on mobile phones and savvy shopping. There’s even a section on knowing your rights when you buy goods and services – great information as we head into the festive season.

For parents battling higher interest rates while still juggling the financial demands of a growing family, Money Topics is a valuable resource – certainly one well worth tapping into.

Sensible money management isn’t just good for our hip pockets. Financial pressures are consistently rated as a key cause of relationship rifts, and keeping your money under control can go a long way towards maintaining family harmony.

The kids will benefit too. The small fry learn a lot from their parents, and watching mum and dad use their money wisely can help children develop valuable financial skills that can last a lifetime.

To help parents share the advice in Money Topics, you’ll also find prompt sheets offering commonsense ideas on how to discuss money matters with the whole family.

Higher interest rates aren’t always bad news. For parents and children with some spare cash, rising rates will see your money earn more - a real incentive to save.

As interest rates start heading north, now’s the time to take advantage of better returns on deposits by kick-starting a savings regime of your own.

A good starting point in any savings plan is to take a look at your household budget and determine how much you can comfortably set aside each week. It doesn’t need to be a significant sum, the trick is to put money away on a regular basis. Over time, compounding returns will work their magic, turning modest savings into a tidy nest egg.

As a guide, let’s say you can tuck away $100 into a savings account today, then add just $20 each week. On an account paying interest of 5% annually, over six years you’ll have amassed up to $6,030. Bump up your weekly savings to $30, and over the same period your nest will grow to as much as $8,985 – a handy pool of cash to draw on for emergencies or to fund a special purpose.

Online savings accounts typically pay healthy rates of interest, but if you’re tempted to dip into your savings, think about a savings account that doesn’t offer ATM access. Better still, look for an account that pays bonus interest if you make zero withdrawals each month.

While it’s important to shop around for a decent interest rate, keep an eye out for account fees that can eat away at your nest egg. The good news is that most savings accounts for children are fee-free.

Websites like www.infochoice.com.au and www.ratecity.com.au provide a useful guide of the different interest rates and fees available with a wide variety of savings accounts.

Note: This information has been provided by Citigroup Pty Limited ABN 88 004 325 080, AFSL No. 238098 ("Citibank"). It contains general advice only and does not take into account your individual objectives, financial situation or needs. Before acting on this advice you should assess whether it is appropriate for you. Contact us at www.citibank.com.au for information about our dispute resolution process.

The festive season is just around the corner, and taking a planned approach to silly season spending will help avoid a New Year financial hang over.

A fabulous festive season doesn’t have to cost a fortune. The trick is to shop smart, looking at ways to save and maximising value to avoid a trail of budget-busting debt.

Hitting the stores
Before hitting the stores, it’s worth drawing up a Christmas spending budget, allocating a set amount for gifts plus turkey and trimmings. Get in touch with family members to discuss gift spending limits, or try a ‘Kris Kringle’, where each family member buys just one present for someone else.

Remember, gifts don’t have to be expensive to be valued by the recipient. Some prettily wrapped homemade biscuits, jams or some potted plant cuttings look great without costing a fortune.

If you’re buying new, making an early start with your Christmas shopping gives you the chance to shop around and compare prices, rather than making last minute impulse buys.

Discount variety chains tend to offer better value than specialist stores, often with a more flexible refund policy. Regardless of where you shop, hold onto receipts in case any purchases turn out to be faulty.

Cash is king
Thinking about how you’ll pay for Christmas goodies is as important as planning the purchases themselves.

Cash is king at the checkout, giving you more bargaining power to ask for a discount without the lingering legacy of high interest credit card debt.

If you have sufficient time, lay-by provides a budget-friendly opportunity to pay off expensive purchases without additional interest charges. As an added bonus, many retailers will store lay-bys until Christmas Eve, so you don’t have to worry about the kids stumbling on the stash of presents.

Using a credit card to pay for festive season purchases only makes sense if you can repay the full balance of the card before interest charges apply. That said, if you need to put purchases on the plastic, opt for a low rate card rather than store cards, which can charge interest of more than 20% annually. 

Aussie kids are a clever bunch, finding fresh ways to drum up extra spending money.

Like plenty of Aussie kids, 14-year old Patrick Fielding* receives a small amount of weekly pocket money. But when the teen set his sights on a new laptop computer, Alex realised his pay packet needed a boost. With mum in tow, he door-knocked the neighbourhood looking for work.

Patrick explains, "I was amazed at how many jobs people wanted me to do around their homes. These days I mow a couple of lawns, babysit for a few families and look after pets when their owners go away".
 
His busy work schedule sees Patrick pocket about $30 each week, and by tucking his earnings into a high-interest savings account, the teen has been able to buy that new laptop, and more recently an iPod Touch.

A dogalicious success
At age 12, Kate Welsh* is rolling in dough, making homemade dog biscuits under her brand name ‘Kate’s K9 Treats’. Kate recalls, "When I was training our dog Sweetie May, mum had some leftover cookie dough. We added a bit of beef stock and Sweetie May loved the biscuits – it really helped me train her."

When Kate shared her success during class ‘news’, the orders for her canine cookies came flooding in. Some basic biscuit mix, cellophane bags and hand drawn labels, and Kate’s business is a dogalicious success among classmates and teachers alike. Kate’s pet treats retail for around 80 cents per bag, and while she sells around ten bags each week, Kate says takings can go through the roof if she sets up shop at local fetes.

Bagging some extra cash
Bagging cow manure may not be everyone’s idea of a great business, but 11-year old Alexandra Moon* is proving that where there’s muck there’s brass. Alexandra simply visits a local cow paddock, bags her raw materials and sells it on a roadside stall for $3 per bag. Alex’s mum Michelle, says, "We’re amazed at how many people buy the cow manure. Alex sells about five bags a fortnight and she’s on track with her goal of saving for pony gear."     

Goes to show that small kids can have big ideas when it comes to making money.

* Names have been changed.

This information has been provided by Citigroup Pty Limited ABN 88 004 325 080, AFSL No. 238098 (“Citibank”). It contains general advice only and does not take into account your individual objectives, financial situation or needs. Before acting on this advice you should assess whether it is appropriate for you. Contact us at www.citibank.com.au for information about our dispute resolution process.