BECAUSE
YOU BELONG
FINANCE
New Year’s Resolution: Teach kids the value of saving
Knowing how hard it is to get kids to pick up
their clothes, the thought of getting them to save
for retirement may give you fits of laughter. Kids
have the magic of time on their side – “tomorrow”
is a million years from now and saving is not a
high priority – especially with limited resources
and so many choices for spending those few dollars.
As tough as it is, it’s a must to teach kids the
important skill of saving. There will come a day
when they must save for a car, their first home,
and yes, retirement. More and more states are adding
a personal finance class as a high-school requirement,
but that’s only one component of a good savings
educational plan. Here are some other suggestions
for teaching your family about the world of saving.
- Show, not tell. It may sound corny, but the
best lesson you can teach is done by example.
Show your children or grandchildren that you
recognize the value and importance of saving.
Share the details of your savings plan. Kids
will see saving as a normal part of your routine
— a habit they’ll continue.
- Teach, not train. Your goal is to teach them
the value of saving, not to train them to chuck
pennies into a jar. The difference is a commitment
to saving as a lifestyle, instead of a grudging
acknowledgement of your request. Skip the nagging
and instead show how interesting it is to see
your money add up, to watch a small sum grow
into a larger amount on its own. That’s a lesson
that will last a lifetime.
- Compound, not confound. Kids need a simple
plan or they’ll lose interest – no pun intended!
Playing the stock market might be fun for a day
or two, but once the market has a downturn, kids
may no longer enjoy the lesson. Since the complexities
of the market may be too overwhelming, chose
a savings option that protects their savings
and adds interest.
The Magic of Compounding
Even kids can appreciate the growth that comes
from compound interest. For example, if you were
to deposit just $1 per week for 20 years earning
5 percent interest, your $1040 investment would
earn an additional $746 in interest.
Ask AAA
AAA can help you start your family on the path
to savings. AAA has partnered with Discover Bank
to offer certificates of deposit, money-market
accounts and CD IRAs, so members save more with
exclusive rates and benefits. Call 888-728-3230
or visit AAA.com/Deposits for more information.
Resources:
discoverbank.com
sec.gov/investor/pubs/roadmap/goals.htm
bankrate.com
bygpub.com/finance/InterestCalc.htm
Photo: ©istockphoto.com/Suzanne Tucker
