Back to School: Savings
Nobody loves to save their money! But, what if we told you that it is the secret to getting what you want? It’s important for children to understand the difference between dumping money into an abstract savings fund and saving with a purpose. When it comes to the actual act of saving, creating (and sticking to) goals is the key. Children may choose to save a regular percentage of their income or a certain amount each month. As an incentive to focus on saving, consider pledging a percentage for every dollar your child saves. This will indicate to them that there is a tangible reward for saving.
Create a Savings Goal: Help your child set a saving goal. This can be anything they want, and won’t be a college fund right away! Some might include toys, candy at the grocery store, sports equipment, clothes or other big-ticket items depending on their age. They will discover for themselves that not all goals are worth the time and effort it takes to reach them. Once they’ve set a goal, create a clear way for them to track their progress. The more visible, the better. For example, a chart in the living room that they fill in for each milestone. This will remind them of their goal and give you both the chance to celebrate progress.
Open a Savings Account: Take a trip to Points West and help your child open their first savings account. You can even ask one of our expert bankers at the financial institution to explain how interest works and why it’s wise to store your money in an account. (Spoiler alert: it’s protected and insured). Encourage your child to ask other questions about how financial institutions work. You may even choose to contribute a little to help get their fund started. But remember, the child needs to learn how important it is to regularly add money to the account. Interest won’t be enough on its own to reach their goals.
As a parent, there are more options to help your child save for the future, if that’s a goal of yours. You can open an account for them, that you control and contribute to, for as long as they are a minor. Once they turn 18, they can have control of the account. These are called Minor Accounts at Points West, and generally referred to as Custodial Accounts. Talk to your banker today to see if a Minor Account would fit your needs for your child!
Join us for our next lesson: Investing!