Thursday, October 2, 2008

Got Bank?

Hi!

Today I am doing my segment about Banking and Saving with your kids. I've been doing some research on it and I am shocked. In two generations, we have lost the discipline to save money. The savings rate, which is higher this year at 3%, was as low as -1% 3 years ago. With the economy as it is, these figures may finally mean more to each of us.

How did we, as adults, create a culture where we actually saved nothing one year but accrued debt? I'm not talking about Wall Street fat cats here. I am talking about us. Ordinary Americans have contributed to the credit crisis at an alarming rate....and what are we teaching our children???

I say it's time to teach them to save, and while we are at it, let's save some ourselves. What was that (not to) old rule about saving 10% of your income? I say it's time to start doing that again and even more, it's time to teach our children to do the same.

PreK - 2nd grade: a piggy bank is a perfect way to start saving with your youngster. Once a month, count the money in the piggy bank with your child and take 10% of it to the bank to put into a savings account with your child's name on it.

3rd grade to 7th grade: Bank and budget with your tween. Encourage your child to put away half of all money earned from allowance and half of all money given as a gift. At the end of the month, ask your child to put 10% of their total income for the month into savings. Next, put 15% of their total income for the month into a college savings plan and finally introduce budgeting to your child by requiring them to pay for extras at school from the remaining 25% of their monthly income. http://www.collegesavings.org/

8th grade to 12th grade: Bank, budget and work. Your child will be ready for more responsibility now and can earn more by doing more chores around the house and getting a job outside of the home. It is really important to have your eyes on college and the expenses at this point. If your child has already been saving along side with you for college, it is an easy conversation - how much do you and your child need to add to savings before graduation? Work it out, set a budget and stick to it.

If you and your child are saving together for college, then higher education does not become a goal, it becomes an assumption.

Think about it, find a coffee can and make a piggy bank. It's better than teaching your children how to structure a bailout plan....

:) Amy

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