Educating Your Children on Saving*
In this age of credit cards, auto loans, and mortgage payments, children need to learn how to be financially responsible. Those who acquire the saving habit early tend to be more financially secure later in life. Educating your children on saving is important.
*Courtesy of the State
Preschool: Introduce saving to your young children--not with money--but in terms of collecting. Young children are natural savers. Encourage them to make collections of stickers, rocks, and other objects that they can handle and count before you suggest that they set aside coins or bills.
- Elementary school: To understand the importance of saving children must learn the value of money. They need to know the coin and paper denominations and the relationships among them. Have your children use catalogs and newspapers to select objects that they would like to own and then have them use play or real money to count out the amounts for
- Middle school: Your children are now ready to save for longer-term goals. Show them
how to handle a bank savings account. They need to learn how to fill
out deposit slips and keep a record of deposits and withdrawals.
- High school:
Introduce your children to the mysteries of compounding interest so
that they can see one way to make their savings grow. Teach them the
"Rule of 72" so that they will know how to find the number
of years it takes for their money to double. This involves taking the
number 72 and dividing it by the rate of return their money is earning.
For example, it takes 7.2 years for $1000 to double at 10 percent.