Fredericksburg Parent

January 2014

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Thinking About Starting a $avings Account for Your Child? BY NIKKI DUCAS I remember carrying a pocketbook with my mom's "old" checks and pretending to write checks when my mom made purchases. I must have been 7 or 8 at the time. I still remember how frustrated I used to get when I couldn't balance "my" checkbook to the penny. To this day, I actually think these small acts of imaginative play helped me to understand checks and balances and to appreciate how savings work. Even before I knew what a savings account was, my parents taught me the importance of spending wisely, to give at church and how to earn money. My husband and I have been tracking our son's savings, from things he's sold to monetary gifts, in an Excel spreadsheet, and we have been depositing his money into our savings account. He is 4-and-a-half, and when he turns 5, we will open a children's saving account in his name at our credit union and transfer his money so he can see how his money works for him. Depositing money into a savings account is the first step toward personal finance empowerment. A simple tip for younger children is obvious—put your cash in the bank and it'll grow. Older children need to learn another valuable lesson—a bank's job is to make money from you. It's important for kids to learn early which bank accounts will allow their money to work for them. Have your children check out TD Bank WOW!Zone. It is an interactive website created to provide a fun place where children and teens can gain a better understanding of the value and worth of money. Parents can share the learning experience with their children by reading the stories and playing the games. Not every account suits everyone though, so be sure to understand this before picking one. Choose wisely depending on when your children need their money—regular savings require a minimum amount of money to be deposited each month. 32 Fredericksburg Parent and Family • January 2014 How heavy is that piggy bank? If you feel the money is too accessible—or may get lost—then it may be time to open a savings account for your child. Most banks and/or credit unions recommend opening children's saving accounts when a child is 5. Reasons to consider opening a children's savings account: • It is a great way to teach little ones to save. Parents can take a portion of their allowance and show them how to deposit it in a savings account. Parents need to explain why we save and why we may not have enough money to buy something now. This hard money lesson will help children learn to save until they have enough money to buy what they desire or, even more importantly, to save their money in case it is needed later. • It also teaches children about interest and how their money can earn more money. Compound interest is one of the greatest lessons in savings and they will take those basics with them as they make bigger decisions to invest for retirement in the stock market.

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