People who never learn to save money usually rely on high-interest credit cards and loans to make ends meet. You don’t your children to struggle financially throughout their lives, so teach them the importance of savings. You’ll know it’s the right time when you see these 5 signs.
Your Child Asks for an Allowance
Image via Flickr by Alan Cleaver
If your kid starts asking for an allowance, then you know you have an opportunity to teach him or her about budgeting money. Make sure your child knows that an allowance is a limited amount of money. He or she won’t get extra cash just because a cool toy comes out.
Opening a savings account will help your child understand the importance of accumulating, rather than spending, money. Instead of splurging on meaningless items, he or she will eventually learn that it makes more sense to save for bigger purchases.
Your Child Starts Receiving Money as Gifts
Maybe you and your child are ready for it, or maybe you’re not. Once people start to give your kid money for birthdays and holidays, it’s time to open a savings account. Otherwise, you’ll have a hard time explaining why it doesn’t make sense to spend those checks on a new video console.
Before you open an account, talk to several banks in your areas. You could find that some of them offer big perks to young clients. Banks often do this to attract young customers that they hope to keep for life.
It’s also great for the bank’s PR.
You Want Your Child to Contribute to Education Expenses
College certainly isn’t getting any cheaper. In fact, it’s getting more expensive by the year. If you want your child to pay for some, or all, of her education expenses, then you need to start a savings account as early as possible.
Some children might complain that they’d rather spend the money on toys or clothes. One your teen graduates from college without hefty student loans, all of those things will be forgotten.
You Want to Take Advantage of a Great Interest Rate
It’s harder to earn money with a checking or savings account than it was a few decades ago. As interest rates on loans have fallen, so have interest rates on savings accounts.
If you find a good deal, then you should take advantage of it now. Try to lock those rates in place so your child can generate income by saving money. If you’re not sure whether you can get more money by saving or investing, talk to a professional at one of the Fisher Investments US Offices. They can point you in the right direction.
Now, Just Do it Now
Some parents argue that it’s never too early to start teaching children about the importance of saving. There’s probably something to that logic. The sooner you and your child start saving, the quicker the account will grow. Your kid will thank you when it comes time to buy a car, pay for college, or put a down payment on a house.
When do you think parents should open savings accounts for their kids? What benefits do you see from choosing that time?