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Never Too Young To Save Money

MG-McCullough-Chrisby Chris McCullough


What are parents supposed to do when a child sees a toy they want in the store and throws a tantrum on the spot? It’s a precarious position, not only because all eyes have turned to the parent and child, but because parents try to teach children they can’t afford to purchase everything they want.


The key words are discipline and communication. Teaching our children about money matters at an early age can go a long way to successful saving techniques as they grow and earn more money themselves.


If we can educate, motivate and empower our children to become regular savers and investors, it’s going to pay dividends when they are out on their own, making their own financial decisions.


Goal-setting is always a fundamental tactic to use when setting financial boundaries. That toy your youngster wants can be used in a goal-setting exercise. Teach the child that if they perform chores around the house they can earn the money needed to buy that toy. This goal-setting helps the child learn to become responsible for himself. After doing the chores and earning the money, the child will realize how much work went into that toy and it will mean that much more to him.


Communicating about the basics of how to save, how to make your money grow and how to spend it wisely, is also crucial. If they hear their parents talk about saving money and using their money wisely, it sticks with them through their formative years.


One small trick to use with children that helps them learn to save is providing their allowance in denominations that encourage saving. If their $5 allowance is due, give it to them in five $1 bills and encourage them to put $1 aside for savings. Communicate with them and explain that even saving $5 a week at 6 percent interest compounded quarterly would total about $266 a year, $1,503 in five years and $3,527 after 10 years. This shows them how a little saving now can grow their money significantly over time.


Remember that it’s never too early to open a savings account for your child. Signing up for a Minor Savings Account will allow them to record their deposits and withdrawals and keep track of how their money is doing.


Chris McCullough is Rabobank, N.A. Vice President and Branch Manager in Murrieta. Rabobank, N.A. has 119 retail branches in California, including Murrieta.