America Saves Week starts Sunday! Are you looking for a way to kickstart your youngster’s savings habit?
“Let’s open a savings account for the kiddo!” you say. Not so fast.
To quote David Owen, author of The First National Bank of Dad:
To a kid, a savings account is just a black hole that swallows birthday checks.
He explains further:
Most efforts by most parents to teach most kids about money are doomed from the start. Those efforts usually begin (and often end) with the opening of savings accounts. The parents suddenly decide that the time has come to impose order on their children’s chaotic financial affairs, so they march the kids down to the bank and sign them up for passbooks. The children are intrigued at first by the notion that a bank will pay them for doing nothing, but their enthusiasm fades when they realize that the interest rate is minuscule and, furthermore, that their parents don’t intend to give them access to their principal.
Fortunately, there’s a new alternative — one that holds your child’s enthusiasm, instills good savings habits, and involves no marching anywhere. It’s a virtual savings account at your very own online Bank of Mom/Dad. It’s a bank where you, the parent, are the bank manager. You make the rules. That means you can set the interest rate and the compounding frequency to something that is compelling to your kid — not minuscule and yawn-inducing.
It’s a bank where your kids have their own access. They can:
- sign into their own accounts,
- set their own savings goals,
- make their own savings plans,
- monitor their own progress.
No more black hole that swallows birthday checks!
Here’s how you can get going right now (click images to enlarge screen shots):
Follow the guided instructions in our pop-up bubbles to create one or more virtual accounts. Decide what kinds of special incentives you’d like to give your little saver. Perhaps an aggressive interest rate or a matching contribution at certain intervals.
Once your child has saved enough to achieve the goal, you can either hand over the funds or make the purchase on her behalf. Then debit the appropriate account to record the purchase.
That’s all there is to it! Get started now!