April is Youth Savings Account month and Communication Federal Credit Union is here to help you teach your children financial responsibility. But why is having a savings account at a young age important? A 2011 study from the Center for Social Development at Washington University in Saint Louis suggests that children with a savings account for college with as little as $1 in it are more likely to attend college.
In addition to a college savings, there’s many additional benefits of opening a savings account for your children.
1. Teaches financial responsibility
It’s never too early to start teaching the value of saving money. A savings account encourages kids to save the money that they get for an allowance or a gift instead of impulsively buying something they won’t use or don’t really need.
Perhaps more importantly, it gives them some control over their money and allows them to allocate funds for different expenditures.
2. Makes saving money a habit
Habits are hard to form, but if a child is raised to save their money, they are more likely to save money as they grow into adults. Teaching kids the 10% rule–saving 10% of your income–early, will help them save and put money back even when they have bills to pay.
If your child gets $50 for his or her birthday, encourage them to put $5 of it in a CFCU savings account. As an incentive, offer to match the $5 if they leave the money in the account for a certain length of time.
3. Keeps money from getting lost
When you were a kid, how many times did you lose money? Rather than you having to keep up with their money, putting it in a savings account is a secure way to keep it from getting lost.
4. Teaches the importance of staying out of debt
The average household credit card debt in the United States is more than $15,000. Debt interest cost the average U.S. household more than $6,000 a year. Having a savings account will teach kids to save for items they want and will hopefully keep them out of debt when they are older.
5. Starts a conversation
You don’t have to discuss your salary or be specific about your budget in order to have a conversation about your financial plan with your children. Instead, you can talk to them about the importance of saving and how you are saving money for retirement, their college, etc.
Opening up a savings account will help stimulate this conversation.
Youth Savings Month is the perfect time to open your kids a savings account and to teach them the importance of savings. Open your child’s first CFCU savings account before the end of April and we’ll match your deposit up to $25.