Long Term Savings Accounts for Kids
Remember the evil and lazy servant in Matthew 25:14-28? When the master came back from his journey he saw that his money had not increased He was furious. In verse 27 (NIVr) he said, “Well then, you should have put my money in the bank. When I returned, I would have received it back with interest.”
The Bible tells us that while saving is a good thing, putting our money to work in an interest bearing account is even better.
Saving money is taking a small planned portion of our income and setting it aside to buy something we need want, need, or would like to donate in the future. Having a specific goal for the money we save motivates us to be consistent; it’s wise saving.
In your heart you plan your life. But the Lord decides where your steps will take you. Proverbs 16:9 (NIVr)
It’s good to make plans, but none of us know what the future holds.
While God wants us to be wise and plan, He also wants us to trust in Him for security. He is our provider. Accumulating wealth for the sake of feeling secure or simply to have more is trusting in money and not God.
The other day we talked about Give –Save –Spend and allocating percentages to each. We use the first 10% to honor to God and the second 10% going into savings.
But what does that mean for our children and how do we manage that?
The 10% that is set aside is for long term saving. As grown ups, we save for a down payment for a house, retirement, or significant investments. Kids can save for a car, college tuition, college books, and supplies, or an exchange program abroad.
Depending on their age, children too young to understand what financial obligations they may have in the future, but we’re not. As their parents, we can decide what this money will be used for. As they mature, keep the conversation going about what they are saving for and why. Once they are little older, they can weigh in the subject.
My kids were young when they started to fill their savings container with dimes. My husband and I knew they needed a better place to store their money, so we opened up a savings account for each of them. They were a long way off from buying a car or leaving for school, but they were on their way to being prepared for it.
Now older, my kids fill their ‘bucket’ with their savings, then once a month I go online and transfer the money to their savings accounts.
Things we have down to teach our kids about saving are:
- Open up a savings account with them.
- Talk to them about what this money is designated for.
- Share with them their monthly statement you receive in the mail or online for their accounts.
- Draw to their attention the amount they have contributed as well as the amount of money they earned.
- Explain to them that interest is calculated on the money that is in the account. As the amount increases, so does the interest they earn. Since it is easy to teach them how to figure out 10%, walk them through some easy calculations with this pretend interest rate to help them understand the concept.
Long-term savings accounts grow little by little over the years. It's an ongoing process.
The conversations I have with my children about it mimic that. We have them consistently, in small amounts over time. Not only does it remember what they are doing it and why. It also encourages them along the way.
This post is apart of a 31 Day Series on Kids & Money.
Yesterday's Post: Day 9 – Putting Your Kids to Work and Free Labor