We opened a savings account at a local credit union for our 7-year-old daughter a few weeks ago, and we made her a deal.
She’s already required to save $1 of her $7 allowance each week. Mandatory savings have been part of her allowance since she started getting one four years ago. With the new savings account, we made a bargain that if she saves any more than $1 week, we’ll match it dollar for dollar. So if she saves $2, we’ll kick in an extra buck.
Then, each December, she’ll be allowed to withdraw half of her savings to spend. The other half has to be left alone to grow.
The cool thing is that our credit union pays a 7% return on the first $500 in a savings account. It’s a lot easier to show the value of savings when you have an actual interest payment to show, instead of the three cents a month or so she’d be earning at a regular bank.
We think our arrangement will strike the right balance between teaching delayed gratification and making savings fun. We hope the incentive will encourage her to save more, while giving her access to the funds once a year will reassure her we’re not locking away her savings forever. (Although “hands off” savings helps me sleep better at night, most kids see it as confiscating their money.)
How was saving encouraged in your family, if it was? What are you trying with your kids to make savings a habit?
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