|Message from the President
A Tailor-Made Education: Home School
Teaching Children The Importance of Saving
The Flag Goes By
||Teaching Children The Importance of
Traditionally, children store
all their savings in a piggy bank, shaking out money as they need it. However, you can use
a piggy bank to teach your child the importance and value of saving money.
Instead of having a single piggy bank, try setting up four piggy
banks. For example, the banks could be jars, ranging in size from a jam jar, a mason jar,
a quart jar and a gallon jar. They should be different sizes because each jar serves a
|The smallest jar
would be similarly to an ATM: money can be withdrawn at any time. Children can use this
petty cash to buy an after school snack, a magazine or any small item that they want.
There would be no set amount for this jar; the child can remove or add money at will.
The second jar would serve as a short-term saving fund:
money for a new baseball glove or a new outfit for school. The money saved in this jar
would be redeemed in a few months, so the savings amount could be set at twenty-five or
The third jar would be a long-term saving fund:
money for a new bike, a laptop computer or something similar. The money saved in this jar
would be redeemed in a few years. The amount of money set for this would be at least a
hundred dollars, and could range for up to a thousand dollars.
The last jar would be a planning fund: a new car or
tuition for college. There would be no amount of money set for this jar: car costs vary
widely, as do college costs. This jar would emphasize the large cost of these items and
the importance of long term goals.
It may seem somewhat ridiculous to ask a seven-year-old to start planning
for something so far off in the future, but it may prove to be a wise investment. Annual
tuition for public schools currently cost around $10,000, and private schools cost more
than twice as much. According to the federal reserve, the average amount financed on a new
car loan was over $18,000.
However, there is one caveat to this savings plan: if your child
decides to save towards a college education, you will want to carefully examine where that
money will go. If your child seeks financial aid for college, current financial aid
formulas ask the student to contribute up to thirty-five percent of their income, whereas
the parent is asked to contribute only five or six percent. If you and your child decide
to take the jars to a bank and set up separate accounts, it may be to your advantage to
set up the account in your name rather than your childs.