savings bonds, almp, unclaimed estates, treasury direct, fraser and fraser Teach your child to think about starting savings in different "layers," or categories. As adults, we have emergency savings for unexpected expenses, savings for short-term goals such as vacations, long-term savings for things like a down payment on a house and retirement savings.
Sometimes in gift giving, it seems the only option is opening our wallets and giving cash. If your child received gifts of money during the holidays, it is a great opportunity to him the importance of saving and other basic money management skills.
A child can learn to create different categories of savings by having more than one piggy bank (or other container such as a margarine tub). Label the containers "savings," "spending" and "giving."
For a child, the first type of savings should be for longer-term goals such as buying a car or paying for college. This container should be periodically emptied and deposited into an account at a financial institution. Another advantage of doing this is that your child will become comfortable dealing with a financial institution, which is key to building wealth as an adult.
The second layer of savings is for spending. An important lesson for every child is realizing that saving is a way to get something they want -- instead of just hoping that someone will give it to them. Help your child pick a savings goal -- they will likely have something in mind. It might be a game, toy, clothing or favorite activity. Help your child understand how many coins or dollars it will take to have enough money saved to make the purchase. When your child saves the money, praise her for having the patience to reach her goal.
The third category of savings is for giving to others. Maybe Grandma's birthday is coming soon. Or, you could encourage your child to contribute money to their church or a charity.
If you are the person giving a child a gift of money, you have different options. For example, U.S. Savings Bonds are great for long-term goals. You can buy bonds at financial institutions and receive them within three weeks, so plan ahead. Or you can go to the Web site at www.savingsbonds.gov to print out a gift certificate that you can present to the child, letting them know the bond will arrive by mail within a few weeks.