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Youth must be taught to save responsibly
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Saving for a rainy day lost much of its appeal during the height of the credit revolution, when consumers could easily buy now and pay later.
However, in the wake of the worst economic downturn since the Great Depression, many Americans are again realizing the benefit of the age-old practice as opportunities for jobs and credit remain elusive. In the era of easy credit, saving dwindled from a high of 14.6 percent in May 1975 to a rock bottom low of 0.8 percent in April 2008, according to the U.S. Department of Commerce Bureau of Economic Analysis.
Since the real estate bubble burst, however, saving has come back in fashion. Recently, bankers across America encouraged this trend with “Teach Children to Save Day” on April 27. The national campaign, organized by the American Bankers Association, is designed to make sure the practice of saving is passed along to the next generation by helping young people develop lifelong savings habits.
Because the practice of saving was largely ignored for the past three decades, many parents might not know how to teach their children this important doctrine. If you want your children to avoid the economic upheaval that has befallen millions of Americans this year, you have to teach them the practice of saving when they are young and most capable of developing lifelong habits.
Creating a generation of savers starts with setting a good example. Children tend to emulate their parents’ personal finance habits. If you pay bills on time, consciously spend and actively save, your children likely will too.
Next, you should talk openly about money with your children. Let them know your values and experiences with money. Explain the difference between needs and wants, the value in saving and budgeting and the consequences of not doing so. Let them ask you questions and be prepared to answer.
Finally, you can help your children learn by doing. One option is to set up a chore chart and give your children an allowance for completing their tasks. To teach them the value of budgeting, you could give them four clear jars labeled  sharing, spending, short-term saving and long-term saving.
In the sharing jar, the child would deposit 10 percent of his or her allowance to give as a donation to a cause of his or her choosing such as the local food bank, church, animal shelter or environmental organization. The other 90 percent would be divided equally among the other three jars (30 percent in each) with appropriate guidelines designated for spending the money in each.
The spending jar could be used at any time for small purchases such as a baseball, toy or a CD. The short-term saving jar could be used to save up for larger purchases, such as a video game or an iPod.
Finally, the long-term saving jar could be used as seed money to start a savings account for future expenditures such as college or to buy a car. Once the money in the long-term jar starts to add up, you could open a savings account for your child. Many banks offer kids’ saving accounts with no minimum balance and no fees.
Besides providing a safe place for your child’s money, a savings account also will teach your child the benefit of compound interest. Encourage your child to go with you to the bank to make deposits regularly so they can learn the process firsthand.
These tips can make a huge impact on your child’s financial future. Teach Children to Save Day, which celebrated its 14th anniversary last month, has already reached 3.4 million youth with the help of some 80,000 banker volunteers through its annual awareness day and the Teach Children to Save Web site: The American Bankers Association hopes to reach 5 million students by the end of 2011.
Teaching children to save for a rainy day starts today. After all, there’s no time like the present to make positive changes that have a lifelong impact on your families and our communities.

Durrence is Liberty County president for The Coastal Bank in Hinesville.
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