The Importance of Saving
by Rick Roman
In 1944, Americans saved over 25% of their income. This decreased to 10% in the 1970ís and to 1-2% by the 2000ís. We are a generation of SPENDERS and our kids are poised to surpass us in this bad habit if we as parents donít take action!
Here are three steps to get you started:
- Allowance Magic is a great way to help our kids get in the habit of saving a portion of everything they get.
- The next step is to teach them how to put their money to work. Itís not good enough to have money sitting in a piggy bank or a zero interest account. They need to learn about interest and the importance of compounding. It may sound basic but it is important to teach them how to shop around for the best interest rate. Even adults need help here. How many adults accept their local bankís 0.2% interest rate when a quick comparison on Bankrate.com shows many online banks paying 6x more?
- Finally, it is critical that they start to understand the tradeoffs between the rate offered with the level of risk.
All this sets the stage for expanding their knowledge into other investments vehicles like stocks which is covered in my article on investing.
About Rick Roman
Rick Roman has a B.S. Degree in Finance from Arizona State University and over 25 years of corporate finance experience in the high tech industry. In 2002, he founded
to make it easy to give a share of stock as a gift and authored the
Iím A Shareholder KIT
to teach kids/teens about money and stock.