What Will Today's Savers Teach Their Children About CDs and Savings Accounts?
January 19, 2010
The sixth annual Wealth and Values survey from PNC bank came out recently, and it is worth a read for anyone who's interested in the savings patterns and attitudes happening today.
One interesting, potentially overlooked tidbit from the survey came from this statement: "The events surrounding the recession have prompted me to have discussions with my children about finances and money."
47 percent of respondents agreed with that statement, 23 percent disagreed, and 30 percent had no opinion either way.
The events of the last two years--most notably the near-total collapse of the U.S. banking system--should absolutely give rise to inter-generational conversations about money and finances.
Particularly for conservative investors who hold money in CDs, money market accounts, and savings accounts, there is no better time than now to transmit those values to the younger generation.
For example, with CD rates rather low at the moment, younger savers may be tempted to think that the stock market is the answer--that the stock market is the ultimate high interest savings account.
It is not. Therefore, we must teach kids about stock market crashes.
Other young people coming of age in the next few years may view the bank that holds their savings account as indestructible, invincible, an edifice that could never suddenly come crumbling down.
Banks are not that, either. Therefore, we must teach kids about FDIC insurance, why it's important and what its limits are.
In the process of having these conversations, it's very likely that both parties will learn from each other-- a great outcome for everyone.
Marc Bautis
19 January 2010 at 8:27 am
I think it is great to teach our children about not only the benefits of saving, but also on the different savings options there are. Most of the time our children only learn about personal finance skills from their parents and sometimes that means picking up bad habbits.
One organization that I am getting involved in is Junior Achievement (http://www.ja.org/) which promotes financial literacy in the classroom. Financial education is a very practical skill and it makes sense to include it in the classroom whether it is from the regular curriculum of the school or through organizations like Junior Achievement.