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Money-Saving Lesson Backfires On Kids

Tuesday, May 31, 2011 - 3:25 PM
From the ABC Affiliate KGO-TV:
A San Francisco mother wanted to teach her kids the value of saving money, so when they were very young, she took them to [Bank of America] to open their very first savings account.

Instead of learning how much your deposits grow from compounding interest, the kids learned how much the deposits can shrink due to fees.
5
Ken TuminKen Tumin5,442 posts since
Nov 29, 2009
Rep Points: 123,688
1. Tuesday, May 31, 2011 - 5:16 PM
That is so pathetically SAD! That's why I posted months ago, that I am my kids banker. 5% interest in a spreadsheet. As they deposit or withdraw, I note it in the spreadsheet. I figure 5% minimum so they can actually have something to help them grasp the concept. So many banks and credit unions offer kid accounts, but so few make it worthwhile. How hard is it to set a maximum balance to earn high interest, so kids can work there way up to a $1000.00 or something. Wouldn't the cost of that policy be cheaper than advertising STUPID LOW rates? The spreadsheet concept saves time and gas. If you have to take your kid to the bank, your paying for them to earn the interest anyway...gas isn't cheap. Neither is time. I'd rather spend time playing ball after we go over the spreadsheet together. When I was learning banking, I was earning 10% + ... maybe that helped me learn the concepts better... it was so much easier to see the advantage of saving, then...
4
MikeMike327 posts since
Feb 22, 2010
Rep Points: 875
2. Tuesday, May 31, 2011 - 11:44 PM
Many years ago when I was rather young, I was able to maintain a 5.25% Savings account at our local Great Western S&L in So. Ca.  Although I was forced to have my mom on the account as a co-owner, I was able to do transactions by myself.  I was even able to open small CD's there too--all my money not her's.

Then when I started to earn summer money, I tried to open an IRA account at World Savings and they were very concerned since I was under 18 years old, that it wasn't such a good idea.  The funds I wanted to deposit into an IRA were going to be weekly amounts something like 10-15% of my earned income at the time.  I wanted to do an add-on CD and they didn't like that either.  Had to wait until I was 18 years old, then I opened a series of small IRA CD's that ended up costing them alot to service, then World Savings didn't let that go on too long before they said no more.  I never forgot how mean they were to me and never had any more accounts with them.
 
Well, both Great Western S&L and World S&L are gone now, so who would have figured they would ultimately "fail" as a possible result of not treating kids right just because they were responsible!!

OC Steve
2
ocsteveocsteve14 posts since
Jan 17, 2010
Rep Points: 58
3. Wednesday, June 1, 2011 - 7:14 AM
Not to defend the bank in any way, but didn't anybody ever look at the bank statements?  I would think that part of the lesson would be to show the kids how their money is growing (even if it is just from adding to it, not from interest).  Or, at the very least, when more money was deposited, check the balance compared to the last deposit?  I can't believe this went on for so long before it was caught.  The one kid was "faithfully depositing money" over the years, so at least that account should have been looked at those times.
4
edlisaledlisal13 posts since
Sep 8, 2010
Rep Points: 37
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