CD Deposit, Learning To Save

By: EconomyWatch Content Team   Date: 25 February 2010

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EconomyWatch Content Team

The Economy Watch Content Team manages our thousands of reference pages on economic, industry,

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Sadly, not enough parents take the time to teach their children about finances.  When these children become teenagers and then enter adulthood, most have no appreciation for money, specifically savings.  One of the best gifts you can give your child is talking to about CD deposit investments and other savings options.  The sooner you can help your child grasp the value of saving the more successful he or she will ultimately be in life and business.

Your child does not have to become a millionaire to be successful but providing information about a CD deposit investment, explaining how this low-risk savings account can earn money is important.  When first starting out, you do not need to drill down to the details but provide your child with a good overview of what a CD deposit investment is and how it works.  This will establish natural curiosity that as the child grows older you can then provide more and more insight.

For instance, be honest with your child about a CD deposit investment, going over both rewards, as well as risks.  You can show your child how a minimum investment locked in with a reputable bank that pays high interest can yield a nice sum of money once the maturity date is reached.  On the other side, you need to show your child how taking money out early would result in a penalty or loss of interest accrued.

We also recommend that in addition to going over information specific to a CD deposit investment, you also discuss other savings options such as stocks, bonds, and standard savings account.  The benefit here is that your child can learn about a variety of different methods for saving money but you can also show your child through this exercise that without doubt, the safest and best way to make money is with a CD deposit investment.

It would even be beneficial for an older child to visit a number of banks so he or she could sit down with you to talk to a representative.  This would show your child the actual transaction involved when choosing the best CD deposit investment.  Other specifics your child should learn is that each financial institution has a minimum deposit amount that the timeframe until maturity varies depending on your ultimate goal and interest rates will be different from one place to another.

Many parents worry that exposing a child to something as serious as a CD deposit investment is too much information for him or her to digest but in truth, most kids are like sponges.  They love to learn and while they may not seem that interested at first, by making this process an adventure, you will be surprised at how quickly your child shows interest and wants to know more and more.  Before long, you will find your child asking questions about a CD deposit investment and other savings options.  In fact, you may have your child hand over his/her piggy bank, eager to get started!
 


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