Stay Informed!

By Carl Rist on 09/07/2011 @ 12:15 PM

Tags: Children's Savings Accounts, Financial Empowerment, Recommended Reading

This morning, the Chicago Tribune published my letter-to-the-editor, which responded to this story on children’s savings. I’ve copied my response below, and I hope you’ll leave your thoughts by using the comments section at the bottom of this page.

"New Lessons Behind Kids' Allowances" (News, Aug. 28) is interesting fodder for parents considering how best to use allowances to teach their children about budgeting and saving.

But for the most part, this is about parents who have the luxury to consider different options.

For low-income families, such options are rarely feasible. Most don't have the money to spare for their kids' allowances and few consider the importance of saving when they are struggling to pay the rent or put enough food on the table.

Yet, in our increasingly complex financial services marketplace, teaching all children, including those from low-income households, the importance of saving is critical to helping them create a more secure financial future.

One way to teach these critical financial lessons to low-income children is to provide them with real incentives to save while they are learning about thrift. Creating Children's Saving Accounts is one proven approach.

CSAs are seeded with an initial deposit as early as birth and built by contributions from family, friends and the children themselves. The accounts are augmented by savings matches and/or other incentives, and include age-appropriate financial education. At age 18, the savings in CSAs can be used for financing higher education, starting a small business, buying a home or funding retirement.

Savings give kids the fuel they need to aim higher in life.

Among students who initially share the same aspirations for college, those with college savings accounts in their name — regardless of how much money they save — are seven times more likely to attend and stay in college than their peers without savings, according to research conducted by the Center for Social Development at Washington University in St. Louis.

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