alt.education

On Feb 25, 7:21 pm, "stevericks" wrote:
> Bob,
>
> In trying to teach my own young son about savings, I ran into exactly some
> of the issues you present. We took him to the bank with us with a $100
> check he had received from grandparents for birthday so he could learn how
> to cash a check. Since he had decided he didn't want to spend it, he
> noticed the bank had a display about "teach your child to save" where if you
> opened a savings account they gave you a 6 pack of sodas, some mugs, and who
> knows what else. The flashy display caught my sons eye and he decided he
> wanted to open the savings account with his money, so we did. I did bother
> to ask about fees--they said they waived them for kid accounts. They also
> let him peak in the vault, safety deposit box room, etc.
>
> Occasionally I would him my pennies to roll and let him keep them. He
> would sometimes deposit those to his account when we went by the bank. I
> tried to make it an event every week or so. After about 8-9 months we
> checked the interest. 17 cents. (Oh yes, and I'm thinking, I can see me
> getting audited by the IRS for slipping up and forgetting to report this new
> account. )
>
> We promptly withdrew the funds and bought an I-Bond (paying about 5% at the
> time). Once every 6 months we look up its value and he still seems to enjoy
> seeing the government "safely store his money" and make a few dollars
> interest too.
>
> The point of the long story is that it would be very difficult in the US to
> find a bank that would open accounts for students for small sums, the
> interest would likely not accrue very fast, and the interest rate paid would
> be insignificant, even if bank fees were waived.
>
> I related an experience about learning to save I had when I was in
> elementary school in AL in another post, but will retell it again:
> In 4th grade we brought a quarter each Friday to school with us. We handed
> the teacher the quarter and she gave us a savings bond stamp (value -25
> cents) along with our U S Savings Bond stamp book. We pasted the stamp into
> our book. The idea was to teach regular savings (and likely encouragement
> at buying US Savings bonds). When your booklet was full of stamps you the
> traded it for a $25 savings bond. I should point out our community was the
> second wealthiest in the state on per capita income. Still 25 cents was
> worth something then (sodas were a dime-a nickel some places, and penny
> candy was, well, a penny.)
>
> If one wanted to teach using some type of a savings plan, it might be good
> to have a business sponsor that would be the financial contributor and
> "bank." Serving as the bank-they could also make a realistic interest rate
> without fees that would help kids learn the concepts. Asking parents to
> send money would put some kids at a disadvantage. And, most teachers would
> not want to be the intermediary between personal accounts of students and a
> real bank.
> Steve
>
> The point being,"Bob LeChevalier" wrote in message
>
> news:mb86s3po7q7b46hack2t2sc0e7bslh2kph@4ax.com...
>
> > Wide Eyed in Wonder wrote:
> >>On Feb 24, 8:37 pm, Bob LeChevalier wrote:
> >>> Wide Eyed in Wonder wrote:
>
> >>> >Also, is it possible...even POSSIBLE that I know
> >>> >"ABSOLUTELY NOTHING" about money management or saving?
>
> >>> It is quite possible that everything you THINK you know is wrong.
> >>> Your track record at being wrong is rather spectacularly successful.
>
> >>Well, I think that if you save money, you will end up with more money
> >>saved. I guess that's wrong?
>
> > You answered a question with some detail, although others have
> > indicated that they think you've avoided the issue. But I will answer
> > one question in some detail in return. You may not learn much about
> > money management or savings, but you may learn that I keep a bargain.
> > We will see if you learn from my example. (You will also please note
> > that this response to you is not my usual raft of insults. You CAN
> > get politeness from me, though it will take a bit more than one post
> > to gain my respect).
>
> > It IS in fact sometimes wrong.
>
> > Buny gave you the hint on this in another post.
>
> > Banks often have minimum balances and charge fees on bank accounts
> > which fall below that minimum balance. If your hypothetical student
> > is saving a penny a week (and not just begging it off mom, but saving
> > his OWN money), then after a month, he has 4 cents. The bank then
> > charges the $5 monthly service charge for not having a $100 or $1000
> > or whatever minimum balance, and he ends up with no money saved.
>
> > Banks also require account activity. There are sometimes charges
> > against an account which is inactive for a year or more; in some
> > states it might be as long as 5 years. If that kid stops putting
> > money in the account, because in the next grade the teacher has
> > different teaching objectives (which is usually the case), then the
> > child may no longer be putting more money in the account. At some
> > point the inactive account charges kick in, and the few cents that the
> > kid has saved disappear, and there is no money come college (not that
> > a penny a week will amount to much after a dozen years. 40 weeks a
> > year times 12 grades is $4.80, and even with compounding he may not be
> > able to afford a single meal at McDonalds.
>
> > Now it happens that my local bank has no minimum balance for kids'
> > accounts until they hit 18, at which point, it is $5 a month unless
> > they have $300 minimum. Relatively few kids start college before they
> > turn 18 (I started at 16, but I am unusual), so most kids would have
> > no money in the account upon starting college.
>
> > In the meaning, the current interest rate on a balance under $10,000
> > is 0.15%, so the kid won't even get 1 penny of interest on that $4.80
> > unless the bank is accumulating fractional cents, at which point it
> > will take 8 months with standard rounding to get a single penny in
> > interest, and another 16 months to get another penny in interest.
>
> > If the money is invested in a 529 savings plan, then there are
> > penalties for withdrawals not used for approved purposes, so the kid
> > could easily end up with less than he actually saved. If the kid does
> > NOT go to college, they may get nothing, though the parent may be able
> > to transfer the money to another beneficiary, that doesn't help the
> > kid. But at least in my bank there is no annual charge on such a plan
> > (I can't find out on line whether there is a minimum balance, though);
> > a Coverdell education account has a $20 annual fee.
>
> > Motley Fool indicates that there are some banks that do charge fees
> > that would likely eat up the kid's pennies rather quickly
> >http://www.fool.com/college/college04.htm
> > It also looks like while the kid is the beneficiary of a 529 account,
> > it is really the parents that own the account, and they get to decide
> > when money can be removed, even after the kid becomes an adult, so it
> > isn't really the kid saving money, but the parent.
>
> > Which leads me back to a question I've asked, and a few people have
> > also hinted at: How does a *kid* learn to save money by your
> > approach, as opposed to learning how to beg mom for a penny to give
> > the teacher?
>
> > It seems to me that a kid has to actually HAVE money, and have some
> > discretion as to whether to save it or spend it, before they can
> > actually learn to save.
>
> > lojbab

Thank you both (Bob and Steve) for two ON topic posts to this subject
(all I was asking from the start). I congratulate you and hope this
will continue.

Kenneth Clifton
christiansuperhero.com