Smart ways to stash the cash and grow it
Whether it's a multiple of 18 for chai (life in Hebrew) or not, cash is always a welcome gift for the bar or bat mitzvah.
Parents need to teach their children smart financial habits, and the bar and bat mitzvah is a good time to think about how to create smart strategies to save and grow the gifts of cash.
Money experts say that even before they become a bar or bat mitzvah it is good to introduce a child to savings vehicles that could earn interest, such as savings bonds and certificates of deposit. Search for a compound interest calculator online and show your child how just one dollar can grow with interest over time.
Several financial institutions in our area offer plenty of youth services to teach youngsters money management skills and to help invest the bar or bat mitzvah cash.
Greater Alliance Federal Credit Union, a full service financial institution, offers youth savings and checking accounts to help youngsters, and bar and bat mitzvah young men and women, start saving their gift money with no fees or minimum balance requirement.
Money experts say that it is very important to get youngsters involved in money matters so they can become stewards of managing their money later. If they learn how to handle money at a younger age, they will be prepared to handle bigger financial decisions through the different stages of their life.
In addition to offering various financial products, the credit union hosts lunch-and-learn opportunities at various organizations and online webinars where anyone can attend to become familiar with topics such as, what is a credit score, how to budget, what to expect when applying for a student loan, and other areas that can help young adults make better financial decisions through different stages of life.
They also offer an app called Money Management where its members can set their savings goal, see how much they are spending, and also keep track of their budget.
Sheryline Ingersoll, director of marketing at Greater Alliance, said the credit union also offers private student loans for undergraduate and graduate school; students can also refinance their existing high-rate loans from other financial institutions.
While owning a first car may be a few years away from the bar or bat mitzvah boy or girl, Greater Alliance Federal Credit Union also offers a First Time Auto Buyer Program to help young adults purchase a new a car if they don't have established credit.
At Visions Federal Credit Union, with Bergen County branches in Mahwah, Westwood, Dumont, Englewood, Oakland and Saddle Brook, the young customer is valued from the very beginning of his or her life, said Ada Myteberi, a spokeswoman for the New Jersey region.
"The earlier good financial habits are built, the better," said Ms. Myteberi. "We don't teach enough budgeting and money management to our kids."
The credit union offers a program for 12 and under called The Kirby Kangaroo Club, a free savings program designed especially for kids. Kirby Kangaroo uses stories, games, and entertainment to help kids learn about saving and finances.
The club provides special incentives and benefits for children who are age 12 and younger. It includes The Kirby Kangaroo website packed with fun stuff for kids to learn with: stories, games, coloring pages, and jokes; quarterly Kirby Kangaroo newsletter; and special Kirby Kangaroo youth activities all year long. Every $5 deposit earns a gift.
Starting at age 13 at Visions, members are able to open a checking account and receive a debit card. A Flex Checking account is perfect for teens, too, with no monthly service charges or minimum balance requirements. They also offer youth lending and credit card accounts, too. These help teens learn responsible borrowing habits alongside guidance from parents and our own financial professionals.
Students age 14 to 18 attending high school can borrow between $100 and $1,000 for up to a year. A co-signer is required on amounts over $500.
Students age 14 to 17 can learn to manage a small credit limit up to $500. A co-borrower is required. Students 14 to 15 must complete a financial literacy program with their parent before approval.
Experts say that the best way to teach youngsters about how to manage money is to give them some, and now that they have it, they can save or use it. They should figure out what they want and see how they can pay for it themselves. It gives them the chance to learn about the consequences of overspending.
Teaching children delayed gratification will help combat the "buy now, pay later" mentality that could mire them in credit card debt later on. Curbing impulse buying goes hand in hand with teaching delayed gratification. Before going shopping, create a budget. Outline what you're going to buy, what stores you're going to, and the price range for each item.
These also are important lessons of becoming a Jewish young man or young woman: learning responsible money management to last a lifetime.