Taking Kids to Money School

They learn the real thing - checking, savings, even credit cards

Ask the children of the Denver area: Saving money and investing can be fun.

When 100 fifth-graders from Running Creek Elementary School stomp into Young Americans Bank in mid-April, they'll set foot in "YoungAmeriTown."

Like the proverbial Main Street, USA, it has a movie theater, town hall, food store, newspaper, investment company, and other assorted shops of modern capitalism.

But it's really a classroom.

The Denver bank uses it to teach kids how to save money, run a business, take out loans, and obtain credit.

Not every town has a YoungAmeriTown, but in the 1990s, more and more financial firms are lending something valuable to children: insights into the basics of money management.

Teaching youths about saving and investing is "definitely a trend," says Patti Boerger, a spokeswoman for the American Bankers Association (ABA), in Washington.

Eager to do its part, the ABA has designated Thursday, April 2, as the second annual National Teach Children To Save Day. Last year, the event reached 125,000 children.

About time! Americans are saving less than 4 percent of disposable income, one of the lowest percentages in the industrial world. A decade ago, the US savings rate was 8 percent.

Saving and investing are two sides of the same coin.

You can't invest unless you save; but saving is not necessarily the same as investing. Money left in a low-paying savings account can earn less than the inflation rate.

So learning about stocks, bonds, and mutual funds literally pays big dividends.

But the first step for children (and adults) is learning to save.

The ABA urges parents and other caregivers to take the following steps:

* When providing an allowance, make sure part goes to savings.

* Have the child use a piggybank for savings and, when it's stuffed, open a savings account in a bank.

* Go over monthly statements and bank records with the child.

* Encourage the child to save 50 cents of every dollar earned. That 50 percent savings rate may not last, but it's a promising start.

* Track a stock - say McDonald's or Disney, for example - with the child in a newspaper.

* You, too, should save and invest. Show your child how you contribute to an individual retirement account or your employer's 401(k) plan.

Young Americans Bank has 17,000 depositors, not just from Denver but from all 50 states and a dozen nations, says spokeswoman Debbie Pierce.

It may be the only US bank entirely for children. All customers must be 21 or younger. Savings accounts can be opened with $10, checking with $50. The bank (303-321-2954) offers checking, loans, and MasterCard credit cards. Credit peaks at $100.

Other banks that reach out to children include Keybank in Ohio and Citibank in New York, the ABA says.

Another resource for teaching kids about money, on the Internet, is the "mad money room," sponsored by NBC and the nonprofit JumpStart Coalition (www.jumpstart.com).

As for investing, there's no school like experience.

One way is with mutual funds. But a child can't own the shares outright. Shares must be held in a custodial account for people under 18. Some mutual funds have low minimum investments - $100 at Franklin-Templeton (800-632-2350).

Stein Roe Young Investor Fund (800-338-2550) has a $2,500 minimum, but caters to children by investing in stocks they can understand and with mailings written at fifth-grade level.

Or, with some guidance, children can buy stocks. But brokerage commissions can seems quite steep, at $30 or so. Especially if you're only buying a share or two. Internet brokers such as E*Trade (800-786-2575) offer lower commissions.

And who knows? Any money earned may come in handy when your child hits college.

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