I was not quite a teenager when my parents had me open my first certificate of deposit.
It turned out to be an important lesson for me on delayed gratification.
I later used some of that money for a backpacking trip through Europe during my college years. And I was grateful to my parents for the lesson.
The idea of delayed gratification, of waiting for a later reward instead of enjoying something immediately, is a difficult lesson, particularly for children.
Indeed, earlier this year, Sesame Street’s Cookie Monster — known for his weakness for cookies — became the spokesman for self control with a new music video (sung as a parody to Icona Pop’s “I Love It”) called “Me Want It, But Me Wait.”
Bankrate has written before about how delayed gratification is one of the top money lessons children should master.
A CD could be one way for parents to teach children that skill, especially since most CDs are structured so that you can’t take money out of them early without incurring a penalty. In addition, how CD rates play a part in the profit that one realizes is also an important lesson.
“Using a CD to teach children personal finance skills is a win-win situation,” Ally Bank said in a news release last year. “You spend quality time together now and help them make smarter financial decisions in the future.”
Here are some other tips Ally Bank had for helping kids learn about saving:
Parents, have you ever considered getting your child to open a CD? Why or why not? Do you think your child understands them as an investment, especially the role that CD rates play?
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