financial education Archives - Common Trust FCU

9 Most Common Savings Accounts — Which Is Right for You?

The nostalgic clink of a full piggy bank has evolved for the digital age — and it’s time to take advantage of the various savings accounts available to modern workers and savers looking to make the most out of their hard-earned savings. But with the variety of savings accounts to choose from, it can be difficult to make a confident choice. 

What type do you need? Which is the safest? Which gives you the most access to funds? Which will pay the most in interest? These are all valid questions, especially when you’re looking to open an account today to reap the most in future savings. Let’s take a look at the 9 most common savings accounts and what they can do for your money. 

1. Savings deposit accounts are interest-bearing that allow you to withdraw money anytime for up to 6 transfers per month. This is what is considered to be a “normal” savings account.

This might be for you if: You want the simplest solution to storing money and earn interest.

2. Money Market Accounts (MMAs) are similar to normal savings accounts but allow you to withdraw money using checks and sometimes even debit cards. The deposit and balance requirements are higher than normal savings, as is the interest. 

This might be for you if: You want to save a lot of money but want access to it all.

3. High-interest savings accounts pay higher-than-average interest, or “yield” — but a high minimum balance, among other things, is required to earn that interest. 

This might be for you if: You want to save a lot of money but only need access to some of it.

4. Club savings accounts offer incentives for things like maintaining a minimum balance or reaching certain savings levels geared toward your goals.

This might be for you if: You like having a savings goal and don’t mind a slightly lower interest rate.

6. Student savings accounts are made for high school and college students and can feature lower minimum balances and more flexible terms. 

This might be for you if: You are a student who wants to save money.

7. Certificates of deposit (CDs) pay more interest than an average account but do not allow you to withdraw funds for a specified amount of time (anywhere from a month to 5 years) without penalties. 

This might be for you if: You want to put a specific amount of money aside to grow and do not need access to it.

8. College savings accounts (529 plans) are accounts used to save money for a child’s higher-education expenses. They aren’t tax deductible but won’t be taxed upon withdrawal as long as the money goes toward higher-education expenses.

This might be for you if: You want to start a savings plan for your child and don’t plan to do anything with the money other than pay for college. 

9. Individual Retirement Accounts (IRAs) are government-sponsored, tax-deferred accounts into which you can make deposits and manage investments to best grow your money between now and retirement.

This might be for you if: You want to plan for retirement by putting money aside now and allowing it to grow untouched until you reach the retirement age. 

Whether you have questions about an upcoming financial decision or just want to be more educated on the path of your money within the banking system, you need a crash course in financial education using sound information and advice. Common Trust Federal Credit Union understands your concerns and offers our Financial Education Center to help you best understand and prepare for new life milestones. Get started today!


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6 Tips for Teaching Kids About Money

Teaching kids about money might seem daunting, but it’s an essential job in order to set up children for financial success. While kids probably won’t be able to understand complex topics like interest and stocks during elementary school, providing an understanding of how money works and good money habits will provide a solid foundation as they grow up. Follow these six tips to start the money conversation early with your young ones.

Encourage savings

Having a designated spot to put money is essential in order for kids to start building their savings. Instead of using a piggy bank, set up their savings in a clear jar so they can watch their funds grow. Get them excited to save by challenging them to fill the jar all the way up to the top and offer a prize for when they reach the goal. Another incentive to get them to save is to match whatever they put into the jar. Just like with a 401K matching program, this strategy incentivizes them to put more bills and coins into their jar.

Keep track of spending

Encourage your child to write down everything that they spent their money on each day, and add up the total spending at the end of the week. This exercise helps kids to understand their spending patterns and find the areas where they are spending a lot. For example, if they find out that they spent $10 a week on candy, you can explain how much of their savings that cost them.

Explain wants vs. needs

When kids are young, it’s important to emphasize the difference between wants and needs. If they are begging you to buy a new toy, it’s the perfect time to explain the difference between the items that we want to buy and purchases that we need, such as food. In addition, demonstrate how much work goes into buying something by helping them to calculate how many weeks worth of their allowance it costs to buy that toy.

Lead by example

Just like when you’re trying to enforce any lesson with kids, it’s important to lead by example. When teaching about money management, set a good example by avoiding impulse buys. While you’re out shopping, stick to your shopping to list and try not to buy anything outside of that list. Another tactic to set a good example is to have your own savings jar and save along with your child. This demonstrates how much you value saving and encourages them to keep going. You can create a healthy competition with your kids and even decide to put all of the savings towards a new pool toy or a family vacation.

Share your experiences

As your kids grow up, nothing helps them to understand proper money management more than hearing about your personal finance successes and mistakes. Share specific stories about the times that you made good or bad financial decisions and what you would have done differently. Owning up to the where you went wrong opens your children’s eyes in ways that are more authentic than a lecture.

Give them their own account

Lastly, once they are old enough, give your kids the responsibility of their own savings account. An account is a safe spot for kids and teens to put their the money away while also accruing interest on their savings. If they open an account early, by the time they are heading into college, they’ll be able to make a big contribution to their tuition.

From now until June 1st, Common Trust FCU is offering a promotion on our youth accounts. By opening up a youth account with a $25 deposit you will be entered to win a bike or an Amazon gift card. Visit our youth account promotion page to learn more or stop by the branch to get started.

Promoting Financial Literacy in Our Community

Improving financial literacy in our community is one of our primary goals, and we believe that starts with offering extensive financial education resources for our members. To celebrate how we work to promote financial literacy in our community, we wanted to share some of the services that we are proud to offer.

Youth Accounts

Financial literacy is an essential skill that should be taught early on in life. This can be practiced by encouraging kids to save and manage their own money at a young age. We offer youth accounts for our members’ children and family for exactly that reason. This month we are offering a promotion on our youth accounts to encourage younger generations to start practicing money management. From now until June 1st, those who open a youth account will be entered to win a bike or an Amazon gift card.

Financial Education Center

Whether you’re a beginner at managing your finances or an expert, there’s always room to learn more. That’s why we offer a free financial education center for our members. On this online platform, you can find short interactive courses on topics essential to financial success, such as saving for a home and paying for college. After completing these courses, you’ll have a deeper understanding of the best ways to tackle big financial endeavors.

Financial Literacy Program at Woburn Middle School

Another service that we are proud to offer to our community is our Financial Literacy Program at Woburn’s Kennedy Middle School. With this program, representatives from the credit union teach two classes that help middle school students build a strong foundation for financial responsibility. In March we hosted the first financial literacy auction at the middle school where students were able to take profits from their school business and bid on auction items. You can learn more about CTFCU’s Financial Literacy Auction in our blog post all about the event.

Woburn High School DECA Program

In addition, we’ve also had the opportunity to donate to Woburn High School’s DECA Program, an organization that prepares students for their careers through competitions, conferences and other forms of professional development. For the past two years, the credit union has donated to send students to a state-wide competition in Boston. This is a valuable program as it helps to boost students preparedness for the workforce, which in turn helps set them up for financial success.

As we grow our membership in Woburn and the surrounding communities, we look forward to expanding our financial resources to reach more individuals across new towns and cities. Stay on the lookout for more financial literacy resources and programs as the credit union continues to grow!

5 Reasons Why Financial Literacy Should be Taught from a Young Age

Despite improvements in banking technologies, many Americans are still unaware of how to manage their finances properly. In fact, only 48% of Americans were able to answer at least half of a set of financial literacy questions correctly. Even worse, less than 25% of millennials were able to answer basic financial wellness questions. So, how can adults best prepare younger generations to handle their personal finances properly and live successful lives? The answer begins with teaching financial education to young people both at home and in school. The following are just five of the reasons why teaching financial literacy is so important.

Learn how to save and budget

One of the biggest reasons why financial literacy should be taught is to best prepare them for saving and budgeting their money. Saving and budgeting are skills that are essential to being a financially successful adult and also require discipline that should be practiced from a young age.  A strong financial education allows kids and teens to know where to spend and where to save their money, as well as how to create and stick with a budget.

Avoid harmful financial mistakes

Because financial education is often unfortunately overlooked today, many early adults have to learn about their finances the hard way. When kids and teens are not taught the impact of their financial decisions, it becomes easy for them to make mistakes such as not paying credit card bills on time or overdrawing their accounts. These financial mistakes can lead to long-standing disadvantages, such as having poor credit and affects financial stability and success. Encouraging financial literacy throughout one’s young life helps to prepare them to make the right financial decisions.

Understand the implications of college loans

With the increasing cost of college, many students are relying on loans to cover the cost of tuition for their higher education. However, when high school seniors agree to loans for an expensive college, they may be unaware of what they are signing up for. Students who are not financially literate may not understand how student loans work or what their other options are. Financial education taught through classes in school and by parents helps students to fully understand how their loans work, including how interest accrues and the dangers or defaulting on loans. This education will help students to be better prepared for repaying their loans as adults.

Helps boost the economy

You don’t need to look much further than the United States’ financial crisis during the early 2000s to see how the economy was damaged by those who didn’t understand the full implications of their financial decisions. Having a solid understanding of the impact that individual financial decisions make on the economy is a critical reason why financial literacy is so important. Those who are taught about finances as they grow up will be better prepared to make decisions that will promote a healthy economy. Financial literacy also provides the knowledge that individuals need to navigate finances during times of emergency.

Encourages giving

Lastly, teaching young individuals about financial literacy goes hand in hand with teaching them about giving. By teaching the value of money, and how to spending wisely, it sets up more opportunities for young people to give back to those in need. After a strong financial education, they will be better suited to invest back into their communities.

As you can see, financial literacy is an essential skill that should be taught throughout one’s life, rather than only during adulthood. The month of April is both Credit Union Youth Month and Financial Literacy Month which seeks to promote the importance of financial literacy in young people. CTFCU is committed to building financial literacy in kids and teens, and that’s why we are offering a promotion on our youth accounts. From now until June 1st, open a youth account and you will be entered to win a bike or a $100 Amazon gift card! Visit our promotions page or stop by our office to learn more.

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