The United States tax code has given its citizens incentives for saving for education and retirement. Section 529 provides tax incentives for saving for college, and 401(k) and 403(b) provides retirement savings benefits. These programs are well known and used by millions of Americans to plan for events that will happen later in life. But there isn't a government-sponsored method of saving for LDS missions, so we have to figure out how to best do that ourselves.
The following are ideas for mission savings that you can use to help your children save for their missions, or they may help you to save for your own mission.
1. Matching Plan. Some employers offer matching plans for their employees' retirement savings. With 401(k) programs, employers can match up to 6% of the employees' earnings and deposit this money in their retirement accounts. When you offer your children a matching plan for their missions, you give them an added incentive, and you also teach them about their future investment strategies. Depending on how old your children are and how much they could potentially earn, you could say, "For every dollar you put in your mission savings account, we'll put in a dollar, too." They'll watch their savings accounts grow faster, which will encourage them to continue working and contributing.
2. CDs. Today's historically low interest rates are great if you're buying a house, but they're not so great if you're trying to save money in a traditional savings account. Today's saving account interest rates don't keep up with inflation, so it's wise to look for another savings vehicle. Certificates of Deposit (CDs) are a good alternative because they have higher interest rates, and you can't withdraw from them until the specified time period has expired. The longer the maturity length, the better interest you'll get. And your child (or you) cannot withdraw the money until maturity, so he won't be tempted to spend it at iTunes.
3. Money Market. Money market accounts are more liquid alternatives to CDs. You'll still get a higher interest rate than you would with a regular savings account, but you can access the money just as you would with a checking account. Money market accounts are a great option for older teens who are approaching mission age and are also learning to use a checking account. Most money market accounts allow you to write checks and use debit cards.
With the new, lowered age requirements for missionaries, starting early with your mission saving has never been more important, and many families will be sending more missionaries now that girls can go at a younger age. For more LDS financial tips, download Farsighted: The Mormon Mom's Guide to Money at Amazon.
How has your family saved for missions?
