The importance of saving for difficult financial times has never been more evident than it has in the last couple years. The downturn of the economy and the loss of jobs across the nation have made many families wake up and start investing their money. As a result, they have also been teaching their kids how to save money for the future.

Starting young is important when emphasizing the importance of saving money. One way to do this at a young age is to teach them how to open a certificate of deposit, or CD. Opening a CD has an advantage to investing in other accounts. A CD account is not as liquid as other accounts, meaning you cannot simply take the money out of the account whenever you want it. Instead, a CD is designed for long-term investment and saving. If you take the money out of the account before the CD matures, you will have to pay a penalty. This is a good lessons for your kids to show them how to put their money away and forget about it while it works for them.

There are CD accounts designed specifically for kids, too. These types of CD accounts offer low starting investments (some as low as $100), the option of adding more money regularly and a free savings book with shows your child how their money is growing as the days and months go by. The Young Americans Center for Financial Education is dedicated to helping young people learn the importance of saving and it offers several types of investment accounts that kids can open. The money is insured by the FDIC and it gives children the opportunity to save their money safely.

If you cannot find an account like that, you can still invest in a traditional CD account. Put the account in your name but use your child’s money as the investment. They will have a stronger emotional attachment to it so they will want to watch closely as it grows.

Teaching your kids about CDs, CD rates and other things that go along with investing will help them compete in a tough world. By starting early, you may be saving them from the turmoil and other problems that many people went through recently with the economic downturn. Don’t you think your kids deserve it?

There is often a disagreement between people who invest their money as to which is better: a certificate of deposit or a money market account. If you have come across this argument at some point or wondered yourself which one is better, here are some benefits of each to help you make your decision.

Benefits of a CD
One of the main benefits of investing in a CD is that you can calculate how much your money is going to earn for you when you make your initial investment. If you have a CD with a rate of 2 percent, you know your investment of $100,000 is going to earn you about $2,000 each year.

A certificate of deposit is also beneficial for investors who will not need their money until the CD actually matures. Many senior citizens put their savings in a CD because it will grow and they will not touch the money because they have other sources of income that they use for paying their bills and everyday expenses.

Benefits of a Money Market Account
Money markets are similar to certificates of deposit. However, the main benefit that you get with a money market account is that you can write checks on your balance. With a money market account, money managers typically use your money to invest in other products, such as bonds, CDs, t-bills and so forth. The owner of the account then gets the pay out from those investments.

Most banks and financial institutions offer money market accounts to customers. Making a deposit into your money market account is as easy as depositing it into your checking or savings account. One main problem that goes along with a money market account, however, is that many people do not have the discipline to just leave the money there. Since you get a checkbook with your account, it is easy and tempting to use the money in the account on a whim. As a result, it is difficult to build up funds and have your money work for you.

Both of these financial investing products have benefits that you can enjoy. However, it is up to you to decide which one is best for you, your situation and your spending discipline.

I took a bit of a summer break on charting the decline in savings and cd rates, hoping that when I returned, the trends would different. I knew it was false hope, and so it was. Savings and CD rates continued their decline, with the average savings rate dropping below 1.3% APY and the 5-year average CD rate breaking below 3% APY. Here's the run-down.

Savings Rates

Average rates dropped slightly from 1.31% APY to 1.27% APY. over the past month. The top non-promotional rate is Southern Community Bank's Ready Saver account at 1.50% APY. In May the same account yielded 2% APY. For promotional rates, Everbank remains on top with their 3-month introductory bonus rate of 2.25% APY. After the three-month period, the rate drops down to 1.26% APY for a blended one year APY of 1.51% APY. We've notw reached a point where Everbank's blended 1 year APY is now the top rate.

CD Rates

The average 1-year CD dropped from 1.55% APY to 1.52% APY. Sallie Mae Bank now offers the top rate of 1.55% APY on the 1-year with only a $1 minimum deposit.

The average 3-year CD rate was actually pretty stable over the past four weeks moving down just one basis point from 2.37% to 2.36% APY. The top spot continues to be occupied by USAA Federal Savings Bank, which offers a 2.56% APY CD with a minimum deposit of $175,000 (down from 2.65% APY last month). The next highest rate is New Dominion Direct at 2.50% APY and a $3,000 minimum deposit.

The average 5-year CD rate dropped from 3.07% to 2.93% APY. The average has now dropped below 3% APY.

USAA continues to have the top rate at 3.31% APY. This rate has held for the past 6 weeks. The second highest rate is held by Sallie Mae Bank at 3% APY.

The spread between savings and 3-year CD rates remained steady over the past month and is currently at significatly last week and is now at 1.09, down from a high of 1.24 in March. The ratio between 1-year CDs and 5-year CDs continued to drop over the past for weeks. What does that mean? Longer term rates are no longer holding their own and are dropping at a faster rate than short-term rates. All rates are continuing to move towards 0. As we predicted last month, 5-year CD rates are moving below 3% APY.

A lackluster economy and continued discussion of deflation means that there is no end in site for low-rate-itis. Expect deposit account rates to continue to drift lower until we see some signal that the economy is improving and the Fed is getting ready to raise the Fed Funds rate.