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Learning about savings bonds

March 6, 2015

Here’s a great idea
A penny here, and a dollar there, placed at interest, goes on accumulating, and in this way the desired result is attained. It requires some training, perhaps, to accomplish this economy, but when once used to it, you will find there is more satisfaction in rational saving than in irrational spending.  P. T. Barnum

In other words
Saving and watching your money grow is more satisfying than irrational spending – and critical for building financial stability. This is a great lesson we can teach our children.  One way to help them learn about saving is by letting them participate in various types of savings products.  Piggy banks and savings accounts are the most common but bonds are another way to save.  Tax season provides a great opportunity to do this automatically with your tax refund. Bonds can be saved for future financial goals such as a college education.

How this applies to you
Up to $5,000 in Series I bonds can be purchased in increments of $50.  You designate the child’s name for ownership or co-ownership of the bond.  Use form 8888.  You can use part of your refund to purchase savings bonds and divide the rest among up to three bank accounts. You will receive your bonds in the mail.

Issued by the Department of the Treasury, Series I bonds are low-risk bonds that grow in value for up to 30 years. Series I bonds pay interest based on a combination of a fixed rate (currently 0.00%), which remains the same throughout the life of the savings bond, plus a semiannual inflation rate (currently .74%), which is updated each May and November. The resulting composite earnings rate for I bonds as of November 1, 2014 is 1.48%.

To find out more
Learn more about Series I Bonds from the U.S. Department of the Treasury at

See IRS Form 8888 Allocation of Refund (Including Savings Bond Purchases) at

Learn more about personal finance at  The Cooperative Extension Service has the latest research-based recommendations on money management to help improve your financial stability.

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