Thursday, August 29, 2013

Double Your Money in 7200 Years

In a recent discussion with another parent, a comment came up that it is hard to get kids to save money when interest rates are so low. Indeed, many bank savings accounts pay as little as 0.01% interest. It is no wonder that parents would forgo opening a savings account for their children.

In my post The Rule of 72, I quoted a formula for how long it takes for savings to double:

Years to double = 72 / Interest Rate

In this case, if you were to deposit your money in the bank at an interest rate (APY) of 0.01%, it would take 7200 years to double in value! Again, this is not very compelling for the average saver.

I mentioned that when I was a kid, I had a Squirrels Club account. But, I have not found the same thing in our area. I did, however, find that Union Bank offers something called a Kidz Savings account. The main perk of this account is that it offers kids a gift card for every 10 deposits that they make. This is certainly a better incentive than the interest rate.

Has anybody else found effective ways to get kids to save their money? I would love to hear your response in the comments.