Rule 72 Tips for Kids

Rule 72 Tips for Kids – Help them Grow Their Money

The ‘Rule of 72′ was developed by Einstein, and says that investing your money at a rate of interest of 10% will allow you to double your investment every 7.2 years. Giving Rule 72 tips for kids can help them make important connections between savings and future financial wellbeing. It is also a great rule of thumb to use when helping your kids assess the value of various investment strategies, so that they can get great returns on their money.

To quote Einstein, “If people understood the Rule of 72, they would never put their money in banks!” That’s because savings accounts only pay a small percentage of interest. The rule works by the following formula: divide 72 by 10%, and you get 7.2 years – that’s how long it will take you to double your money at that interest rate. To take a bank example, the difference between investing your money at three percent, means that it will take you twenty-four years (72 divided by 3) to double your money. Over a lifetime, by applying Rule 72 tips for kids, means that if they keep doubling their money, then doubling that doubled amount, and so on, as fast as they can, it becomes readily apparent how much more wealth they can accumulate.

Rule 72 tips for kids work great when you make it a visual lesson for them. Taking a whiteboard, you can start off with an investment that pays 10% on one side, with a bank savings account on the other. Choose an amount to start with, for example $100 or $1000, and keep multiplying it. Stretching that over a lifetime will make a staggering difference to their bottom line. That is a difference they won’t soon forget!

The great thing about Rule 72 tips for kids is that the younger they start, the more doubling opportunities they will have in their lifetime. Starting a kid off at age 7, versus ages 14-15, means an additional doubling period for their money. There is literally no time like the present to get started on this!

Rule 72 tips for kids can be achieved by having your kids’ savings directed into higher-yield investment options such as bond issues and stocks. It is a good idea to get your kids’ financial portfolios diversified anyways, to teach them different investing strategies, and open their eyes up to the potential opportunity in the financial markets. They will benefit by learning the terminology, looking at different options, and knowing what they should be basing their decisions on.

Kids aren’t taught financial management in school, so it’s up to parents to provide this education to them. By teaching them money smarts early on, these things will become habits for them, and pay dividends throughout their lives. Plus, waiting until they are adults, means lost doubling periods for their money.

Rule 72 tips for kids can also be great teaching tools to impart wise spending habits. If your child has a penchant for spending their money on expensive videogames, or comics and candy, you can show them how much lost interest-earning opportunity they will be subject to, by not saving more. You don’t want to discourage their interests, or take away their fun, but rather show them how maintaining a strong balance between saving and spending can benefit them both now and in the future. You can also take the flip side of this coin, and teach your kids how much money they will have to spend to service debt, and how long it will take. Credit cards often charge much higher rats of interest, so it’s a double whammy to pay off debt and not enjoy the benefits of saving their money.

Rule 72 tips for kids will help them to become proactive investors and learn how to build their savings to provide for their own futures. It is a benchmark that they can use to ensure their money is working for them. By starting their investing activities at a very young age, your kids could double their money many times over, throughout the course of their lives. Help your kids to become financially well off and free by teaching them the Rule of 72.