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.
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Allen Taylor
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What’s really cool is Felix’s Corollary and the Millionaires Estimation. Using the Rule of 72, to become a millionaire, you have to set aside $500,000 and wait for it to double. Who has $500,000?
Using Felix’s Corollary, you can set aside $1905 per year for 36 years at 12%, and you’ll be a millionaire. A much more realistic plan for kids!
See http://www.statemaster.com/encyclopedia/Rule-of-72#Felix.27s_Corollary_to_the_Rule_of_72
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.
+1
It is so important to teach youngster about investing and creativity from an early age. I was lucky as I was ‘forced’ to help in my fathers business from a young age, which gave me a valuable insight into working life. I now try and encourage my 9 year old neice to start saving and thinking of creative ways to make money so that she can have the laptop she desires. Nothing like earning soemthing from your hard work!
what an absolutely excellent article. I have never heard of rule 72, but it makes perfect sense. I am just about to invest some money for my neice who is aged 2. I’ve been trying to decide on the return I would like to get and stumbled on your article by pure chance but this gives much more structure to my investment decision, so thank you.
It is so important to teach youngster about investing and creativity from an early age. By teaching them money smarts early on, these things will become habits for them.
I was ‘forced’ to help in my fathers business from a young age, which gave me a valuable insight into working life. I would like to get and stumbled on your article by pure chance but this gives much more structure to my investment decision. Thank you for your article that you post.
I’ve been trying to decide on the return I would like to get and stumbled on your article by pure chance but this gives much more structure to my investment decision. It is so important to teach youngster about investing and creativity from an early age.
Nice post.
If you invest on your child now that is young, you will get real results when he is an adult.
cursus time management
It is so important to teach youngster about investing and creativity from an early age. I would like to get and stumbled on your article by pure chance but this gives much more structure to my investment decision. Thank you.
What a mind-expanding rule! Really simple and easy to remember. How have I got to 26 without hearing that before?!
I agree with Christie – teaching kids about money in general or even just getting them thinking about it from as young as possible is a really good idea. I lacked fiscal teaching from my parents and I think it really held me back until my early twenties.
These tips are really great for kids and useful too. Thanks for sharing.
Thank you for another essential article. Where else could anyone get that kind of information in such a complete way of writing? I have a presentation incoming week, and I am on the lookout for such information..
These are great tips for children and adults alike. Tanks por chering
Now all you need is a 10% annual return! It can be done, but not in a bank. There’s a broad range of investment alternatives to choose from. The average annual return of a stock in the 20th century was 6.7%, including dividends.
I wish they would teach this more in depth earlier on in a kid’s education. The only substantial information I received in school when it comes down to handling your money was done in Economics during my senior year in high school. By then, most kids already have a savings account and debit card at some bank.
It is a smart decision when parents choose to teach their kids the value of money at an early age. In this manner, the kids are able to grasp and comprehend the idea early on, thus allowing them more time to practice and live with the concept … getting everything perfect by the time they get to the age when they are finally allowed to handle their own money.
It is so important to teach youngster about investing and creativity from an early age. I would like to get and stumbled on your article by pure chance but this gives much more structure to my investment decision.
I wish they would teach this more in depth earlier on in a kid’s education. The only substantial information I received in school when it comes down to handling your money was done in Economics during my senior year in high school.
My wife and I have always encouraged our kids to save money and to learn the value of it. At the earliest possible time (depending on each child’s readiness), we teach them the value of saving through a mere piggy bank. The looks in their faces are priceless when they realize that their piggy banks are getting heavier and heavier by the day. Later on, we teach them the value of earning money — by doing extra chores, working during the summer or helping out in the neighborhood. Around such a time, we also encourage them to open their own bank accounts.
This is great. It is so important to teach youngster about investing and creativity from an early age. I was lucky as I was ‘forced’ to help in my fathers business from a young age, which gave me a valuable insight into working life. I now try and encourage my 9 year old niece to start saving and thinking of creative ways to make money so that she can have the laptop she desires.
It is a smart decision when parents choose to teach their kids the value of money at an early age. Thank you for another essential article. Where else could anyone get that kind of information in such a complete way of writing.
It’s never too early to start teaching kids the concept of money, spending and saving. At a very early age, filling up a pggy bank with coins and feeling the piggy bank growing heavier and heavier can be quite fun — and enlightening — for toddlers. At a later age, showing them that they can actually buy something with what’s inside their piggy banks will teach them the importance and advantage of saving.
This is an awesome tip for kids.
This is great, I first heard about this theory in “Rich Dad Poor Dad”.
Its going to be very important to foster a hard working attitude and frugal spending and smart investing in our youth.
Thanks for your post!
My little boy probably took his first lessons on money, sabing and spending a tad too seriously. My wife and I have always been advocates of spending. Thus, each of our kids have their own savings accounts. My little boy “earns” money by abusing her sister.
Everything has to be paid for — a favor, a chore, even helping her fix her bike. Now, my wife and I are trying to shake him free of this annoying — yet lucrative! — habit!
This is an interesting post. Good one!
Helpful resource. Thanks for sharing.
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Awesome post. I liked it.
This is an interesting article and also a helpful resource.
I’ve been investing for a few years and the compounding effect has had an incredible effect on me. It’s something that I think about most days now. It’s so simple but so powerful that it just becomes part of your thinking and behaviour. I wish someone taught me this stuff when I was younger.
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