08 May 10 Teaching Children Personal Finance
One of the simplest rules of thumb "teaching Personal Finance for Kids" is to give them a quick lesson in "value of money and compound interest with the" Rule of 72 ". The" Rule of 72 "is a basic way and simple to explain compound interest to your children with simple arithmetic and money (everyone wants to know how to get more money!). For convenience in the teaching of this general rule is that 72 children is a convenient choice of the counter as has many dividersthat are easy to remember: 1, 2, 3, 4, 6, 8, 9 and 12 Although today to present scientific calculators and digital spreadsheet programs, methods for finding the exact duration, is the rule to illustrate the rule with a swift mental calculation, or just a simple calculator is available useful.
In the financial world, Article 72 is a method to determine which require an investment of time. The consequences can also be used to show the growth rate of debt. Simplyspecified if the share of annual return in 72 that you say, is about how long it takes to double your money.
For example …
Take a savings account that earns 3% interest. 72 divided by 3 = 24 … Would double to about 24 years, the security deposit. In a span of 48 years, the money would double twice (holding that difficult with inflation!)
Another scenario, you can make the investment of 9%. This would mean doubling the period would last eight years and wouldDouble-six times in the same 48 years … a significant difference!
Now, how do you explain this fact with children?
My favorite way is the penny jar RAID. (You need at least 100 pence).
Start by making a son of 10 and 10 cents I always tell the child that get 9% on their savings and that you get only 3%.
Count to 8 (each number representing one year) and twice the amount of money for the child. The child remembersThey have won twice the amount of money again.
Continue to count and double-click again at 16 and 24 again. At this point, you can double their dime, once the stack. You have to have 20 cents and 80 cents. You get the point if to reinforce that accepts a lower return. Make a game of trying different returns … Make sure you have enough money!
fund doctrine to children how to understand so funny nowhelp them wiser and more informed decisions for themselves in the future.
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