I am working on a book for young people to help them acclimate to life after high school. This is an excerpt from that project. If you have a son, daughter, niece, or nephew in this age group, this may be good information to pass along to them.<\/p>\n
\u2013 \u2013 \u2014 \u2013 \u2014 \u2013 \u2014 \u2013 \u2013<\/p>\n
\u00a0\u201cThe most powerful force in the universe is compound interest.\u201d<\/p>\n
\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0 \u2013 Albert Einstein<\/p>\n
Would you like to know the secret to success? In a single word, it is discipline.\u00a0<\/p>\n
Savings combined with compounded interest can make any person rich.\u00a0 The key is in discipline.\u00a0 As with any program you have to design your savings plan, determine your monthly investment, and then you have to stick with the plan.<\/p>\n
More than likely, you have heard your parents talk about how important it is to save.\u00a0 The problem with many families is that it is nothing more than talk; for a person to learn how to save effectively they must actually see savings in action and they must be able to measure the results of the saving program.<\/p>\n
For many, the idea of saving started with a twenty-five cent allowance.\u00a0 Their parents gave them quarter telling them to save a nickel from each quarter.\u00a0 The idea that parents had was to train their child to save a portion of every quarter.\u00a0 In theory, it is a fine idea.\u00a0 After a whole year collecting quarters, the child would have $13.\u00a0 Of that, if the child saved a nickel a week, they would have saved $2.60.\u00a0 Oh yes, this is without interest.<\/p>\n
To learn effectively how to save, you have to see some real results.\u00a0 You also have to understand concepts of saving \u2013 with and without interest.\u00a0 You should also get a grip on the idea of simple interest compared to compounded interest. If you are saving for the short term, simple interest is fine.\u00a0 On the other hand, if you are saving for some serious jack, you definitely want to get involved with a bank or credit union offering compounded interest savings accounts.<\/p>\n
Many people do not understand savings, savings accounts, and interest well enough.\u00a0 For example, if you save $100 a month underneath your mattress, after 12 months you have $1,200.\u00a0 After you do all that saving, if you took your money down to the bank and put it into an account with a simple interest of 3%, at the end of another 12 months, instead of $1,200 you would have $1,236.\u00a0 Thirty-six dollars is not a lot of interest, but as some have said, it is better than nothing.\u00a0 So, after 24 months, you would have $1,236, or a savings of approximately $51.50 per month.<\/p>\n
Now, instead of saving $100 a month for one year and then sticking a lump sum into a simple interest bearing account, let\u2019s take that $51.50 and save it leisurely over 24 months.\u00a0 In other words, instead of struggling to get $100 a month into savings during the first year, take the smaller amount of $51.50 a month for 24 months and place it in a compound interest account.<\/p>\n
Instead of $1,236, your savings compounded at an interest of three percent for those two years will yield a total of $72.20 in earned interest.\u00a0 This is more than double the interest earned in a simple account.<\/p>\n
Without a doubt saving money in a compound interest bearing account is the most important thing you can do.\u00a0 If you can purchase whatever you want with cash, you can save a great deal of money in the end.<\/p>\n
-30-<\/p>\n
\u00a9 2011 J. Clark <\/em><\/p>\n","protected":false},"excerpt":{"rendered":" I am working on a book for young people to help them acclimate to life after high school. This is an excerpt from that project. If you have a son, daughter, niece, or nephew in this age group, this may … Continue reading