Who else gives you money for saving money-besides my son’s grandma! She is actually matching whatever he saves for a car. I thought, “Who is this woman? I did not grown-up with her!?” Ah the luxury of spoiling your grandchildren, but I digress.
The secret to success is compounding interest!! Don’t let your eyes glaze over here-it is pretty simple & ya don’t have to do anything.
Let’s break this down:
Save $10 per month or $120.00 a year at the current 1.49 interest rate. How much at the end of ten years: $1428.05 & at 20 years: $2945.44
You can choose to use a bank savings account, CD or bonds. These are the current rates:
Savings rate: 1.49%
CD rate start at an investment of $500 & are: .1 or .2
Bonds Series I: (2.20) or Series EE: (.60)
The Treasury also guarantees that these Series EE bonds will double in value in 20 years. This creates a guaranteed rate of 3.50% if you hold the bond that long. (Example: Same $10 bucks a month for 20 years: $3632.34)
Series I bonds interest rates are made up of two components that are added together, a fixed rate component and an inflation rate component. (this is more complicated for me, & my Dad always used EE bonds so…)
Twenty years are a long time but, it is the out of sight/out of mind mentality that makes these work for you. Yes it is slow going but, it is FREE money!! You did not have to break your back or put in long hours to earn it. Kids need to learn the cool rules of matching compounding interest!
My parents used savings bonds to pay for our college education. It was an old-fashioned method but, it got the job done. Sometimes we need to return to the tried & true old methods to learn something.
How are you saving? What are you going to use?
Since this is a financial post, I thought it would be fun to see what the top ten financial college rankings were. So not one, but ten colleges are highlighted with tuition rates & average class sizes.
**Pre-order your doll from our indiegogo campaign on the right side of this post. There are some awesome thank you gifts & free shipping!
*Disclaimer: Sarah Dugo is not a financial planner. Please, consult a reputable firm.