August 14, 2012

                      I was quite shocked to learn that you can spend a lot of your money on whatever you like and still be able to end up with a high amount saved up. A part of that depends on when you start saving. When you start saving small amounts early, it can eventually accumulate to a large amount of money and you can do it while being able to buy what you want. Also, using the Compound Interest Calendar I learned that the interest rate affects your future value dramatically. When it is higher you earn a lot more and even a small two percent difference in the interest rate can drastically alter what you end up with. An example of this would be if you had an annual addition of $10,000 with 40 years to grow and an 8% interest rate you would earn a total of $2,797,810.40. If you were to only change the interest rate and make it 10%, you would earn $4,868,518.11 which is around two million dollars more. When I talked to my dad about this he was incredibly proud of me and was ecstatic that I was taking a class that would help me in the future when I’m more independent.

                We also talked about when it’s the right time for parents to teach their kids about money. I personally feel pretty blessed because my mother has been trying to get us into the habit of slowly saving up money. Every three months she makes my sisters and I put in about $600 dollars in our own personal bank accounts. I think this system has made me be more careful with my money since it forces me to ask myself if I really need something before I buy it.