I left the pool with my $5 paycheck and Burger King breakfast, my weekly job perk. It had felt like a successful morning of babysitting, but something wasn’t right when I called my grandfather. My bank account had reached $4,000 in babysitting money, and I was calling him to brag!
His Disappointment
Gramps: “Your money is just sitting in your bank account? earning 0.01% interest?”
Me: “Yes!”
Gramps: “That’s a mistake. Invest the cash and any extra money you make.”
Investing? What even is that?
I had no idea what I was doing, but blindly decided to invest the $4,000. I continued to add $150 per month as I learned more.
Fast forward 11 years, and that initial investment blossomed into $45,000.
The Miracle of Compound Interest
If you are wondering how much your money can grow over time, here’s the free calculator to try out.
Say you want $100,000 in 10 years. Try $525 per month at a 10% interest rate…The numbers get even crazier when you let the money grow for decades.
Gramps Was Right
Invest every extra penny of money that you don’t need. Yes, it’s great to hold 3-24 months’ worth of expenses in an emergency fund. Everything else can be INVESTED. That’s where the real growth happens.
If your kid has a job or extra gift money (let’s face it, they don’t need the whole $100 to spend on Chipotle), encourage them to do the same.
Learn How
You can set up your own investment accounts at trustworthy banks like Vanguard or Fidelity. I would opt for the self-management option because you save a boatload in fees. If you want to open an account for your child, consider a 529 or UGMA/UGTA account.
There are many wonderful books to help you get started, and free classes are available.
Mama, you’ve got this! Get that cash in the stock market and GROW IT!
