Everyone knows that savings accounts make your money grow by using compounding interest. This interest is a great source of revenue and when left alone causes the cash to grow even more. So instead of beating this dead horse I will write this week about two different stories about banks and personal finance from when I was a kid.
The first story involves my sister, when we were very young our mom wanted to have us make our own bank accounts for our weekly allowance, (more on this later). When the bank teller asked my sister which kind of account she wanted my seven year old sister in all of her wisdom replied “I want the one with the highest interest rate”. Here is a 7 year old girl that knows to hunt down that high APR account to make your money grow faster. Grown-ups have problems with this all of the time.
The next story is around the same time, I was about four and my mother was explaining to me interest and letting your money grow by itself. I replied “Oh that must be why they have big vaults”, my mother slightly confused asked me to explain myself… “Because since the money is growing it can no longer fit in their drawers”. How cute! My mother then had to explain that no, the money doesn’t physically grow.
So there you go two very cute stories from my childhood and the power of a savings account. Next week we talk about other methods of saving.
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This article was recently hosted in the Carnival of Personal Finance.