- May 4, 2008 at 2:18 pm #257559
Yes most of this is from the parents, but I feel my generation (those
thirtysomething) have an extremely bad understanding of debt/compound
interest/budgeting so sometimes the teachers have a big effect on students.
I know that most of my friends in this age group who are now good at these
things are mostly from their parents teaching them, but there are a few that
could learn alot through some geeky math teachers who are good at giving
exciting examples of the power of compound interest.
Here’s an example from bankrate.com that I heard similar to what I learned
about in my mid 20s that was helpful to me to get started on my 401K right
away. I was a math major so yes I may have been a geek to begin with, but
these things were helpful to get me thing.
“Let’s say you save $2,000 every year for 20 years, and your investments
earn 8 percent annually. If you start at age 25 and contribute until age 45
and then save nothing further, by age 65 you’d have roughly $426,000. But if
you wait until age 35 to begin saving $2,000 a year for 20 years and then
retire at 65, your kitty would amount to about $198,000. In both scenarios
your out-of-pocket contribution is $40,000. “
To me these additional examples of compound interest are helpful to give
example of saving instead of acquiring debt.
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