Savings & Budgeting 101 - Compounding Interest

Saving & Budgeting

If you think your personal finances are in need of an overhaul, you aren't alone. According to the US Census, the average American household is falling short of their savings goals. I, along with First National Bank  hope to give you some basic tools to help you establish and achieve your personal financial goals. If you have any questions or concerns about saving and budgeting contact Nick Zwiebel with First National Bank and let him know I sent you. Follow me for the next six Mondays for some great tips, tricks and ideas to keep your savings and budgeting on track.

Last Monday, we discussed Emergency savings and what exactly they mean along as why they are so important. – This week we will look into Compounding Interest. According to First National Bank…

Compounding Interest

Banks are willing to pay you for your money. Make sure you are
interest savvy to get more bang for your buck.

Annual Percentage Yield (APY): the annual rate of return on an investment after compounding

A few things to consider about compounding interest:

·         1. Compounded interest essentially pays you interest on your interest

·         2. Always compare Annual Percentage Yield over Rate when
shopping for the best interest on savings accounts

·         3. The more frequent the compounding, the more money you make

·         4. The longer your investment sits, the more you earn

With the power of compounding interest, it's easy to earn more in interest than you take from your own pocket. All you need is a little bit of patience. With a monthly contribution of $50and an assumed 5% savings rate, let's watch how your money grows.

Personal Contributions

Cumulative Balance

30 Years | Contributions: $18,000 | Total Balance: $39,863.31

That's almost $22,000 free money!