July 18th, 2022
Do you know your regular allowance, gift money, or money you earn for jobs you do can make more money? When you put your money in a credit union savings account, it’s called investing. The credit union then pays you for letting it use your money to give loans to other people.
So, how does your money grow in a savings account?
The first time you invest, you will be paid a dividend on just the amount you put in your account. Dividend and Interest are the same thing — earnings you receive by allowing others to use your money. The next time your account pays a dividend, you’ll be paid on the money you put in your account, plus on the money you’ve already earned in interest. That’s called compound interest. The higher the dividend rate, the more money it earns.
Would you like to see how quickly your money grows? Say you decide to deposit $5.00 every week into your savings account. The interest rate for your credit union savings account is .50%. How much would you have after 12 months?
Here’s a calculator to help you figure this out: https://www.interest.com/calculator/savings-calculator/
If you deposit $5.00 every week (52 weeks), you will save $260. With compound interest, you’ll earn another 6 dollars ($266). If you continue depositing $5 each week, in 3 years you’ll have $791!
If you increase your weekly deposits to $7.00, you’ll earn even more money! $7.00 x 52 weeks = $364. But with interest, you’ll have $372!
If you keep depositing $5 every week, in 3 years, you’ll have $1,107!
So, you see, if you promise yourself to put a bit of money into your savings account every week (and don’t take it out), you’ll watch it grow so fast, you’ll soon have enough to pay for something really special, like a bike or a tablet!