Hello, PiggyBunker parents! Ready to supercharge your child's financial education? Let's dive into the exciting world of interest rates and how you can use them to teach valuable lessons about saving and compound growth.
Getting Started
To access the interest rate settings, navigate to your child's account in the PiggyBunker app. Press on the "Advanced" toggle and below the accounts you will find the "Savings Interest Rates" button. Here's what you'll see:
Let's break down each part of this powerful tool:
1. Enable Savings Interest
This is your master switch. When turned on, your child's savings accounts will start earning interest. It's a great way to introduce the concept of passive income!
2. Interest Rate Period
This setting determines how often interest is calculated. You have three options:
- Weekly: Interest is calculated every week.
- Monthly: Interest is calculated once a month.
- Annual: Interest is calculated yearly.
💡 Tip: A shorter period (like weekly) will result in faster growth, making the concept more engaging for children. For example, 5% weekly would grow $100 to $112.99 in a month, while 5% yearly would only grow it to $100.41 in the same time.
3. Interest Rate (%)
Use this slider to set the interest rate. The range is from 0% to 25%. Remember, while high interest rates can be exciting, they might not reflect real-world savings accounts. Use this as an opportunity to discuss realistic expectations about saving and investing.
4. Compound Frequency
This determines how often interest is deposited into your child's savings accounts:
- Daily: Interest is added to the account balance every day.
- Weekly: Interest is added once a week.
💡 Tip: More frequent compounding (like daily) can help savings grow faster and be more engaging for children than less frequent compounding.
5. Preview
This powerful feature shows you exactly how your child's savings will grow over time. Accross both the main Savings account and additional Goal accoutns, It displays:
- Growth amount and percentage over 30 days
- Projected balances after 1 week, 1 month, and 1 year
Use this to demonstrate the power of compound interest to your child!
6. Interest-Earning Balance Cap
This sets the maximum total balance across all Savings and Goal accounts that will earn interest.
Once accounts reach this total, no more interest will be added.
💡 **Tip 1 **: Once the cap is reached, you will receive an indicaiton in your weekly email from PiggyBunker, which means that its time to change the interest rates period or percentge to moderate and adjust the growth.
💡 **Tip 2 **: Use this to teach your child about graduated savings rates or to encourage them to explore other saving and investing options once they reach a certain milestone.
Making It a Learning Experience
- Start Small: Begin with a modest interest rate and show your child how their money grows.
- Experiment Together: Try different settings and use the preview to show how changes affect growth.
- Real-World Connections: Compare your PiggyBunker rates with real bank rates to discuss realistic expectations.
- Goal Setting: Use the preview to help your child set savings goals and see how long it will take to reach them.
Remember, the goal is to make saving exciting and educational. Don't be afraid to adjust settings as your child grows and learns!
For more in-depth information, check out our community forum article: Introduction to Interest Rates.
Happy saving and learning with PiggyBunker! 🐷💰📈
