You can set up a savings account instead of jars for the kids鈥� longer-term goals, and they will learn about the power of compounding interest 鈥� which looks like magic to them!
I started Lydia, my oldest daughter, on a 25-cent allowance. When her long-term jar got full, we set up her savings account. When her first statement arrived, showing she had earned 21 cents interest, her eyes lit up.
鈥淗ow did that happen?鈥� she wanted to know.
鈥淚sn鈥檛 it amazing?鈥� I asked. 鈥淎ll this time while you have been sleeping and eating and playing, your money has been just sitting there growing. And they gave you almost a whole quarter for it.鈥� My daughter couldn鈥檛 believe it. Now every month, she can鈥檛 wait until the bank statement comes. She wants to see how much she earned while she was having fun.
