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Important Lessons I Learned From My Parents

A few weeks ago, J and I went out to dinner with my parents. When the check came, my dad asked J to calculate the tip. Luckily we had just talked about this, so he was able to figure it out — but it made me think about all of the other money and finance lessons I’ve learned from my parents.

So far I’ve mentioned that my dad would drill me on the rule of 72 and part of any money I received had to go towards opening savings bonds, but there were many more lessons over the years.

My dad was relentless with the sayings:

• You don’t have to spend it all!
• Don’t spend more than you make
• Save some for a rainy day

When I was in middle school, he took me to our local credit union and we opened a checking account. He showed me how to write checks and use an ATM card.

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The Rule of 72 and Exponential Growth

Have you heard of the Rule of 72? (It sounds boring, doesn’t it? I promise you, it’s not.)

The Rule of 72 is a quick way to determine how many years it will take for money to double with a given interest rate. Divide the interest rate into 72 and get the approximate number of years.

For example, at 8% interest, money will take about 9 years to double.

72 / 8 = 9

So let’s say that you have \$100. In 9 years, you’ll have about \$200.

When I was a kid, my dad would drill me on the Rule of 72 — mainly in the car on long trips. At the time, it wasn’t very interesting. So what if I’d have \$200 in 9 years? (Actually, it seemed terrible. I’d have to wait 9 years to have a measly \$200? Why was that worth talking about?)

The key, though, that makes this concept REALLY powerful is…