Financial education

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…

Financial education

3 Amazing Resources That Helped Me Get Control of My Finances

Being a blogger who writes about teaching my son personal finance — maybe you think I’ve always been good with money. That’s what gives me the creds, right?

Eh… not exactly.

I’ve never been in a really bad place, but I’ve never felt really good — like I was in control and going in the right direction.

It’s not for lack of trying. I tried for YEARS to get it together and feel good about my state of affairs. I’ve always balanced my checkbook and attempted budgeting at various points in my life (even enlisting my cousin’s help as she learned about it herself). There were homegrown worksheets and an elaborate configuration involving a shoebox and manilla folders with the days of the month for organizing receipts.

But I didn’t have a system that worked. I didn’t have a direction, or goals, or practical steps to take to meet those goals.

Until three years ago.