A new report from Young Invincibles revealed that Millennials have a median income of $40,581 – 20% less than what Baby Boomers were making in the same life stage. It’s probably no great surprise that Millennials have less…
Less money to spend. And less money to save.
You know that saving is important for your future. Retirement may seem far away, but it’s coming. So what do you do with the money you should be saving now?
This is where a little-known formula called “The Rule of 72” comes in…
Here’s how it works: Take the number 72 and divide it by the annual interest rate. The answer is approximately how many years it will take for money in an account to double.
For example, applying the Rule of 72 to $10,000 in an account at a 4% interest rate would look like this:
72 ÷ 4 = 18
That means it would take approximately 18 years for $10,000 to grow to $20,000 ($20,258 to be exact).
This formula really shows the value of finding a higher interest rate, doesn't it?
Here’s the breakdown (tl;dr - too long; didn’t read):
- You probably earn less than your parents did at your age.
- You’ll probably have less money to set aside for retirement.
- But you can make what you do save work for you.
Young Invincibles: "Financial Health of Young America." 1.2017