Exercise 2

Tales of Twin Spending.

Understanding how spending and saving choices can impact reaching a goal is a key lesson for kids to learn early on. Read how twins Lauren and Cassidy made decisions to show how mapping out a plan can guide kids in monitoring, sticking to, and reaching their financial goals. 

Tales of Twin Spending

Lauren and Cassidy are twins. When they were 12, they opened their first bank accounts. Lauren decided that she  wanted to buy a car after college and put $100 a month into an investment account for the next 10 years with the allocation of 60% stocks, 30% bonds, and 10% money market funds. Cassidy decided to spend $100 a month for a gym membership. She kept her membership for seven years and then started putting $100 a month into a savings account to pay for a vacation. When they were 22 years old, they looked at their accounts and were happy. Lauren had $17,202 and Cassidy had $3,628 - goals met! 

NOTE: This example assumes an annual rate of return of 7% for equity funds, 5% for bond funds, 0.8% for Money Market funds and 0.5% for a savings account.