Let's Talk About Compounding Interest: Unlocking Financial Wisdom for Future Generations

The Ultimate Wealth Game: How to Set Up Compound Interest Accounts for You and Your Child

If you knew there was a game where the earlier you started, the greater your rewards, would you play?

What if I told you that this game determines your financial freedom—and even your child’s future wealth? The trick is simple: leverage compound interest to make money work for you instead of you working for money.

Here’s the catch: the longer you wait, the harder it gets to win.

This is where most people fail.

They hear about compound interest, nod their heads, and keep putting it off—losing thousands, even millions in potential earnings.

You don’t want to be that person.

Let’s break it down. Step by step.

Account by account.

By the end of this post, you’ll know exactly what to do to set up the right accounts for yourself and your child—and you’ll see why starting today is the smartest financial move you’ll ever make.

What Is Compound Interest? (And Why You’re Already Behind If You Haven’t Started)

Compound interest is what happens when your money earns money—and that new money also starts earning money.

It’s like a snowball rolling downhill, picking up more and more snow as it grows.

Here’s the difference between someone who starts early and someone who waits:

* Emma starts investing $200 a month at age 20.

By the time she’s 60, she has $1.2 million (assuming an 8% average annual return).

* Jake waits until he’s 30 to start investing the same $200 per month.

By 60, he only has $540,000—less than half of Emma’s total, even though he contributed the same amount each month.

Starting earlier gives you an unfair advantage—one you can pass on to your child.

Here are the steps to take today...

Step 1: Set Up Your Own Compound Interest Machine

You can’t build wealth for your child if you’re not setting yourself up for success first.

Let the Games begin..

1. Open a High-Yield Savings Account (HYSA) Today

Your first step is parking your emergency fund in a high-yield savings account (HYSA). These accounts offer better interest than traditional savings accounts.

While they won’t make you rich, they ensure your emergency fund isn’t losing value to inflation.

Best options: Ally Bank, Marcus by Goldman Sachs, Sofi Discover Bank

*Goal: Keep 3-6 months of living expenses here.

*Aim For 1-3 months at minimum

I call it the "Rest Easy Account"

Put it away and you will rest a little more soundly.

2. Open a Tax-Advantaged Retirement Account (401(k) and/or IRA)

This is where your money plays to win,

this is where real compounding magic happens.

• 401(k): If your job offers a 401(k) with a match, contribute at least enough to get the full match—it’s free money.

Free Money here, Collect your $$$ and Pass GO.

• IRA (Traditional or Roth): Open an IRA to maximize tax-free growth (Roth) or tax-deferred growth (Traditional).

If self employed or employer does not offer. Protect yourself and save for your future tax-free with the most flexibility.

Next move:

* Invest your contributions in low-cost index funds like Vanguard’s VTSAX or Fidelity’s FXAIX (they track the overall stock market).

*Experts say aim to contribute at least 15% of your income to these accounts.

I advise to aim for a comfortable amount that will keep your snowball rolling downhill on a consistent level.

You are implementing a new routine and are playing a long game.

Stay focused and as stress-free as possible.

At this point you should be switching focus to get the children onboard.

You have Made great strides to fill some gaps and now let's get them on the board.

Games of Gain can be played here.

Time to Level Up Here

Implement what you have learned through your journey this point.

Ask questions, seek advice if needed.

Keep learning keep rolling.

3. Open a Brokerage Account for Additional Investing

Once you’ve maxed out tax-advantaged accounts, a brokerage account lets you invest even more.

* Best platforms: Vanguard, Fidelity, Charles Schwab

*Investment focus: Low-cost ETFs or index funds for steady, long-term growth.

Great Job, that took some work but it will pay to play.

Now that you have blazed a trail for your financial situation to start working for you,

Let's show the children how to play.

Move 1: Set Up Your Child’s Wealth-Building Accounts:

Your child has the biggest advantage in the world: Time.

We all discover as we age the blessing of time. It's a Life Jewel that when used correctly it is a winning move.

Even small contributions now can turn into hundreds of thousands (or millions) by adulthood.

1. Open a High-Yield Savings Account in Their Name

Start with an HYSA to teach savings habits. Great for birthday money, allowances, free money for family referrals or small windfalls.

Be the one to witness your children's delight and realization on Discovering the Jewel of Delayed Gratification.

2. Open a 529 College Savings Plan (If College Is a Goal)

A 529 Plan allows tax-free growth for education expenses.

*Why it’s great: No federal taxes on withdrawals for qualified education expenses.

*Where to open: Your state’s plan (some states offer tax benefits).

3. Open a Custodial Roth IRA

(The Ultimate Secret Weapon)

This is where you change your child’s future forever.

A Custodial Roth IRA allows a child to invest earned income (from jobs like babysitting or lawn mowing) and grow it tax-free for decades.

You can pay you child up to 13,850 a year tax free for both off you every year from a family business to apply to their Roth IRA.

Example:

• If your child invests just $3,000 a year from ages 10 to 18 in a Roth IRA and never touches it…

• By age 60, it could grow to over $3 million, assuming an 8% return.

Now thats a winning move, worth the few less shiny toys.

When you find yourself comfortable with your hand, apply what you have learned and dive deeper into starting this next move.

4. Open a Custodial Brokerage Account for Extra Growth

Want to give your child an investing head start beyond a Roth IRA?

A custodial brokerage account allows you to invest on their behalf in stocks and ETFs.

Move 2: Automate & Optimize Your Wealth Game

Now that you have the right accounts,

make them automatic:

1. Set up auto-transfers:

Retirement accounts: Deduct automatically from your paycheck.

Brokerage accounts: Set up monthly deposits.

Kids’ accounts: Transfer small amounts regularly.

2. Invest in set-it-and-forget-it funds like VTSAX (Vanguard Total Stock Market Index Fund) to minimize risk while maximizing returns.

3. Increase contributions over time:

Whenever you get a raise, increase your contributions.

If your child starts working, encourage them to put 50% of earnings into their Roth IRA.

Move 3: Watch the FOMO Set In & Stay the Course

Most people never take these steps because they think they have time.

They don’t.

Every year you wait, you’re losing out on thousands (or millions) in compound interest.

This is your chance to:

Retire early and stress-free

Give your child a financial head start that changes their future

Learn how to make money your employee not your enemy.

Bond with your child and discover one of the many benefit's of teaching the right education and making it fun so everyone wants to apply what you know to be true.

You are ready to make your first move for yourself and your child.

You are equipped and have all the tools to start your new Game of wealth.

Taking you from Stuck to getting you on your way to Gains and Prosperity.

Enjoy your time learning and excelling in this fun family venture.

Become very aware of where you can gain free money to fund your growing accounts.

You are on your way to learning, growing and creating bonds that will last for generations to come.

Now is the time to start talking, start sharing and start growing your knowledge and assets.