Compound Interest for Children: What Every Parent Should Be Teaching (But Most Aren’t)
- Silivere Bakomeza
- Jul 13, 2023
- 4 min read
Updated: May 19
Written by Silivere Bakomeza, Founder of BakoInvest
Imagine if We All Learned This at 10
What if we raised a generation that didn’t have to recover from bad financial habits—but started with the right ones?
That’s the vision.
If we thought compound interest to children in every household, we'd change generations.
In a world where most schools still don’t teach financial literacy, it’s on us—as parents, mentors, and builders—to change that. And it starts with teaching kids the power of compound interest and long-term investing early.
Because if they learn now, they won’t be playing catch-up later.
Why Financial Education for Kids Isn’t Optional
A child who understands how money grows becomes an adult who doesn’t fear money, mishandle it, or rely solely on a paycheck.
But here’s the problem:
Most schools don’t teach budgeting, investing, or even saving. That means the responsibility falls on us.
According to a Northwestern Mutual study, the majority of Gen Z and millennials don’t understand compound interest. That’s a problem—but also an opportunity.
Because once your child understands compound interest, their brain gets rewired. They no longer chase quick wins—they focus on systems.
And systems build wealth.
The Real Power of Compound Interest
You don’t need to give your child $100,000.
You just need to teach them this:
“If you invest early—and let your money work—you can do less work and still get ahead.”
Compound interest is interest on your interest. It’s money multiplying in the background. It’s what happens when you don’t touch the money and let time do the heavy lifting.
The earlier they start, the bigger the difference. Even investing just $5–10 a week can turn into six figures over time.
If they understand this young, they’ll beat 99% of adults.
How to Introduce Investing to Kids (Without Overwhelming Them)
Teaching your kids about money doesn’t mean showing them a stock chart.
It starts with:
Earning a small allowance
Budgeting for toys vs. saving
Understanding that money grows when you don’t spend it
Using real apps to give them a feel for investing
Here’s a real-world strategy you can use:
Start with budgeting.
Then add saving.
Then show them a compound interest calculator.
Then give them a tool to start investing.
That’s how you teach investing without lectures.
The 8 Best Money Apps & Tools to Teach Kids Investing
Here are some of the most powerful (and simple) tools to help kids start learning money the right way:
1. Acorns Early (Custodial Account)
Acorns lets you invest spare change automatically into ETFs and stocks. With Acorns Early, parents can open custodial accounts for their kids and start growing long-term portfolios—hands-off.
You can start with as little as $5 and let compound interest do its thing.
Why it works:
Kids see real growth over time
Parents can automate contributions
It teaches long-term thinking
They can invest without having to “trade”
2. Greenlight Card
A debit card for kids—with built-in parental controls. You control how much they spend, where they spend, and can even give them investing exposure.
Perfect for teaching real-life budgeting with real money.
3. Chase First Banking
A banking app from a major name. Offers parental oversight, spending limits, and a clean mobile experience for kids learning banking basics.
4. Copper Banking
A sleek, mobile-first app designed to help kids learn saving, spending, and goal setting. Includes investing education and financial quizzes.
5. FamZoo
FamZoo lets you automate allowance, set spending limits, and teach budgeting using prepaid cards. Kids learn to plan with purpose instead of spending freely.
6. Stash
A full-featured investing platform that’s simple enough for kids (and adults) to understand. Teaches Dollar Cost Averaging and long-term investing—perfect for building habits.
You can set up recurring investments to show kids how small contributions add up over time.
7. PiggyBot
A digital allowance tracker where kids split money into save/spend/share categories. Helps them visualize how they use money, even without physical cash.
8. Saving Spree
A gamified app that teaches kids how everyday spending impacts long-term savings goals. Perfect for pre-teens and younger teenagers.
How This Breaks Generational Poverty
If you’re the first in your family to think long-term—you’re already changing the story.
Your kids don’t need to inherit your mistakes. They need to inherit your mindset.
That means:
Teaching them how to delay gratification
Showing them that money is a tool, not a goal
Giving them systems, not just slogans
You don’t need to be rich to teach this. You just need to be intentional.
Final Thought: Build Legacy on Purpose
The real flex isn’t how much you leave your kids.
It’s how well they know what to do with it.
Start early. Keep it simple. Focus on systems. That’s how compound interest turns into generational freedom.
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Want to start teaching your kids real investing?
Open an Acorns Early account here and start growing wealth for their future—with just $5.
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