PouchInterest calculator for kids
Quick answer
Parent-paid interest means you add a small percentage to your kid's savings each month, so they see money grow while it sits. Start with $20, add $10 a month, pay 5% a month yourself, and after a year the balance is about $195, of which about $55 is interest. The calculator shows the first 12 months and the final month.
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Why use a rate this high?
Real savings accounts pay far less, and at those rates a kid's few dollars barely move. A higher rate that you pay yourself makes the effect visible in weeks, which is the point of the lesson. Keep the amounts small so it stays affordable, and set an end date.
How to run it at home
- Pick a rate you can afford and say it out loud: "Every first of the month I add 5% of what you've saved."
- Pay it on the same day each month and show the sum on paper.
- Let them see that money they don't spend earns more next month.
- Cap it: a maximum balance or a set number of months keeps the cost predictable.
Pouch has no interest feature. To track it, add the interest as money added on the day you pay it, with a note like "Interest". The full lesson is in explaining interest to kids.
Questions parents ask
What is parent-paid interest?
It's interest you pay your kid on their savings, at a rate you choose, to show how money grows when it's left alone.
What rate should I use?
Any rate you can afford that makes the growth easy to see. A few percent a month on small balances keeps the sums easy to follow; set a cap so it doesn't get expensive.
Does a real savings account work the same way?
Yes in principle: the bank pays interest on the balance. The rate is much lower, so the growth is slower.