If I Had Saved…

When I was six years old, I started my first business. My favorite book character, Karen from the Babysitter’s Little Sister series, started her own newspaper in book #40. Things went badly for Karen, but I was determined that I could do it too – and do it better.

And I did. For over six years, I ran my own newspaper. In it’s heyday, the “Kids Gazette” was sold in five stores across my town, and had three writers working under me. In addition to selling the paper in stores for 25 cents, I also sold ads in each issue. And I made $30 and issue, which was pretty much a fortune to me. I paid out 10% of each issue’s profits to each writer that contributed that month. And life was good.

But I didn’t save any of the money. And I haven’t the slightest idea what I spent it on. I didn’t even save up the money for the thing I wanted most at that age, an American Girl doll (although, now that I’m 20 years old, I realize it would have only taken me three months to do so). That money didn’t even seem to last from one issue to the next.

But what if it had? What if I’d saved all that money? Or what if my mother had matched my profits in an account somewhere? Where would I be today?

Ok, so, I wasn’t exactly consistent with my newspaper, so we can say that I probably made $30, six months out of the year, for 1993-1999. So $180 a year, for seven years.

Likely scenario:
I shoved all the money in a shoebox. In 1999, it would have totaled $1260. At that point, I had my own savings account. So let’s say I put it in there when I stopped the newspaper, and then never touched it till today. My savings account earns 0.2%. So I would have $1277.75 today, to do with as I wish.

Err… well that’s great, and I certainly would appreciate having nearly $1300 today, but only earning $17 in interest over 7 years is really kinda awful. So, what if we had done even better?

Less likely scenario:
Each year, the money was deposited in a CD or money market account, earning 5%. Again, after 1999, I contributed nothing else. Today, that would be $2062.19.

Well, now we’re getting somewhere. $800 in interest is nothing to shake a stick at. Now, I could certainly run the numbers at 8% interest, and 10%, but I think you already get my real point here: Any which way, I would have a lot more money now.

The real question, I suppose, is whether I (or my mother) would have put aside this money when I was so young, if someone had just run the numbers. Can a child (or even a parent) be persuaded to save, just by being shown how it really adds up? And why didn’t anyone run the numbers for me 14 years ago? … And what did I buy with all that money, anyway?