The Hidden Trap in Your Child's Piggy Bank
You've done the hard part: teaching your child to save. Every coin clinked into that ceramic pig feels like a win—until you realize the money inside is quietly shrinking. Inflation erodes the buying power of every dollar left idle, which means your child's savings actually lose value each year.
We built a simple tool to quantify that loss. Use our Child Savings Calculator: Piggy Bank vs. Investing at 8% Returns to see the difference in seconds.
The Silent Killer: How Inflation Steals Savings
Put $100 into a piggy bank today and it buys a set number of video games. Leave it there for ten years at 0% interest, and you still have $100—but those games now cost $130. Same dollars, fewer dreams. That is inflation at work, and it punishes kids who keep money in cash.
The Investing Advantage: Making Money While They Sleep
Compound interest is the antidote. When savings earn returns, those returns earn more returns, creating a snowball that grows even while your child sleeps. Our calculator uses an 8% annual return because, over history, a diversified stock portfolio (think S&P 500) has averaged close to 10% before inflation. Eight percent is a conservative, real-world expectation for long-term investing.
The Power of Starting Early
Consider two kids who each contribute the same $10,000 but start at different ages:
| Investor | Age Started | Monthly Contribution | Total Time | Total Invested | Total Value @ Age 65 (8% Return) |
|---|---|---|---|---|---|
| Early Bird | 10 | $50 | 16.7 years | $10,000 | $1,788,000 |
| Late Starter | 30 | $50 | 16.7 years | $10,000 | $340,000 |
The Early Bird stops contributing at 27 yet retires with more than five times the wealth of the Late Starter. That gap is the price of waiting.
Take Action: See Your Child's Future
Every allowance dollar is an opportunity. Don't let inflation steal it. 👉 CLICK HERE to use the Child Savings Calculator: Piggy Bank vs. Investing at 8% Returns.
Once you see the power of compounding, you'll be ready for the next decision: choosing the right account. Read our next article: UGMA vs. UTMA Account: Which One is Better for College Savings?
Want to teach your child how money grows?
Try the Kids Savings Calculator
Let kids dream up a goal, plug it into the calculator, and watch the timeline shrink with smart habits.
