Setting up kiddo's account?

[DavidDoes]

Hey, folks! Been referencing MMM's post post from May 20, 2015 about their kid's account and earnings.

I want to start something similar for my kiddo. However, I don't understand compound interest, apparently. In his spreadsheet, why do the interest rates change at times?

[Texas82]

It appears the annual 10% return is based on a 360 day calendar.  Every 30 days it earns 0.83%, or 0.0278%/day.  The deposit on 10/14 is 4 days after the monthly interest payment, 4 days x 0.0278% =0.11%

Compound interest, let's say you only contribute $100 into an account that earns 10% annually and don't contribute anything after (not recommended).  Your initial deposit will almost double in 7 years.

$100 invested
End of:
Yr 1 = $110 (100*1.10)
Yr 2 = $121 (110*1.10)
Yr 3 = $133.10 ($121*1.10)
Yr 4 = $146.41 (133.10 * 1.10)
Yr 5 = $161.05 (146.41 * 1.10)
Yr 6 = $177.16 (161.05 * 1.10)
Yr 7 = $194.88 (177.16 * 1.10)

[DavidDoes]

It appears the annual 10% return is based on a 360 day calendar.  Every 30 days it earns 0.83%, or 0.0278%/day.  The deposit on 10/14 is 4 days after the monthly interest payment, 4 days x 0.0278% =0.11%

Compound interest, let's say you only contribute $100 into an account that earns 10% annually and don't contribute anything after (not recommended).  Your initial deposit will almost double in 7 years.

$100 invested
End of:
Yr 1 = $110 (100*1.10)
Yr 2 = $121 (110*1.10)
Yr 3 = $133.10 ($121*1.10)
Yr 4 = $146.41 (133.10 * 1.10)
Yr 5 = $161.05 (146.41 * 1.10)
Yr 6 = $177.16 (161.05 * 1.10)
Yr 7 = $194.88 (177.16 * 1.10)

Thank you for the reply. This explains it very well!

We are trying to figure out some things she should get paid for. Her current chores are to feed the pets and clean up after herself, but I feel that she should also be able to help unload the dishwasher, help load the washer, etc.

Thanks a lot!