So for our kids, who are still quite young, instead of opening an entire other savings account for them, we decided to do “virtual” savings accounts.
Essentially, we have a spreadsheet with what money they have gotten from birthdays and other events, then we just deposit it in our savings. They can withdraw whenever they want.
In this spreadsheet, I’ve been trying to keep track of interest (in a basic way), to show how saving can also help them “earn” money. However, I don’t think I’m doing it correctly.
See Google sheet: dates are not correct and interest rates are not accurate. I just wanted to show that we are attempting to give the “correct” interest rate for the given date. (I know interest rates fluctuate all the time, just trying to not make it not too difficult to maintain)
https://docs.google.com/spreadsheets/d/1rwwIFVOGYt-lIx8Dtuv_6PGz28jSNQbH7LcZG2qKlfg/edit?usp=sharing
Thank you for taking a look, I’ve been trying to get this right for a while.
If I were doing this, I would get an average balance for the month (start of month balance + end of month balance divided by 2) and multiply by monthly interest rate (interest rate divided by 12). I would add that interest payment to the end of month balance and that would become the next months starting balance. My spreadsheet columns might look like this:
Beginning Balance formula would be =sum(Ending Balance, Interest Earned) from the previous line
Deposits and Withdrawals would be numerical entries
Ending Balance formula is =Beginner Balance + Deposits - Withdrawals
Interest formula is =average(Beginning Balance, Ending Balance) * rate / 12