Learn the "Rule of 72"

The rule of 72 is a quick formula to calculate how long it will take for your money to double. Simply divide the number 72 by the annual interest rate. For example, if you put $1000 into an investment account that earns 10% interest per year, in roughly 7.2 years (72/10=7.2) to double and you will have $2000 in that account. In another 7.2 years, it will be $4000. This rule goes hand in hand with compounding interest, but just serves as a quick estimation for doubling power and illustrates the importance of interest rates. This also applies to debt that has compounding interest. If you have a credit card with a 25% interest rate that has a $1000 balance, and make little to no payments to pay down the balance, in just 4 years you will owe $2000 on that same card even if you don't charge another dime! High interest debt is a financial death spiral, so avoid credit cards at all costs!

FINANCE AND BUDGETING