While your kids may readily grasp the concept of putting money aside for a rainy day, getting them to understand how interest can add to their wealth or leave them drowning in debt may require more novel explanations.
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Try comparing interest to the idea of renting, suggests Elisabeth Donati, owner of Creative Wealth International, a Santa Barbara, Calif., company that holds financial summer camps for children. The next time you rent a movie tell them, "we had to pay a rental fee in order to use this video. When you put your money in the bank, the bank pays you a rental fee to use your money," Donati explains. Here are five exercises you can use to make the concept more real for your kids
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