Results 1 to 2 of 2

Math Help - Savings & Inflation

  1. #1
    Newbie
    Joined
    Jan 2009
    Posts
    2

    Savings & Inflation

    Soon I will be able to increase the amounts that I have been depositing to three childrens savings accounts. They will receive their funds when they turn 18 years old. But I need to know if you think the following is fair to all three children. Child #1 will turn 18 in four years, child #2 will turn 18 in 8 years and child #3 will be 18 in 11 years.
    If I give the same amount to each, it is apparant that childs #2 and #3 will receive more money then child #1.
    So I decided to use a base number to make it fair (I think) to all three.
    $7200.00 is the base number
    Child #1 gets $150.00 per month for 4 years = $7200.00
    Child #2 gets $ 75.00 per month for 8 years = $7200.00
    Child #3 gets $ 54.55 per month for 11 years = $7200.00

    Now here is where I get stuck. Inflation will give #2 and #3 less purchasing power when they turn 18. So how do I adjust for inflation? Do I Increase the monthly deposit by the past years inflation rate or use some other number?
    Last edited by rjordan392; January 24th 2009 at 04:44 AM.
    Follow Math Help Forum on Facebook and Google+

  2. #2
    Newbie
    Joined
    Jan 2009
    Posts
    2
    After 14 views, I thought someone might let me know if I am close to being right. So I'll try to answer my own question.
    After the #1 child receives her funds (about 7200.00) I will give the other two an imaginary $7200.00 and keep a yearly record of past years interest rate and add it and the differance between that the inflation rate if any to the principal. So in summary:
    $7200.00 + estimated 3.75% yearly interest rate (compounded monthly) + any differance between interest rate and inflation to be added to the new principal. This is about as close as I can figure it.
    So to make this work, I will also have to adjust the monthly deposit to reflect this new principal.
    Last edited by rjordan392; January 24th 2009 at 02:51 PM.
    Follow Math Help Forum on Facebook and Google+

Similar Math Help Forum Discussions

  1. interest savings
    Posted in the Business Math Forum
    Replies: 4
    Last Post: April 15th 2011, 07:35 AM
  2. derivation of savings function
    Posted in the Business Math Forum
    Replies: 2
    Last Post: February 17th 2011, 04:06 AM
  3. Savings Bank Account...
    Posted in the Business Math Forum
    Replies: 1
    Last Post: February 1st 2010, 09:47 AM
  4. forecast of savings balance
    Posted in the Statistics Forum
    Replies: 1
    Last Post: September 20th 2009, 01:11 PM
  5. savings, interest, inflation etc...
    Posted in the Business Math Forum
    Replies: 1
    Last Post: July 19th 2009, 07:38 PM

Search Tags


/mathhelpforum @mathhelpforum