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How much pocket money should an economist pay their children?

More importantly: at what age is my daughter old enough to understand compound interest?

By Duncan Weldon  

At what age will my daughter understand compound interest?

A couple of weeks ago, my eldest daughter told me that when she was older she would have “a big house and a fast car.” After a moment’s pause, she further noted that “it would probably cost a lot of money”. When I enquired as to where she would get the money from, she gave me the kind of dismissive look that only a five-year-old can and replied, “I’ll borrow it from a…

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