Friday Fundamentals: The Rule of 72

Want to know how many years it will take your money to double?

Use the Rule of 72.

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What It Is

The Rule of 72 is a shortcut that estimates how long it takes your money to double at a given interest rate (assuming compound interest).

Compound interest means your interest earns interest.

All you need is the interest rate.

Note: The Rule of 72 is most accurate for interest rates between about 4% and 10%.

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Why It Matters

For Saving/Investing

Use it to compare investment vehicles or savings accounts—anything that earns interest.

When comparing a savings account earning 0.5% to one earning 4%, the Rule of 72 shows you the real difference in years, not just percentage points.

For Calculating Debt (Credit Cards, Loans)

It works in reverse for debt, showing you how fast a credit card balance can double when interest is being added faster than your payments to what you owe.

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How to Calculate It

The Formula:

72 ÷ Interest Rate = Years to Double

That’s it. Just divide 72 by whatever annual interest rate you’re looking at.

Step 1: Find your interest rate (APY for savings, interest rate for investments, APR for debt)

Step 2: Divide 72 by that number

Step 3: The answer is how many years it takes your money to double

Important: Use the number without the percent sign.

So if your rate is 6%, just divide 72 by 6.

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Real Examples

Using It for Saving/Investing

High-Yield Savings Account at 4% APY

72 ÷ 4 = 18 years

Your $10,000 becomes $20,000 in 18 years.

Traditional Savings Account at 0.5% APY

72 ÷ 0.5 = 144 years

Your $10,000 becomes $20,000 in 144 years.

This shows why we look for options where we can get higher interest rates, even for emergency savings.

Investment Account at 8% Average Return

72 ÷ 8 = 9 years

Your $10,000 becomes $20,000 in 9 years.

Retirement Account at 7% Average Return

72 ÷ 7 = 10.3 years

Your money doubles roughly every decade.

Start early, and you get multiple doubles working for you.

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Using It to Calculate Debt (Credit Cards, Loans)

Credit Card Debt at 24% APR (when your payments aren’t reducing the principal and unpaid interest keeps adding to the balance)

72 ÷ 24 = 3 years

That $5,000 balance becomes $10,000 in just 3 years if you’re not paying it down.

This is why minimum payments keep you stuck.

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The Bottom Line

The Rule of 72 shows you what’s possible when you build wealth strategically—pay down debt, increase cash flow, and let your assets work for you.

Save 3–6 months for emergencies (or more if your income is variable or isn’t the same amount consistently).

Then put the rest of your savings where it earns real interest.

Calculate how long until it doubles, then calculate again after it does to find out when your money will double again.

That’s your money growing on its own.

This is what we mean when we say your money is working for you.

This is what you want in your life, sis.

Friendly reminder: This is for education, not personal financial advice. Everyone’s money situation is different, and any decisions should be based on personal research or speaking with a licensed professional about your individual situation.