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Compound interest is interest calculated on both the initial principal and the accumulated interest from previous periods. Unlike simple interest, compound interest allows your savings to grow exponentially over time because you earn interest on your interest.

The Rule of 72 is a quick way to estimate how long it will take for your savings to double. Simply divide 72 by your annual interest rate. For example, with a 3% annual rate: 72 ÷ 3 = 24 years to double your money.

APR (Annual Percentage Rate) is the simple annual rate, while APY (Annual Percentage Yield) includes the effect of compounding. For savings accounts, APY gives you a more accurate picture of your actual returns.

More frequent compounding leads to slightly higher returns. Daily compounding is best, followed by monthly, quarterly, and annually. However, the difference between daily and monthly compounding is usually minimal.

High-yield savings accounts are ideal for emergency funds and short-term goals due to their safety and liquidity. For long-term wealth building, consider diversified investments which historically offer higher returns but with more risk.

Financial experts often recommend the 50/30/20 rule: 50% of income for needs, 30% for wants, and 20% for savings and debt repayment. However, save as much as you comfortably can while maintaining an emergency fund.

Most financial advisors recommend 3-6 months of living expenses in an easily accessible savings account. This provides a safety net for unexpected expenses or income loss.

Interest earned on savings accounts is typically taxable as ordinary income. Consider tax-advantaged accounts like IRAs or 401(k)s for long-term savings to maximize your after-tax returns.