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Ami Desai is co-founder (with David Crosta) of Early Earners, a program that helps children and adults to save and invest in small amounts over time. Desai earned a B.A. in economics from Washington University in St. Louis, and an MBA from Columbia University. After working in consulting in New York City, she joined JPMorgan Chase, where she met Crosta. Today the two of them devote themselves full-time to Early Earners.

What does Early Earners do?

Early Earners empowers individuals, families, and children to take control of their financial future by understanding the power of saving early. We provide a simple, clear process so that people can start saving now. The Early Earners Method emphasizes saving and investing in small amounts, and using the multiplicative power of compounding to grow one’s savings over time.

How did the idea for Early Earners come about?

I was interested in how business could be used for social empowerment. Before business school I had helped run job training and computer classes at Sakhi, an organization that aids South Asian victims of domestic abuse. This interest was further developed during my MBA internship at the Community Development Venture Capital Alliance. This fund invested in companies or other VC funds that were for-profit and that employed a certain percentage of low-income people at fair compensation.

During the second year, David approached me about an experience he’d had speaking to American families about finance. He found that the adults wanted to save money for retirement but were overwhelmed by all the options before them and the lack of straightforward information about their choices. The children whom David spoke with were immediately engaged by the concept of compound interest. They understood that if they just put away a few dollars a day in a high-interest savings account, they could eventually become millionaires. The excited looks on these kids’ faces stayed with David and drove us to the concept of Early Earners.

How did you and David turn the idea into a functioning company?

After identifying the need for simple savings education and guidance, we researched the existing financial learning space. We discovered that teens spend $170 billion a year on consumer goods, and neither schools nor parents teach children about money. In fact, 56 percent of U.S. parents admitted that they had not discussed savings or investing with their children, and only 27 percent of U.S. children have learned about saving and investing through their schools (Nest Egg Score Survey 2006). Thus, more and more young people leave college with a negative net worth, starting the vicious cycle that traps so many American adults.

We found plenty of education sites but they simply educated you on the importance of saving and then left you to find a savings account, probably paying little interest.

We understood that having a solid financial foundation provides choice and freedom in life—concepts that are fundamental to the American ideal. And we believed that financial fitness, like physical fitness, is best learned hands-on.

It became clear that we needed to provide financial education coupled with a clear and simple process to actually start saving. We found that banks offering youth accounts typically paid less than 1 percent interest. Kids’ money in these accounts actually loses value because inflation is well above the interest earned. We knew we wouldn’t be able get a child excited about saving without a fair interest rate.

We then found an online savings account that paid interest higher than inflation and that allowed for the setup of an automatic savings program where a specified dollar amount is transferred into savings every week or month. This was not a youth account—as the parent’s name had to be on the account—but that worked with the idea that parents ultimately need to be involved in and responsible for their kids’ understanding of money. Most kids pick up their habits from home, and handling money, just like eating well and maintaining personal hygiene, is a daily responsibility.

After forming a relationship with the bank, we built a website that gave simple and fun education (showed kids calculators to show how much they would earn if they didn’t buy a video game or pair of shoes) and connected them to the high-interest, no-fee savings account. We gave our audience little choice but to start now. It did not cost anything, anyone could do it because you didn’t need money to start, and our website clearly explained the benefits of starting today versus tomorrow since time is the most important component of compound interest.

We soon learned two important facts about our audience:

1. It was the parents who were more interested in Early Earners and they were the primary drivers for opening savings accounts.

2. Adults without kids were also interested.

So we tweaked the message to cater somewhat more to parents and adults, and added investing for people who have started to save. The investment account incorporates the same philosophy as savings—automatic deposits each month in which you can buy partial shares and take part in dollar-cost averaging to spread out your risk. Early Earners is free to our customers, as our revenue comes from the financial institutions.

How much time does it take for somebody to open an account through earlyearners.com

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The easiest part of Early Earners is opening an account. It takes no longer than 10 minutes to complete a savings or investment account application and after the application is complete, it takes about five days for the account to get funded and to receive a log-in and password for the account. This means that a child or adult can start saving or investing in less than a week! And hopefully, start a habit that will last a lifetime.

For more information or to start an account, go to www.earlyearners.com. Ranjit Souri (rjsouri@yahoo.com) teaches improvisation and writing classes in Chicago.

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