I just calculate it at the end of every month by taking the balance and multiplying by the monthly interest rate. So if you offer 6% per year, multiply by 6/12, or 0.5%. So I have a column called “interest” and the next month’s balance is the interest plus the previous month’s interest, and then I drag both columns down as needed.

To make things easier to see, I also have a “deposits” and “withdrawals” column for each month and calculate that in to the current month’s interest (so current month is previous balance - withdrawals + deposits + previous month interest, and interest is current month * monthly interest rate).

This isn’t how banks do it (they do average daily balance), but it’s good enough and encourages my kids to keep month invested through the end of the month.

I used my excel skills to create a Google sheet to fulfill your requirement.

https://docs.google.com/spreadsheets/d/18s_qFviyI2n9ONhd_MLDb9kIYWVfHccHlvqKvtjbabM/edit?usp=sharing

The cumulative interest is calculated at month level, I guess calculating at day level would be overall kill.

Transactions:

• Date: Transaction date
• Amount: the amount you like to deposit and withdraw (deposits in +ve and withdrawals in -ve)
• Comment: Any comments if you want to put
• Month: derived from the date col - used in the Monthly summary sheet
• Year: derived from the date col - to get per day interest rate
• Days: derived from the date col - to identify the number of days to apply interest
• Interest for days: Calculated interest on the month of deposit / withdrawal.

• The first 3 are inputs and remaining 4 columns are to be copy/paste from previous row.

Interest Rate:

• Year: Just the year
• Interest Rate Per Year: Input the interest rate per year
• Interest Rate Per Month: Interest Rate Per Year / 12 months
• Interest Rate Per Day: Interest Rate Per Year / number of days in a year
• The first two columns are input and remaining 2 columns are calculated

Monthly Summary:

• Month: Year and Month (the date is always 1 - check the formula bar). This is used to calculate cumulative interest and to get the deposit / withdrawals.
• Opening Balance: Closing balance of previous month
• Deposit / Withdrawals: Sum of deposit and withdrawals in a month - comes from ‘Transactions’ sheet
• Interest for deposits/WD: Day level interest calculated for the deposits and withdrawals for each month. This also comes from ‘Transaction’ sheet.
• Interest on balance: This calculates the cumulative interest portion. Interest rates are taken from ‘Interest Rate’ sheet at month level.
• Closing Balance: Sum of all the above.
• No inputs are needed in this sheet.

Hope it will be helpful and all the best for your kids future.

I do save something for my kid using this scheme. I try to put the maximum amount in a year. I wish my parents saved something for me, which would have supported my education.

interest rates are usually an annual rate and accrue monthly. You seem to have applied the interest percentage of 1% to every deposit which is incorrect. Each deposit should gain that amount every year. For example, if you deposited $10 last year now it would be $10.10. If you deposited $10 2 years ago it would now be $10.201 due to the interest compounding.