How to Teach Kids About Compound Interest
Begin by giving your child a dollar.. Write them a receipt for the "deposit.. Give them a penny for interest each day.
Steps
1
Begin by giving your child a dollar.
Begin by giving your child a dollar.
2
Write them a receipt for the "deposit.
Write them a receipt for the "deposit.
3
Give them a penny for interest each day.
Give them a penny for interest each day.
4
Show them how much money they have accrued.
Show them how much money they have accrued.
5
Illustrate the effects of spending.
Illustrate the effects of spending.
6
Set up three jars.
Set up three jars.
7
Put one dollar in the "principal" jar.
Put one dollar in the "principal" jar.
8
Add 10% interest to the contents of the first two jars each day.
Add 10% interest to the contents of the first two jars each day.
9
Add to the interest in the interest jar.
Add to the interest in the interest jar.
10
Help your child add up the new total.
Help your child add up the new total.
11
Explain why banks might pay compound interest.
Explain why banks might pay compound interest.
12
Talk about what makes compound interest especially valuable.
Talk about what makes compound interest especially valuable.
13
Help children understand why they should care about compound interest.
Help children understand why they should care about compound interest.
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