Week 02, Class 06
Compound Interest and Starting Early
Borrow, protect and grow your money
The same force that makes a credit card balance expensive makes a savings balance powerful. This class introduces compound interest from both sides, so students recognize it whichever direction it is pointing.
Students work through simple versus compound interest, then run savings and growth scenarios with different starting ages and contribution amounts. The central lesson is time: a sixteen-year-old has more of it than any adult, and the arithmetic proves what that is worth.
Topics covered
- Simple versus compound interest
- How compounding works
- The value of starting early
- Regular contributions
- Time as a teenager's advantage
The practical activity
The savings and growth exercise: students compare the same monthly amount saved from age sixteen versus from age thirty, and quantify the head start.
The learning outcome
Students can show with arithmetic why starting early beats saving more later.