Compound Interest is one of the most crucial money lessons students can learn when they’re young, but it’s also one of the most difficult to teach. Yet, especially for students with learning difficulties, compound interest is irrevocably important to support a life of independence and freedom in the after years.
However, learning this concept becomes inevitable since it is used in various forms of monetary transactions. Hence, a few fun ways can help children learn the concept of compound interest better. Kids would be startled to see and know more about how money can grow if left alone.
So let’s go over a few different approaches to break down compound interest for students so that they can learn in a much more fun and engaging way!
Fun ways to teach compound interest
Depending on their age, you may explain to kids about compound interest in a fun and engaging way. It might be a difficult idea to understand, but by incorporating visual aids and toys they already obviously love, you can convey this concept to them in a much more fun and engaging manner. To make learning more impactful, including fun ways to teach compound interest will be a big win for your child.
But why are these ways important, and how are they benefitting your kid?
Practical knowledge is always superior to theoretical knowledge. Given that theory may teach people and acquaint them with terminologies and the fundamentals, practical knowledge is what makes people learn lessons and learn them by heart! Therefore, fun ways to teach compound interest shall be introduced to students so that the lessons become lifetime learning and aren’t just temporary.
Some of these fun ways are added below. Have a look:
1. Through online games
Living in the era of digitalization where even classes are being conducted online, some online games on the internet today have a focus or emphasis on educating children about money. Giving them a realistic touch, kids can learn so much about compound interest by engaging in a few online games that can keep them busy and motivated for a long time. These games can be made part of the computer classes or can be played while the kid is home during holidays.
One of the games that can be included is :
Compound Interest: This quiz-based game asks students various questions and gives them 4 options. The kids now have to read the word problem and pick out the most suitable answer. The game is ideal for middle schoolers, where they can use a pen and paper to solve the questions. In the end, the game will tell the student’s right score and also show which areas of improvement can be focused on by the young learner.
2. Through demonstrative examples:
When kids are taught through some demonstrative examples, they learn the best as they can relate to the concept even better. To explain this complex topic, give your child a small piece of candy or marshmallow. Inquire how long they believe they can keep it before eating it. Then, offer to give them an extra sweet, so they keep their sweets uneaten daily. This teaches children the concept of earning a reward for saving. The lesson could then be expanded with coins.
Give your child a small amount of money (start with 50 cents) and offer to add to it every day for as many days as your child can continue to save. Then, gradually increase the daily amount you provide to simulate compound earnings.
Explain how money kept in a bank earns interest. Once your child has practiced saving their sweets and understands the concept of earning more by saving more, you can explain that money invested in a savings account works similarly – that the sooner they save, the more compound interest they can earn.
3. Classroom activities
Classroom activities, when conducted in class, involve the participation of the students as well as the teacher. These activities can help students understand the concept closely by relating to the problem. Some compound interest activities can make the learning process easier and more fun for the learners. Teachers can try this activity to inculcate the concept:
- Marathon of Compound Interest
To teach your child the magic of compound interest, lay out two large empty jars, give them some coins, and tell them that they may earn money by running a “marathon” around the yard. This one is a good blend of physical movement and actual learning, which most children will love.
4. Learning the concept at home
While there is no denying that students learn best at school with the vigilance of the teaching staff. However, when parents pay equal attention, learning can be enhanced and this can add up to the inculcation of the concept. Hence, parents can also undertake a few activities or practices to help their children absorb the concept of compound interest. These can also be held on a day-to-day basis when the child is home on vacation as it helps the children by not losing touch with studies.
- Bank of Treats Waiting Game
This activity includes giving your child a tiny bit of a favorite treat to put in their “bank” and then giving the child more treats after a short period to demonstrate how compound interest and delayed gratification may earn them more of their favorite reward. This is a fun game to play after dinner.
- The Checkerboard Game
It will be easier to remember if it is enjoyable. Try the checkerboard technique. Begin with a huge coin bag. On the first day, have your kid deposit one coin in the bottom left square of the board.
Every day, they collect double interest from the lender (you) and place it on the next square. So they’ll have two pennies on Day 2, four pennies on Day 3, eight pennies on Day 4, and so on. They’ll accomplish their savings objective after accumulating enough interest and piling the pennies till they fall.
5. Websites to learn compound interest
While activities to partake in can be fun practically and teach your child about the concept, at the same time, websites are an equally fun way of visual learning for kids. Therefore, here are some cool websites and apps to visit that can help your little one learn a thing or two about compound interest. Have a look:
- $mart Path
$martPath is an online teaching resource for students in grades 1-8. $martPath is an engaging, dynamic, and simple approach for elementary and secondary school teachers to incorporate relevant and enjoyable economic and financial education into their classrooms to increase students’ financial literacy. What’s more, the finest part? It is completely free.
- ENT credit union
Since 1957, Ent has helped various members and readers improve their financial life by providing quality and reliable financial education and access to the greatest financial products. They give importance to proper financial training and education. It’s one of the substantial ways an individual can flourish.
- Lemonade Day
Lemonade Day is a lesson-based program that guides children from a dream to a business strategy while educating them on the same concepts every company must follow. In addition to encouraging children to work hard and profit, they are also encouraged to spend some, save some, and give some by giving to their community.
Lemonade Day has evolved from feeding 2,700 children in one city in 2007 to serving 1 million children in 80+ licensed markets in the United States, Canada, Bermuda, six U.S. military posts, and counting. Lemonade Day ignites the entrepreneurial spirit and inspires young people to set objectives, work hard, and realize their aspirations.
6. Teach with coins and cash
Since Compound Interest is all about money, cash flow, and saving, hence, what better way to teach the kids than by handing them over some real coins and cash? Some practices can be inculcated by parents to help the students with a better understanding of compound interest. This practice will educate your kid on how compound interest can quickly mount up, but only if your money is left alone.
This can be a helpful practice if your kid has been demanding money for something they desire or for ways to make additional money around the house. Basically, just hand them over to a piggy bank, and give them a cent to deposit every day. Set up a rate of interest with them at the beginning of the month. For the whole month, keep giving them one cent, and reward them extra whenever they perform well in class or do something good at home. At the end of the month, ask them to count how much money they have in their piggy bank, and also ask them to calculate the compound interest on the money.
This amount (Savings + Compound Interest) can now be used by them to purchase their long-desired item. The activity can also be carried out with some coin manipulatives.
The idea of compound interest being boring is a matter of the yesteryears. Any child in able hands can quickly understand and learn the concepts of compound interest if followed in an interesting manner. With the right set of games, engagement, and last but not least, patience, anyone can master it skillfully. You never know; your tiny one might just retire as a billionaire if started at the right time and, most importantly, the right way! We hope that this post proved beneficial to you in inculcating the necessary math skills in your kid.
An engineer, Maths expert, Online Tutor and animal rights activist. In more than 5+ years of my online teaching experience, I closely worked with many students struggling with dyscalculia and dyslexia. With the years passing, I learned that not much effort being put into the awareness of this learning disorder. Students with dyscalculia often misunderstood for having just a simple math fear. This is still an underresearched and understudied subject. I am also the founder of Smartynote -‘The notepad app for dyslexia’,