Grade 9-12
,
Activity
Compounding Your Savings
Objective
Students will be able to:
- Explain the value of compound interest.
Standard
National Standards in Economics
Interest Rates
Standard: 12
- Students will understand that: Interest rates, adjusted for inflation, rise and fall to balance the amount saved with the amount borrowed, which affects the allocation of scarce resources between present and future uses.
- Students will be able to use this knowledge to: Explain situations in which they pay or receive interest, and explain how they would react to changes in interest rates if they were making or receiving interest payments.
National Standards in Financial Literacy
Saving
Standard: 3
- Students will understand that: People who have sufficient income can choose to save some of it for future uses such as emergencies or later purchases. Savings decisions depend on individual preferences and circumstances. Funds needed for transactions, bill-paying, or purchases, are commonly held in federally insured checking or savings accounts at financial institutions because these accounts offer easy access to their money and low risk. Interest rates, fees, and other account features vary by type of account and between financial institutions, with higher rates resulting in greater compound interest earned by savers.
In this personal finance activity, students will identify the purpose of compound interest and how it works to build savings.
Resources
Procedure
This activity is an individual activity where students watch a video and respond to a set of questions. Compound interest is one of the most important concepts when examining the ability to build savings. This activity will help you understand how to make more informed choices about your savings. To complete this activity, students need to follow the instructions below:
- Watch the video No-Frills Money Skills Episode 1.
- Respond to these questions with a Quizizz activity, worksheet, or ReadyAssessments Activity
- Once the questions are completed check the answer key.