Week 4 of 5

Saving, interest and reaching a goal

Session 1 · SOLVE: Link Ideas

Money that grows

10 minInterest is the price of using money. When you save, the bank pays you; when you borrow, you pay the lender.
15 minSimple interest: I = P × r × t. $500 saved at 4% a year for 3 years earns $500 × 0.04 × 3 = $60.
15 minSavings goal: your context needs a set amount by a set date. How much must you save each week? How much does interest help?
10 minCompare saving $10 a week from now with saving $20 a week starting in six months. Which reaches $500 first?

Session 2 · SOLVE: Verify

15 minSwap budgets and plans with another group. Check every calculation with an estimate first, then a calculator.
15 minCheck the fine print: fees, 28-day periods, minimum balances, late fees. Does anything change your answer?
15 minStress test: what if prices go up 10%, or you miss two weeks of saving? Does your plan still reach the goal?
5 minRecord every correction you made and why.

Getting started

Work out one year of interest first (P × r), then multiply by the number of years.

Stretch

Compound interest: add each year's interest to the balance before working out the next year. Compare with simple interest over 3 and 10 years.

Checkpoint

A savings plan that reaches the goal on time, with interest calculated correctly and checked by another group.

Activities for this week

Savings race: simple interest: How much difference do time and interest make to saving?

Useful this week