• On Day 1, have your child “deposit” $1 into an envelope, jar, bag or whatever, and explain that they will be earning interest each day at a rate of 50%.  Depending upon the age of your child, you may have them compute how much they would earn each day (duplicating the chart below).
  • At the end of each day thereafter, add the “Interest Paid” amount shown on the column below and explain that is the interest earned on their deposit balance from the prior day. Beginning on the third day, they will earn interest on their interest.  This is the compounding effect.
  • At the end of 7 days, your child will see their $1 grow to $11.39 because of the positive effects of compound interest!  Here’s how the daily growth looks:

Deposit      Interest Paid     Principal + Interest

Day 1                  $1.00                      $1.00

Day 2                $0.50                    $1.50

Day 3                $0.75                     $2.25

Day 4                $1.13                        $3.38

Day 5                $1.69                      $5.06

Day 6                $2.53                      $7.59

Day 7                $3.80                      $11.39