How Can We Make Compound Interest Interesting for Kids?

Memo from the Chief Mammal Header

“Working to help parents raise money-smart kids.”

3 Ideas to Share and Save

Hi! I hope you had a nice Thanksgiving. Here in LA, outdoor dining has been banned in an attempt to slow the spread of COVID-19. It was a difficult decision, and I feel awful for our service industry friends. The owner of El Coyote, our family’s favorite restaurant, told us she recently invested heavily to expand outdoor dining. Now – bang – nothing. Tough times. Just as I wish our restaurant friends find some rays of light on which they can rest their hopes, I offer you these knowledge nuggets below to provide you with a little educational warmth as we head towards winter.

— 1 —

Psychology of Money author Morgan Housel breaks down compound interest and investing for eight- to ten-year-olds in this video. I’m always looking for ways to explain the power of compound interest better, and Morgan does such a wonderful job here. This is a tough concept to make stick because we are biased towards the value of the present. (The technical term is hyperbolic discounting.) I’d love to know if this video helps your kids.

— 2 —

Oat the Goat is a story presented by the New Zealand Ministry of Education to help combat bullying. It was originally released during Bullying-Free NZ Week a few years ago. This story isn’t about money smarts for kids, but it’s so beautifully done that I had to share. Fun fact: Watch to discover that “clear” rhymes perfectly with “dare” in New Zealand. If your kids are experiencing any trouble with bullies, then Oat the Goat might help.

— 3 —

I wrote a two-minute “atomic” essay (in the form of a letter to my kids) inspired by Bertrand Russell’s idea that education’s aim should be a “Mental Adventure.” It is part of a challenge I joined to write thirty essays in thirty days. You might pair this essay with my discussion with Dr. Ashley Whillans about how to help kids find enriching careers.

I hope you find one or more of these three ideas useful in some small way.

Until next time, I wish you and your family well on your own money-smart journey.


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