ASL Financial Literacy—Calculating Interest
Part of becoming financially literate is understanding how to calculate interest. In this video, your kids or students will learn what exactly interest is and how they can calculate it. Interest is an amount of money that you either pay or earn. Whether you pay or earn depends on the situation. If you borrow money, you have to pay interest. If you save money at a bank, you will earn interest.
There are a few terms you should be familiar with. The principal is the amount of money you start with that you are borrowing or spending. Another term to know is rate. The rate is the percentage you are charged (if borrowing money from a bank/company) or paid (if saving money in a bank). You will be able to use the rate and principal to determine the interest using an equation: Interest = Principal x Rate x Time (years).
The video goes through a helpful example scenario to walk you through calculating interest when saving money at a bank. In this case, Frankie Finance is starting with $200. The rate will be 0.15. Based on the equation, Frankie will earn $30 dollars per year in interest. Next, you can follow another scenario in which Frankie borrows money and owes $30 extra a year! The equation is the same regardless of whether or not you're borrowing or saving.
We hope you and your student(s) enjoyed learning about these important skills! If you want even more information, head over to our website and download one of our many free lesson plans, full of activities, worksheets, and more!
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What you will learn in Financial Literacy—Calculating Interest:
0:00 Introduction
0:29 What is interest?
1:24 Principal, rate, and the interest equation
2:20 Interest scenario—earning interest
4:23 Interest scenario—paying interest
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