Saved money can GROW — banks pay interest, and compound interest earns interest on your interest, so it snowballs over time.
📊Simple vs. Compound: Watch It Pull Ahead
Simple interest — same small step each year
Compound interest — grows faster every year
Both start with the same $100. Simple interest adds the same amount each year, but compound interest gets a little bigger every year — so over time it leaves simple interest behind.
⛄The Money Snowball: Compounding Over Time
Each year your savings earns interest — then next year you earn interest on that interest too. Like a snowball rolling downhill, it picks up more and more, so starting early and leaving it alone matter most.
🔑Key Terms
🏦BankA safe place to keep your money. The bank pays you interest for letting it hold your savings.
💰InterestExtra money the bank pays you for saving — a reward that makes your money grow.
🪙PrincipalThe starting amount of money you put in the bank, before any interest is added.
➕Simple InterestInterest paid only on your original principal, so you earn the same amount each year.
📈Compound InterestInterest paid on your principal AND on interest already earned — so it grows faster over time.
%Interest RateThe percent the bank uses to figure your interest — a higher rate grows your money faster.
⭐Remember: with compound interest your money earns money on its own money — so the earlier you start saving and the longer you leave it, the bigger your snowball grows!