lesson ten - Practical Money Skills

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compound interest calculationInterest is paid on the amount of deposit, plus any interest earned.Deposit + Earned Interest x Interest Rate = Interest EarnedexampleYou have $100 in a savings account that pays 6% interest, compoundedannually. During the first year, you would earn $6.00 in interest.$100 + $0 x 0.06 = $6.00$100 + $6 = $106 (total value)With compound interest, at the end of two years, you would haveearned $12.36 in interest.$100 + $6 x 0.06 = $6.36$106 + $6.36 = $112.36 (total value)The account would continue to grow at an increased amount each year.At the end of <strong>ten</strong> years, you would have earned $79.80 for a total valueof $179.80.www.practicalmoneyskills.com savings and investing overhead 10-1b
name:____________________________________________________________date: ______________________setting your financial goalsShort-range goal (within 1 month)Goal:____________________________________________________________________Estimated CostTarget DateMonthly Amount$ ______________$ ______________$ ______________Medium-range goal (2–12 months)Goal:____________________________________________________________________Estimated CostTarget DateMonthly Amount$ ______________$ ______________$ ______________Long-range goal (more than 1 year)Goal:____________________________________________________________________Estimated CostTarget DateMonthly Amount$ ______________$ ______________$ _______________www.practicalmoneyskills.com savings and investing activity 10-1a
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Page 14 and 15: pay yourself firstA little can add
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lesson ten - Practical Money Skills

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