Chapter 3: Smart Saving – Pay Yourself First
LESSON GOAL
BY THE END OF THIS LESSON,
you’ll understand what interest is, how it helps your money grow, and why saving money (especially early!) can be a powerful way to build wealth over time. You’ll also explore a fun idea: getting “paid” by Mom’s Bank or your own family savings system!
💬 let’s break it down
Have you ever heard someone say, “Let your money work for you?” Well, guess what — money can grow even when you're not doing anything with it. That’s because of something called interest.
Interest is when you earn extra money just for saving. Sounds cool, right?
Here’s how it works:
Let’s say you put $100 in a savings account that gives you 10% interest per year. That means after one year, the bank adds $10 to your account — for doing nothing but saving!
Now you have $110.
Next year, you earn 10% on $110 — which is $11.
So now you have $121.
It keeps growing… like magic ✨
This is called compound interest, and it means the more you save, the more you earn — and the faster it grows over time!
You don’t need a real bank to try it out — you can start with “Mom’s Bank” or “Dad’s Credit Union” at home. Your grown-ups can decide how much “interest” to give you for saving money and leaving it alone.
🧠 ANALOGY: Interest is Like a Snowball
Imagine rolling a tiny snowball down a hill ❄️
At first, it’s small. But as it rolls, it picks up more snow… and more… and MORE!
By the time it gets to the bottom, it’s HUGE!
That’s how interest works. The longer you let your savings sit and grow, the more “snow” (aka money) it picks up along the way.
🤔 critical thinking questions
Would you rather get $100 today or $1 that doubles every day for 15 days? Why?
How does compound interest help you earn money while you sleep?
Why do you think starting to save early matters more than saving a lot later?
What would make “Mom’s Bank” fun and fair in your home?
✍️ journal entry: “My Growing Snowball”
Pretend you have $50 in savings.
If you earned 10% interest every year, how much would you have after 3 years?
Write a short story or draw a comic about your money snowball rolling down the hill, getting bigger each year — and what you do with it when it’s big!
👨👩👧👦 ACTIVITY WITH FAMILY OR FRIENDS: Start Mom’s Bank!
What You’ll Need:
A jar or envelope for savings
A notebook or tracker
Agreement from your grown-up (they're the bank!)
How to Play:
Decide on a fun “interest rate” (like 10% per month or $1 per $10 saved).
Every week or month, add your interest and record your total.
Watch your money grow!
🎯 What This Teaches: Kids can see how money multiplies and build motivation to save instead of spend right away.
💵 real-life practice: Try a Mini Interest Challenge
Challenge: For the next 4 weeks, put money into “Mom’s Bank” and let it earn interest.
Track your starting amount and how much interest you earn each week.
Example:
Week 1: $10 + $1 interest = $11
Week 2: $11 + $1.10 interest = $12.10
(Keep going!)
🌟 Bonus: Add a “no touching” rule to really test your patience and self-control.
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