Financial Math Basics for 8th Graders

To understand interest, let's first look at what percentages really mean.Five percent means five parts out of one hundred. Let's highlight five squares to represent five percent.When working with interest rates, we often need to convert between decimals and percentages. Five percent is the same as zero point zero five.Now let's look at the simple interest formula. This formula helps us calculate how much money we earn on our savings.Each letter in our formula represents something specific. I is the interest we earn. P is the principal, or the amount we start with. r is the interest rate as a decimal, and t is the time in years.Let's use a real example. Imagine you save one hundred dollars in a bank account that pays five percent interest per year.After one year, you'll earn five dollars in interest. This comes from multiplying one hundred dollars by point zero five, for one year.After two years, you'll have earned ten dollars in total interest.And after three years, your total interest earned will be fifteen dollars.Let's visualize how your money grows over time with simple interest.Starting with one hundred dollars, your money grows by five dollars each year due to the interest you earn.Now that we understand how interest works, let's move on to learn about budgeting.The 50/30/20 rule is a simple way to divide your monthly income.Let's break down how to spend fifty dollars on needs.Thirty dollars can be allocated to wants, or non-essential items.The remaining twenty dollars should go to savings.Let's look at how to track your spending throughout the month.Here are some important tips to help you stick to your budget.Many apps can help you track your budget on the go.When comparing products, it's important to look at the unit price rather than just the total price.Let's calculate the price per ounce for each container.The larger container is a better value at 29 cents per ounce, compared to 33 cents per ounce for the smaller size.Now let's look at how to calculate discounts on purchases.Here's another example with a larger discount percentage.Sometimes buying in bulk can lead to significant savings.In this case, buying the bulk package saves nearly four dollars compared to buying individual items.