Compound Interest is not just a Lesson

It’s a Life Principle

This spring marks seventeen years since I accepted a teaching position at Cincinnati Hills Christian Academy and during that time, over 2,585 students have come through my classes. This is not the place where I say how much I enjoyed teaching each and every one of them—rather, this is where I talk about one of my favorite lessons to teach.

Early in 2019, I began interviewing parents whose children were about to graduate from our school and I asked each of them a pointed question: what would you most like your student to have learned that we didn’t teach them? I was ready for all sorts of answers: how to interview for a job, how to write a resume, how to ace a college exam, how to stay focused on academics, and so on. What I got instead was unexpected.

Parent after parent after parent said the same thing: money management. “We want our kid to go off to college and understand the basics—how a checking account works, why they should pay off their credit card each month, what to look for in a car payment.” When I inquired further, I discovered that each parent was frustrated with the overall lack of any sort of financial education.

Given that our entire entrepreneurship program hinges on the philosophy of being “opportunity seeking,” this seemed like a massive chance to do something about the problem of financial illiteracy. And it began with a lesson on compound interest.

It’s worth knowing that I’m a bit obsessed with personal finance and have read everything from Dave Ramsey to Robert Kiyosaki to David Bach, so this lesson on compound interest was fueled with passion and purpose. And while I’ve always believed that teachers need to lead with passion to convince kids to pay attention, what I discovered was that if the material is interesting enough, getting the kids’ attention is easy.

Compound interest is the most important lesson in the entire subject of money management—it’s importance hinges on the principle that consistency compounds. What we do, over and over, day after day, defines who we become, and this is as true for our habits as it is for our dollars. When we teach compound interest, we are really teaching students how to live successful lives.

When I first pulled up a compound interest calculator and began showing students how wealth is built over time with consistency, the students were locked in. We began putting in a variety of different numbers and exploring how Roth IRAs were different from 401k accounts and how custodial investment accounts could be opened for minors. It was clear that this was something students cared about.

Out of that lesson, an entire track within the entrepreneurship program was born. I took my recently published book, The Seed Tree: Money Management and Wealth Building Lessons for Teens, and turned it into “Financial Literacy” – an online class that teaches high school students everything they need to know to begin navigating the financial world. Within two years, this led to a brand-new course called “Advanced Investing”—an honors weighted course for students who wanted more knowledge about managing their money.

All in all, it became clear that students are craving knowledge about how to manage money and that we, as educators, need to provide it to them. Financial literacy is a core class in our entrepreneurship program, and we ensure that every one of our certificate students has taken it. Does your school offer financial literacy? Do you have a robust money management program? If not, reach out to connect.

The future of education is bright indeed!

Do you know a young person who is struggling to manage their money? Well, help them take control of their money now and put them on the path toward financial freedom!

They say that money doesn’t buy happiness. But I think we can all agree that having your finances in order can make living a happy life much easier. Make sure your young person doesn’t fall into the trap of asking “where is all my money going?” or “why didn’t they teach me this stuff in school?!”

Author, Stephen Carter, is a high school teacher turned entrepreneur and had made it his mission to help young people manage their money better. Through a page-turning narrative, Stephen tells the story of a sophomore named Andrew Black, as he navigates the world of finance alongside his instructor, Mr. Sharp.

Although the story itself may be fictional, the teachings, tips and tricks are all based on the author’s own experiences. From crafting a budget and obtaining his first job, to setting up a Roth IRA and developing an investment plan, Andrew emerges at the end of the semester with more financial literacy than most adults attain in their lifetimes. With the power of compound interest at his fingertips, Andrew’s journey demonstrates the amazing benefits of getting an early start on the path toward financial intelligence.

“The Seed Tree: A Financial Fable” is a teen/young adult financial self-help book that blends the beauty of a fictional story, with the hard facts and advice of a non-fiction workbook. Young people will be drawn in by Andrew’s gripping story and will learn about managing their money without even realizing it.

This easy-to-read story is chock full of useful advice to help young people get a grip on their finances, now and forever. The book is ideal for teens, young people, parents, and teachers.

Imagine your culture infused with growth mindset, grit, redefining failure, and opportunity seeking. Imagine your team acting and thinking like entrepreneurs.

Stephen Carter