Compound Interest Calculator for Kids

Why show kids compound interest?

Compound interest is the most underrated lesson of childhood. A kid who understands that money grows on top of money — and that “on top of” gets bigger every year — has a mental model most adults lack. Starting early matters more than the amount: $10/month from age 8 to 18 at 7% is worth more than $30/month from age 15 to 18 at the same rate. Time does the heavy lifting.

What interest rate should I use?

For long-term projections (what the stock market has averaged), 7% is the classic assumption. For a kid's savings jar where you the parent pay interest to teach the concept, higher rates (5% monthly, 50% annual) are fine — the balances are small and the point is visibility, not yield.

How to turn this into a lesson

Run the calculator once with your kid's current allowance and 0% interest. Then run it again at 7%. The gap between the two numbers is interest — money they didn't work for. Show them the year-by-year bars. Most kids are visibly surprised at how much the bars accelerate near the end. That's the compounding kicking in.

See our allowance-by-age guide for age-appropriate contribution amounts, and the savings goal calculator for shorter-term goals.