Dane S.

How To Use Simple Interest Rates To Teach Multiplication In Elementary And Middle School

Keeping math “interest-ing” is one of the hallmarks of a great math lesson plan. Of course, elementary and middle school students tend to learn best when faced with exciting ideas and new scenarios.

Using simple interest rate activities—and money, most importantly—to teach multiplication is one of the best ways to encourage financial literacy and draw our students into the fascinating world of mathematics.

Why Teach Interest Rates?

Using interest rates to teach multiplication comes with a host of benefits. By focusing the multiplication lesson around the concept of interest rate activities, we:

  • Teach our students the importance of simple interest.
  • Impart precious—and sadly often overlooked—personal finance knowledge to our students.
  • Keep students engaged and interested in mathematics by using real-world examples that students enjoy.


Tip: Don’t be afraid to make use of roleplay in the classroom. The more your students connect with the examples, the better.

Lay the Groundwork

First things first: we want to make this exciting. Our students love anything that gets them up and moving, so feel free to adapt the following to your classroom.

Open the lesson by asking your students to name something they want to buy (we’ll use a new phone for our example). Assign the phone a price (say, $100).

Tip: You’ll likely get a broad range of answers—phones, televisions, spaceships—so don’t be afraid to choose something a little wacky to get the students excited.

Class Examples

Next, ask for a volunteer (John, in this case) to be your “customer.” John wants to buy the $100 phone, but he only has $50 to his name. The only way for him to purchase the phone is to take a loan for the remaining balance.

At this point, you’ll want to introduce the concept of simple interest. Explain to your students that interest is a charge for money borrowed—if John borrows the $50 from you, John then owes you the original amount (the principal) plus interest.

Explain Interest With a Simple Interest Worksheet

This is where things get a little more complicated. Your students now know that simple interest is a charge for money borrowed, but explaining the math behind it is best done with examples.

Here, you’ll want to introduce the simple interest equation:

  • Interest = Principal * Rate * Time.

Keep the math simple. Opt for an interest rate that is either 10% or 15%—no need to get fancy. Time is best kept simple as well: I like to stick with one year. Plug in the numbers from John’s purchase:

  • Interest = $50 * 0.15 * One year.


In this example, John will pay $7.50 in interest on his new phone. In total, John’s new phone will cost him $57.50 after one year.

Tip: Compounding interest comes later. For now (and especially for elementary students), simple interest should be the focus.

Reverse the Roles: Savings Account

Of course, you don’t want students thinking interest is only ever bad for them. Reverse the roles: John has $50 and he puts it into his savings account. Now, the bank must pay him interest—work through the equation and see how much money John will make.

Creating a simple interest worksheet with multiple examples is a great way for your students to get additional practice.

Tip: Ask your students if they’d rather have $100 now or $115 next month. This is a great time to start imparting valuable personal finance knowledge to your class.

Check Understanding

Run your students through several more examples. Change the variables for principal, rate, and time to check your student’s understanding.

Once everyone is on the same page, ask the following questions:

  • If you take out a loan, do you want a lower or higher interest rate? Answer: Lower.
  • Is interest ever good for you? Answer: Yes, in a savings account.
  • What is the equation for calculating interest? Answer: (I = PRT).

Tip: If you have the time, considering running a “classroom credit card” interest rate activity. Teaching a solid financial strategy from a young age is incredibly useful.

Teaching Simple Interest Rates and Multiplication

Using interest rates to teach multiplication is one of the most important (and practical) real-world skills we impart to our students. The more our students understand how to calculate simple interest, the better prepared they are to be successful adults.

Dane Sigler

Dane is a freelance writer and former teacher with a passion for the intersection of technology and education. When he’s not writing, he can usually be found motorcycling around Southern California in search of new, strange teas.

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