Compound interest lesson for KS3/4 maths and PSHE: simple vs compound interest and AER. Worksheet, worked answers and discussion cards included.

How can money make money? Learners follow Zara’s £1,000 over 20 years, with the interest spent and with it left in, and find out why a 2% difference matters. Also in the Saving & Borrowing bundle (Stages 5–7), £7.95.

Learners will be able to:

Explain what interest is, and work out simple interest.
Work out compound growth year by year, and explain how interest starts earning interest.
Explain why the gap between simple and compound growth keeps widening, and why a small difference in rate matters.

Money Explained is a 12-stage personal finance course for UK teenagers, written by Verity Jepson, who has worked in education and taught her own children for seven years. Each stage teaches one big idea through a story and a reveal, with just enough maths to make the point land. It’s tried and tested with real teenagers, works for mixed ages and abilities, and works just as well for neurodivergent learners. You don’t need to be a finance expert: everything you need is on the page, including worked answers.

Every stage includes:

A one-page teacher guide: big question, learning objectives, key ideas and the main activity
A two-page student worksheet
Five discussion cards to cut out
An answer and discussion guide with worked answers and links to short videos
A plain-English glossary

UK figures throughout (£, Bank of England, 2026/27 rules). A4 PDF, ready to print. Money Explained is for education, not financial advice.

Every stage follows the same simple shape, so learners and teachers always know what to expect. It opens with a big question, such as “Is someone who earns a lot necessarily wealthy?” A short warm-up needs no preparation and has no wrong answers. Learners work through three core questions, pause to run the main activity (a story, a game or a decision with a reveal), and then reflect on what they found. A challenge question asks them to answer back to a common money myth, and a journal sentence starter helps the idea stick.

Five discussion cards (Explain It, Challenge It, Real Life, What If? and Teach Back) can be pulled at random for extra discussion. Level up tasks stretch confident learners, often with a creative or philosophical twist. The answer and discussion guide gives worked figures for every calculation, and says what a strong answer looks like where there is no single right answer. Calculators are welcome and the maths stays light, so the ideas, not the arithmetic, do the work.