Maybe your son is saving money to buy a car but has no idea how much insurance would run along with interest on a loan to be taken out. Or your daughter wants to know what’s the big deal about earning interest on her bank account.
You could sit down with your kids and try to explain these pocketbook topics, or do a quick online search for textbook definitions of everyday financial concepts.
You can also turn to Napkin Finance — a free website that can explain the complicated terminology in a creative and entertaining way.
The brainchild of Tina Hay during her days at Harvard Business School, Napkin Finance touts itself as a multimedia company that aims to introduce people, especially young people, to complicated financial concepts through video, text, and yes...napkins.
Except these are no ordinary table napkins.
Napkin Finance has created essentially online infographics with key words, arrows, drawings and other diagrams that break down and explain a topic, such as college financial aid, the stock market and buying insurance. Each lesson can be digested in about 30 seconds.
If your child is more of a visual learner, www.napkinfinance.com is a site worth visiting for learning your financial ABCs.
The napkins — there are more than a dozen of them — were critiqued by bankers, financial advisers, and illustrators to make sure they succinctly cover the topic.
Napkin Finance even partnered with former first lady Michelle Obama’s Better Make Room program to create a course on how to successfully maneuver through the college financial loan process.
Some of the most popular napkins, according to Napkin Finance, cover budgeting, borrowing, investing, compound interest, and the Free Application for Federal Student Aid, or FAFSA.
Take compound interest, described on the napkin as “the most powerful force in the universe.” There’s also a drawing of the man widely credited with that quote — Albert Einstein.
As the napkin explains, compound interest is pretty powerful. In its simplest form, the money you invest in a savings account earns interest, and that interest then earns more interest every month, every quarter, every year. Over time the interest being cranked out will exceed the amount of your initial investment.
Napkin Finance also keeps current. There’s a bitcoin napkin on the new-age currency, and during the presidential campaign, Napkin Finance even created some election napkins that broke down into tidbits some of the key economic issues facing the country, such as income taxes, student loans, and the minimum wage.
The Napkinfinance.com website includes fun money facts: What’s the most expensive share of stock? The answer is Berkshire Hathaway at more than $240,000 a share.
And if kids want to use the website’s financial calculators, they can determine how much to save each month to become a millionaire.
For an 18-year-old who wants to retire at age 65, he or she will need to save at least $228 each month, assuming a 7 percent annual rate of return. It’s a start.
Steve Rosen: 816-234-4879