Is teaching interest w/o inflation misleading students?

[Foircia]

I think teaching only interest without inflation in schools is misleading because it gives students an incomplete picture of how money actually works in the real world.

Interest - whether for savings or loans - is important. But understanding interest without context becomes almost meaningless if you don’t also know what inflation does to the value of money over time. Interest rates tell you how much your money grows or costs to borrow; inflation tells you how much that money actually buys. If students learn that interest makes money increase without learning about inflation, they might falsely believe that simply earning interest makes them richer, even if their purchasing power is shrinking. That’s like teaching how to run without telling someone why they’re running uphill.

So how do we simplify this??? We teach interest and inflation together by showing that interest makes your money grow, but inflation makes things more expensive at the same time.

It’s like saving candies in a jar. If you earn 1 extra candy every year (interest) but the price of candy goes up by 2 candies (inflation), you can actually buy less candy later. So money isn’t just about how much you have, it’s about what it can still buy.

Are there any educators here like me? How do you teach interest in your class?

Btw, sharing these articles if you need some good reads.

1. How inflation affects cost of living and purchasing power (https://www.ecb.europa.eu/press/key/date/2025/html/ecb.sp250327~4f9c298d91.en.html)
2. Why financial literacy helps individuals respond to economic changes (https://educate.lgu-santol.gov.ph/financial-literacy-and-economic-education/inflation-and-cost-of-living-concepts/)
3. Purchasing power and inflation (https://www.investopedia.com/terms/i/inflation.asp)

[demonica]

I'm not sure how you were able to say that they only teach interest and not inflation in school, cause what I remembered is that both interest and inflation were taught. Perhaps it just differs on what major you're taking and how in depth the lecturers teach these topics.

And even if it's not being discussed in school, as we grow older, we slowly realize that things are becoming more expensive day by day. We get a bit of awareness about inflation just by buying things in the market and comparing it to its price years back then.

[Findingnemo]

I don't remember them teaching me anything at all.

But it should be taught together and this is a mistake done by most of the economic influencers too even today, when they talk about investing they just take an asset and possible growth in percentage but they never take the inflation into account so it's not going to be as big returns at the time of our retirement if we add 5-8% inflation rate.

[Miles2006]

I will create out time to read more articles posted by op, honestly op is right concerning inflation rate recently the high rate of inflation keeps growing. A simple example tells how governments keep increasing salary payment every month yet even with a high pay amount salary earners can’t grow rich instead the money paid are likely a fit in for inflation commonly price of foodstuffs. The more interest rate increases likewise inflation increases certainly the interest becomes less value, teaching interest and inflation can help enlighten students but, these two topic can be found in same subject although a broad education standard vary.

[Perfectbaby]

We should be able to know how things works and even though many are that depending on their interest, without considering the other side of it. However, inflation is something that is constant but it's gradually affects the price of things or products.
That is why it's best advisable to have investment on digital currency which inflation could hardly affect, in fact digital currency like Bitcoin is a safe haven over inflation.

[bitterguy28]

I'm not sure how you were able to say that they only teach interest and not inflation in school, cause what I remembered is that both interest and inflation were taught. Perhaps it just differs on what major you're taking and how in depth the lecturers teach these topics.

it’s not part of the general studies but i think it should be discussed even for kids and not simply tell them to work hard and keep saving but instead think about investing

[noorman0]

Inflation and interest are taught in school, as far as I remember, in separate chapters. But I understand your point: how banks must maintain consistent business profits while inflation continues to accelerate.

Actually, I've also begun to understand this over the past year, out of curiosity about whether banks would be able to offer the same interest rates as fiat currencies if I saved in gold.

[Ambatman]

From my experience this is not true
As long as they talking about interest rate in respect to the economy
Inflation would always mentioned
Except you talking about interest on accounting.

What should be added would be Debt
Our world today is financed by debt hence the existence of interest rate and the existence of inflation.

[tabas]

Inflation and adjustments won't be understood by kids if they're taught in the primary school. Even in high school, I can't remember if that's taught to us. And now if someone asks me related to this, I'm opening about the inflation so that they won't have any confusion if the time comes they earn money and they're surprised why their money after spending is just quickly gone. It's due to the inflation and the increase of cost of goods and everything. While, I am not an educator but I agree that if the schools are teaching about interests, they should also include inflation and the impact of it into the economy, global, regional and personal.

[Fortify]

I think teaching only interest without inflation in schools is misleading because it gives students an incomplete picture of how money actually works in the real world.

Interest - whether for savings or loans - is important. But understanding interest without context becomes almost meaningless if you don’t also know what inflation does to the value of money over time. Interest rates tell you how much your money grows or costs to borrow; inflation tells you how much that money actually buys. If students learn that interest makes money increase without learning about inflation, they might falsely believe that simply earning interest makes them richer, even if their purchasing power is shrinking. That’s like teaching how to run without telling someone why they’re running uphill.

So how do we simplify this??? We teach interest and inflation together by showing that interest makes your money grow, but inflation makes things more expensive at the same time.

It’s like saving candies in a jar. If you earn 1 extra candy every year (interest) but the price of candy goes up by 2 candies (inflation), you can actually buy less candy later. So money isn’t just about how much you have, it’s about what it can still buy.

What age of student are we talking about here? Because I think you'll find there are large parts of the population in most countries that don't actually want or ever care to learn about such basic concepts. Interest is probably a hard enough concept for them to grasp and when you try to talk about inflation in that context you are going to lose all interest. That's the root of the problem really, lots of people pretend to be interest in money but in in so far as how can they get as much of it as possible for as little effort, beyond that things like compound interest just sound far too slow. I definitely agree that such concepts should be taught in schools, but a lot of other stuff like mortgages, credit cards, pay day lenders, bonds, etc. should also be taught in depth.

[Mate2237]

OP you raised a very important issue here because, in schools you are not taught the reality on ground and that, is financial management and education. The role of financial knowledge as an antidote to the raiding harsh economic conditions cannot be overemphasized because you can't be talking about financial freedom without having a good background on financial intelligence. This is key you must have a discipline financial habit if you are to break free from financial problems.

Inflation is biting harder every day so there is need to have a balanced understanding of inflation in respect to how it affects you as a person.it is funny how many people are highly educated but when it comes to financial education and intelligence they are not there.

[Alpha Marine]

I don't remember them teaching me anything at all.

I was taught both interest and inflation in high school. I remember it because it was in one of my favourite subjects then. I remember not fully understanding it then, though, but as I matured, I got a better understanding of it.

I don't believe what OP is saying is entirely true, though. I think both interest and inflation are taught in schools, but the problem is, they teach it in a very passive way. They don't teach it as something that is important, but its in the curriculum, especially students who learn economics.
There are many thing that cant be taught in schools. A school is suppose to equip the student to learn on his own and be aware of his surrounding.
Inflation is a very practical thing. A person who has had a good education should be abe to know and understand what it means when his $2 can no longer afford what it could afford a year ago. Not everything can be taught in schools.

[hmbdofficial]

It should not be about interest actually and not even inflation as well, I think it should be about proper money management and development of skill that shape your money in the right way which is the investment.

I don’t know wether it’s even thought in school about interest rate of cus it’s just the calculation aspect that is alw thought in school Wch is very important to know how to calculate your interest rate and manage your funds.

Inflation is not something that can even be thought because you don’t knw how it happens it’s a gradual process that happens without you even knowing.

Let just say we need to know those factors that causes the inflation and should be thought that’s what I think should be done to help the young generation.

[Ruttoshi]

Schools cannot teach you how to make money. How will they teach you about inflation when they don't know how to tackle the inflation problems in the country. Inflation is a broad topic that even the economist who are experts don't understand how to contain inflation. The future is filled with uncertainties caused by human greed which will definitely lead to high level of inflation. Simple Interest is very easy to understand with the mathematical formula. It's taught in Primary school.

The government is the number one problem to inflation.

[9ja Amaka]

Your points are very logical, but I am skeptical on somethings you said. I don't think that teaching interest is misleading, especially to the little ones. Both interest and inflation are very related, but they are different concepts, and teaching kids both can be too much for some at the same time, necessary for them to have the basic knowledge on those things.

However, inflation is a concept that needs to be thought when one has started earning his own money. Like little kids that are yet to earn any money, do not need to bothered about the knowledge of inflation, except what it meant literally.

[Betwrong]

I think teaching only interest without inflation in schools is misleading because it gives students an incomplete picture of how money actually works in the real world.~

You are absolutely right, but I think in many economy schools aground the world they teach inflation too and they teach to take it into account too when calculating the real profit from your investment, not only the interest. Inflation could be so high that your profit from your investment could be negative despite seemingly high interest. Btw, you are the living proof that such teachers exist. You are doing a great job, mate. Keep it up.

[slapper]

but who voted on deciding we teach personal finance instead of economic systems?

You teach interest and inflation as individual issues. How does this have an impact on YOU and your money. What should YOU do. And sure that's good if you have money and choices. But most people don't have enough of either for this to make much of a difference.

Wages don't follow the trend of productivity anymore. That's the thing that broke. People are creating and producing more, working more and getting less of the value they create. That began in the 70s and just kept on going. But we don't teach that because then you'd have to do that because it gets into the uncomfortable territory of policy choices, who gets it, and so forth.

Maybe I am asking too much from schools. They're not going to teach teenagers monetary policy. But to say "financial literacy" when really it's "here's how to work your way through a system we won't explain" that's dishonest.

[bhadz]

How do you teach interest in your class?

The educational system in my country doesn't include any of these economical and personal finance subjects. It is what we mostly needed and we are only learning that when we become adults and we have to deal with it through experience and failures. I think that it's not only about inflation and profiting that we should add to what the schools teach to the children. And it should come from someone who's made well in life through their own experience and not just theoretical teaching on how to be financially free. If there's that kind of program that the schools can adopt, it will help starting from kids to being young adults.

[michellee]

No, they don't. Schools just educate the global things without teaching about inflation more details. Teachers thinks they are not ready with the complicated explanation although some of them can understand. Students learn in the school just follow what their parents ask and do as their teachers say. Students only knows money can buy something so sometimes they use money to buy other students to do their homework. They don't thinks about inflation or other things too serious. Even if they are works, not many of them thinks about inflation. They just know how to they can have money by working and saving while they can spending the salary for themselves.

[Ucy]

A proper money ought to be deflationary or going up in value fast enough to beat inflation and compensates the need for interest from either savings or loans. This could encourage people to just save or lend more without expecting the interest. And it can also encourage them to plan for more profitable/productive investments that can help push price of goods and services down if their supply increases to outpace their demand.

So the students should also be taught the solution to the problem of saving or lending with inflationary fiats and getting paid interests that can't compensate for the inflations. The solution would be: don't save longterm in fiat currencies and invest in things profitable enough to beat inflation.