How to explain investing to a fifth grader – and why we must

The other day, I overheard my daughter explaining compound interest in the most brilliant way. She said, “Your money has money babies. Then those babies have more money babies. And they have more money babies. The longer you leave your money, the more money babies you get.”

She’s not yet in fifth grade. But somehow, she gets it.

And that’s exactly the point. If a child can understand the power of compound growth, then it’s perhaps not the concept that’s complicated, it’s the way we teach it.

In my home, money isn’t a taboo topic. My children are exposed to it constantly, through life. My daughter sits beside me while I prepare talks and presentations about women, wealth creation, and long-term investing. Sometimes she repeats my exact words. Other times, she makes those words her own, like turning compound interest into a story of money babies that multiply over time.

That’s how learning should happen. Not through pressure, but through immersion. Repetition. Curiosity. And love. We need to start building the basics in a language our little people understand.

 Fikile’s Money Dictionary for Fifth Graders

Investing

Imagine you plant an apple seed. At first, it looks like nothing is happening. But if you water it and give it time, it grows into a tree – and that tree gives you apples every year. Investing is like planting your money so it can grow and give you more money later.

Example: If you put R100 into an investment and it grows by 10% in a year, you’ll have R110. Next year, if it grows by another 10%, you’ll have R121 – even though you didn’t add any more money. That’s your tree giving you more apples each year!

Activity: Plant a seed in a pot and water it every day. Just like a plant, money needs time and care to grow.

Compound interest

Your money has money babies. Then those money babies have money babies. And they have more money babies. The longer you let your money stay invested, the more money babies you get!Example: Start with R50. If it earns 10% a year, after one year you have R55. The next year, you earn interest on R55, so it becomes R60.50. The year after that, you earn interest on R60.50 – and the numbers keep growing faster and faster.

Activity: Stack LEGO bricks. Start with one, then add two “babies,” then three more, then four… See how tall the tower grows the longer you go.

Delayed gratification

It means choosing to wait for something special instead of spending your money right away. Like saving up for a big toy you love instead of buying sweets today.

Activity: Help your child make a simple wish list of something they really want. Then, work together to create a savings jar with a picture of that goal on it. Each week, add a little bit of money they ‘earn’ and track the progress. Talk about how waiting and saving helps them get something they care about.

Why we need to teach investing from grade one

We need to start teaching investing early. Not because we expect children to become financial experts, but because we want to instil a mindset – one that values patience, planning, and growth. It’s just like brushing your teeth: you don’t teach it once and move on. You reinforce it over time, through everyday moments. Drop a nugget of wisdom at dinner, or in the car, or while they help with your grocery list. And most importantly, let them see it in your life – that you’re saving, investing, and making intentional choices.

That’s my challenge to all parents: model the behaviour. Live within your means. Delay gratification. Grow your money babies – and invite your children into that journey.

In South Africa, we face a crisis of instant gratification. We want quick returns, fast money, flashy lifestyles. Gambling is on the rise – for the year ended March 2024, South Africans spent a staggering R1.1 trillion on gambling, a 40% increase from the previous year. Alarmingly, online gambling has become one of the biggest competitors to online investment platforms, drawing people in with the promise of instant wins rather than long-term growth. Meanwhile, consumer debt is compounding. And we have one of the lowest savings rates in the world.

That’s why I believe we should teach compound interest and long-term thinking in primary school when young minds are at their most malleable – not just in the context of saving, but also to understand debt. Because debt has money babies too. And if we don’t teach this distinction early, we risk setting our children up for cycles of stress instead of cycles of growth.

When I speak about financial literacy, I always say: it’s like studying. You give something up now – your time, your effort – to build something bigger later. Investing works the same way. It requires time, consistency, and patience. It’s how money grows.

Start growing money babies together

I’ve opened SatrixNOW investment accounts for my children. Often, we sit together and look at how their money has grown. They can see their money babies at work – and that builds excitement, understanding, and trust in the process. If we can raise a generation that understands compound interest before they ever sign a loan or swipe a credit card, we’ll be empowering them for life. If we can shift mindsets early, we can shift the economy too.

Higher savings rates fuel investment. Investment fuels economic growth. Economic growth fuels jobs and prosperity. Our GDP per capita remains low, and one of the things we can do to influence GDP growth is to change our relationship with saving and planning. But it can. If we start young. If we start at home.

“Mom, what do you do for work?” my children ask. “I talk about money,” I tell them.“Because it matters. Because it can change lives. And because we’re starting with you.”

* Mbhokota is the CEO of Satrix.

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