The same jar of 60 coins buys fewer buns as prices creep up.
The big ideaPrices creep up, so a jar of coins buys less over time. Growth can help.
How it works
Nico's jar of 60 coins never lost a coin. But each year a bun cost a little more, so the coins bought less.
Grown-ups call prices creeping up a little each year inflation.
Gran's made-up garden adds one new coin for every ten inside each year, so coins can climb the way prices do.
Real investments are not so smooth. Some years they grow and some dip, and growth is never promised. That is why investing is for coins not needed for a long while.
What one bun cost.Two jobs.
Example 1: Buns at three coins
A bun costs 3 coins.
60 ÷ 3 = 20.
The jar buys 20 buns.
Example 2: Buns at five coins
Ten years on, a bun costs 5 coins.
60 ÷ 5 = 12.
The jar buys only 12 buns, though it holds all 60 coins.
Example 3: The garden, year one
60 coins hold 6 full tens.
6 new coins sprout.
60 + 6 = 66 coins in the garden.
Example 4: Garden against jar
After ten years the garden holds 149, and a bun costs 5.
The garden buys 29 buns and the jar buys 12.
29 − 12 = 17, so the garden buys 17 more.
Words to know
inflation
Prices creeping up a little each year.
jar
Keeps coins ready, never changing.
garden
A made-up place where coins get time to grow.
Watch out
The jar did not lose coins. Each bun cost more.
A garden is not smooth. Some years it dips.
Coins needed next week or this month belong in a jar, not a garden.
The garden is made up. Growth is never promised.
Try it
A bun costs 4 coins. How many does a jar of 60 coins buy?
What is it called when prices creep up each year?
Should coins for a kite next week sit in a jar or a garden?
A jar buys 12 buns and a garden buys 29. How many more does the garden buy?
Answers: 1. 15 · 2. Inflation · 3. A jar · 4. 17
Try at homeWith a grown-up, ask what a loaf of bread or a bus ride cost when they were your age. Is it the same now? Talk about why.
For grown-upsAsk a grown-up what a loaf of bread or a bus ride cost when they were your age, and talk about why it is different now. Everything here is pretend, and none of it is advice about investing.
Open these notes on screenScan the code, or go to tutorpip.com.