{"id":4939,"date":"2016-12-19T10:38:13","date_gmt":"2016-12-19T15:38:13","guid":{"rendered":"https:\/\/www.afcpe.org\/?p=4939"},"modified":"2019-04-23T15:44:19","modified_gmt":"2019-04-23T19:44:19","slug":"the-challenge-creating-visuals-for-financial-concepts","status":"publish","type":"post","link":"https:\/\/www.afcpe.org\/news-and-publications\/blog\/the-challenge-creating-visuals-for-financial-concepts\/","title":{"rendered":"The Challenge: Creating Visuals for Financial Concepts"},"content":{"rendered":"\t\t
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When you teach financial concepts, how do you help your clients or audience understand the concept? While it\u2019s simple to teach that 2 + 2 = 4, it can be harder to help people comprehend the time value of money, opportunity cost, or longevity as it relates to retirement planning. For people to use these concepts, we must go beyond defining the concept and help people \u201cget\u201d the concepts so they can act on them.<\/p>

Although different people learn differently, we still typically rely on verbal education. \u00a0However, translating our words to visual demonstrations is immediately rewarding. In fact, if you think back to elementary school, we learned to add 2 + 2 by using manipulatives like little blocks.<\/p>

As a University of Illinois Extension educator, I typically teach people in community settings, so my audiences range from elementary students to senior citizens. I believe that all ages benefit by understanding concepts like compounding returns. (You should hear the third graders squeal in delight when they learn that they will have\u00a0more money<\/em>\u00a0after earning a return in their savings accounts!) In the last few years, I\u2019ve been incorporating visual examples when explaining financial concepts.\u00a0 No more time value of money formulas like the uniform series compound amount in my presentation notes!<\/p>

So if I\u2019m not teaching eye glazing-inducing formulas, how can the time value of money be demonstrated? Well, I\u2019ve found that pulling out a $100 bill wakes up the audience!\u00a0 Then I can talk about what happens when you deposit $100 in an account that provides a compounding return. I demonstrate this by adding coins and currency (representing annual growth) on top of the $100 bill. Using 5% interest compounded annually,<\/p>