__December 2017 Financial literacy question__

**Imagine that the interest rate on your savings account is 1 percent a year and inflation is 2 percent a year. After one year, would the money in the account buy more than it does today, exactly the same or less than today?**

We will disclose the answer to the question at the end of each month so stay tuned! In the meanwhile, scroll down and submit your answer!!

__Question & answer to the November 2017 financial literacy question of the month!__

Suppose you have $100 in a savings account earning 2 percent interest a year. After five years, how much would you have?

You’ll have more than $110.41 at the end of five years because your interest will compound over time. Here’s how – Savings account with $100 and a 2 percent annual interest rate would earn $2 in interest for an ending balance of $102 by the end of the first year. Applying the same 2 percent interest rate, the $102 would earn $2.04 in the second year for an ending balance of $104.04 at the end of that year. Continuing in this same pattern, the savings account would grow to $110.41 by the end of the fifth year. You will earn interest on the money you save and on the interest your savings earned in prior years.

This was a simple example using $100 but imagine if you are able to save $10,000, $100,000 or $500,000? 2% does not sounds like a lot, but it does add up.

For more information please go to workingyourwayup.com

$50

Great guess, Nyesha!! I will provide the answer and calculation this Thursday (last day of the month) so stay tuned!

Thank you for being my first comment! I appreciate it 🙂 Yinette