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This guide will cover important topics like simple interest, compound interest, consumer price index (CPI), and the tax system in America. Gaining an understanding in these topics can help you manage your finances more efficiently.

Simple Interest is the interest earned on a principal amount over a time period. In other words, you invest or borrow money and you earn or owe money on that amount.

The interest is not added to the starting amount and reinvested, which is what compound interest is.

Here are two scenarios that can apply to simple interest:

- You can earn interest on money you borrowed. For example, on a student loan. This amount will need to be paid back.
- You can earn interest on money you invest. This amount is given to you when you get your principal amount back.

Notice two important aspects:

- The rate is in decimal form; not percent form and
- The time is in years; not days, months, weeks, etc.

**Here is a video with examples. **