Most children learn the story of Sir Issac Newton sitting under an apple tree and being hit in the head by an apple, and how a falling apple prompted him to discover gravity. What the children were not told, however, was that the same event prompted another Newton invention. Gravity is a force that describes how things are pulling toward the center of the earth. To explain the concept of gravity and make the new concept more useful, Newton invented an entirely new branch of mathematics called calculus. I have an engineering school and have attended more math classes than the vast majority of the population. Although teaching arithmetic to children at an early age can be difficult, the basic concepts behind arithmetic are very simple, easy to illustrate, and are vital in teaching financial education concepts.

Before the invention of arithmetic, it was very difficult to understand many things in nature because mathematics was limited to recordings. Algebra, geometry and trigonometry only make sense for given data at a given time. If you wanted to see how things behaved over time, you needed to figure out the equation on a bunch of different points and draw a graph to see it. The account allowed us to see how things change at a given moment. It allowed us to see that if we are in our car and apply the brakes, we can predict how long and how long it will take us to stop. It allowed us to see if we were spending money at a given rate and if we were earning at a lower rate, how much we would need until we ran out of money. These types of measurements were not easily performed before the invention of calculus.

When it comes to personal finances, each of us constantly counts, even though we may not realize it. An account is used to measure the rate at which something is changing at that moment. From week to week, from month to month, we adults always do the net income equation to make decisions. Net income is simply total income less expenses. The majority of financial education is aimed at increasing the rate of change in the net income equation. When we work to be more frugal, we reduce costs. When we invest, get hired for extra jobs, or get pay raises, we increase the gross income side. Both increase the rate at which the net profit equation changes.

Using the net income equation we can predict where we will be financially in the future. When will I be able to afford this new thing? Will I have enough money to go buy groceries or go to the movies? Will I be able to pay the tuition? Will you have enough left to continue paying for other things? These are questions that can be reasonably answered with the help of bills.

I find it sad that teachers in schools often talk about the first discovery Newton made that day, but so often neglect to mention the latter. Children at an early age need to know the concept behind computing and the speed of change. It will help them throughout their lives. If you think about it, you will find many ways to illustrate these concepts to your children in the car, on the playground and at home.

This type of learning is important because gravity tells us that things fall to the ground unless we do something. This applies just as much to checking account balances as it does to apples.