Foundations · Module 2 of 6
The numbers underneath
Percentages, interest that grows on itself, and the cost of choosing one thing over another. The three ideas everything else leans on.
Key terms in The numbers underneath
- Percent change
Percent change expresses how much a quantity has risen or fallen relative to where it started. Statistical agencies prefer it to raw point differences, because a point change depends on the level of the series while a percent change does not. It is the usual way price and wage movements are reported.
Source: U.S. Bureau of Labor Statistics, CPI News Release Technical Note
- Opportunity cost
Opportunity cost is the value of the next best alternative given up when a choice is made. Because money, time and effort are limited, choosing one use of them means forgoing others. Economists treat it as a real cost of any decision even though no payment is made for the option that was not chosen.
Source: Consumer Financial Protection Bureau, Exploring opportunity costs
- Simple interest
Simple interest is a way of charging interest only on the outstanding principal, not on interest that has already accrued. On many auto loans, the amount owed in interest is worked out daily or monthly from the balance remaining on that date. Because the balance shrinks as principal is repaid, the interest charged in each period shrinks with it. The CFPB notes it is the far more common method on such loans.
Every term on Lever is in the money glossary.
About this module
The numbers underneath is part of Foundations, one of 15 subjects in Lever. It’s a short run of 8 lessons, about 20 minutes in all, so you can finish it in one sitting.
Every lesson takes one idea at a time. You read it with the math worked out step by step, answer a question that puts it to use, then see why the right answer is right and why the others aren’t.
It’s for anyone who was never taught this, and you don’t need to know anything first. Every lesson is free. Lever works out what you already know, so you can start here or let your path bring you to it.
More in Foundations
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1
What money actually is
Why money exists at all, the jobs it does for you, and why every price is written in the same currency.
6 lessons -
3
What keeps money working
Why paper money still buys groceries, and the trust that keeps the whole system running.
5 lessons -
4
A number and a date
Turn “I should save more” into a clear goal with a number and a date, and decide which goal comes first.
5 lessons -
5
Now versus later
Why money today is worth more than money next year, and how to weigh a choice before you make it.
5 lessons -
6
The shape of growth
How long money takes to double, and why small amounts added every month grow faster than you’d think.
5 lessons
Try this module
It’s part of Foundations. Lever will bring it to you when you’re ready, or you can go straight there.