This model shows the relationship between earnings, compound interest, and expenditures. By manipulating the various parameters, the user can see how to manage money to achieve long-term goals. It is important to note that all values are set to a weekly time scale. The runs shown below demonstrate that even if your allowance increases from $10 a week to $30 a week, if you continue to spend a certain percentage of your money weekly (in this case, 50%), the value of your money will plateau at the point where your income and expenditures are equal.

THE MODELS

Vensim Version Vensim PLE Software Right-click to download the model Money Model Vensim

STELLA Version isee Player Software Right-click to download the model Money Model STELLA PC How to Build the Money Model

[Diagram Level | Equations Level | Graphs ] money(t) = money(t - dt) + (weekly_allowance + interest - discretionary_weekly_expenditures - fixed_weekly_expenses) * dt INIT money = 0 weekly_allowance = 10 interest = weekly_interest_rate*money discretionary_weekly_expenditures = .5*(money-fixed_weekly_expenses) fixed_weekly_expenses = 0 annual_interest_rate = .03 weekly_interest_rate = annual_interest_rate/52 Time Specs Range: 0 - 12; dT = 1, Integration Method = Euler's Sensi Specs Run #1: Weekly Allowance = 10 Run #2: Weekly Allowance = 20 Run #3: Weekly Allowance = 30

Home | Contact | Site Map | Search