Standard of deferred payment

Alright kiddo, have you ever borrowed something from someone and promised to pay them back later? Maybe you borrowed a toy from your friend and said you'll give it back in a few days. That's kind of like what a standard of deferred payment is, but on a bigger scale.

You see, when grown-ups need to buy something but don't have enough money right away, they can use a standard of deferred payment to buy it anyway and pay for it later. It's like borrowing money from the store or the bank.

For example, let's say your mom needs a new refrigerator. She doesn't have $1,000 to buy it all at once, so she uses a standard of deferred payment and buys it on credit. This means she can take the refrigerator home and pay back the money in smaller amounts over time. She might pay a little bit each month until she's paid off the whole amount.

This is helpful because it means that people can get what they need, even if they don't have all the money right away. And as long as they make their payments on time, they can keep using the standard of deferred payment to buy things they need.

Now, just like when you borrowed your friend's toy, when someone uses a standard of deferred payment, they have to promise to pay back the money they borrowed later. They usually sign a paper that says they agree to pay back the money and to pay an extra amount of money called interest. Interest is like a fee for borrowing the money, and it helps the store or bank make some extra money for letting people use the standard of deferred payment.

So that's what a standard of deferred payment is, kiddo. It's a way for people to buy things they need even if they don't have all the money right away, and to pay it back in smaller amounts over time plus extra money called interest.