This month’s Financial Adventure Activity will have you and your family thinking about delayed gratification and how making the best choices can help you in the long run.
Would you rather have a penny or a million dollars?
When asked this question, many will opt for the million dollars since it seems like it would be the better choice, but this month’s Financial Adventure Activity – Would You Rather Have A Penny Or A Million Dollars will get your family thinking twice.
For this Financial Adventure Activity, gather your family together and ask the following question: Would you rather have a job that pays you one million dollars a year or a job that pays you a penny on the 1st day and then doubles your pay each day for a year? Listen to each person’s answer and then ask why or how they are coming up with their answers.
This is where the fun starts! Take some time to show everyone what the penny on the 1st day that is then doubled each day accumulates to. Have the family help figure out what each day would amount to. The first day is an easy one since you start out with $.01. The second day would be $.01 x 2 = $.02, Day 3 would be $.02 x 2 = $.04, Day 4 would be $.04 x 2 = $.08, Day 5 would be $.08 x 2 = $.16 and so on. After Day 10, it starts to get interesting. Watch how fast the money starts to double. Which day do you reach one million dollars? How much would you have by day 30? Click on this link to see how the first 30 days look:
A Penny A Day Doubled Each Day For 30 Days
Ask the question again…does anyone change their answer? Talk about how important it is to save and think about the future or the long term. This concept is a great way to introduce compounding interest to your children – which is interest added to the principal of a deposit or loan so that the added interest also earns interest from then on. Granted you probably won’t find a 100% interest like in this activity, but when you are young and have more time to save and invest your money you start to see the same snowball effect where your money will build on itself and get bigger and bigger.
If you are interested, you could start to give your children a penny a day and then double it each day like the example, but put a limit on the amount of days you feel comfortable paying them before you start. Use the chart above to help you. Another option would be to use play money. Either example would provide a great visual for them to actually see how the money is doubling and adding up.
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