Your decision is whether to accept the $1,000,000 offered, or hold out for a penny, doubled every day for a month. The illustration shows a penny doubled for a week. How many days will it take to get $1.00?

The first time I heard this challenge, Robert said, "Picture putting a penny in a drawer. Every day when you go back and open the drawer, the penny has doubled. There are twice as many pennies in the drawer as there were the day before."

How much money would you have at the end of a month? If the month has 30 days, you will have _____________. If the month has 31 days, you'll have double the amount you answered above. That's $______________.

The money increased (grew) by 100% per day. After it increases by 100% a day for a month, at the end of the month you get to take all of the money (pennies) out of the drawer. This is an example of daily "compounded interest."

Compound Interest

The power of compound interest is that the interest of the previous period (day, week, month or year) is added to the original amount before the interest is figured for the next period. One penny is doubled on the second day. On the third day, the doubling happens to the penny (now 2¢) that was doubled the day before!

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I loved that joke when I was in the second grade. A playmate that wasn't listening carefully would give the wrong answer, and everyone around could laugh.

A: Lead is much heavier by volume, but the question asks about weight, not size. A handful of feathers is much lighter than a handful of lead! Still, a pound is a pound!

Here's another of my favorites…

Q: Which would you rather have: $1,000,000.00 or 1¢ doubled every day for a month?

A penny doubled is only 2¢, right? That’s right for the first day. If you’ve learned your 2X multiplication table, you know that the next day, 2 X 2¢ = 4¢. The next day it will be 8¢, then 16¢.

Are you ready to take the million dollars and run?

Compounding

“The most powerful force in the universe is compound interest.” This statement is generally attributed to Albert Einstein, but I've found no proof he said it. That's a picture of him at 14. (According to Wikimedia Commons, the photo is in the public domain, so you can reproduce it for home school lessons.)

Compounding, in this case, means "to add to," "to augment," "to increase." Choosing intelligently between one million dollars or a penny double for a month depends upon a basic understanding of compounding." How powerful is doubling?

Should you choose $1,000,000 or 1¢?

 

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Why are so many homeschoolers struggling to make ends meet? Of course, they're generally living on one income, which has been nearly impossible for the last four decades. For that alone, each and every parent, guardian and child should be roundly applauded.

Homeschool teachers endeavor to teach better content and have higher academic standards, along with safety, bonding and morality. Perhaps it isn't easy to find financial literacy curricula, since our educational systems have been, by and large, neglecting to prepare us or our children for the business world.

In modern society (or is it just "adulthood"?) everything is the business world. Physicians must keep their practices afloat, artists must sell their sculptures and paintings, social workers must negotiate living-wage salaries and benefits, and ministers must see that their worship buildings' utility bills are paid.

It is impossible to thrive without financial acumen. For most of us, that means learning it ourselves, even if one day we hope to hire a team to manage it for us. A team, because fiscal astuteness touches on almost every topic in the modern world.

• Youngsters can begin by earning and saving their own money to join a sports team or participate in a contest or race. They can read the application and understand the waivers.
• Older ones will learn about buying a vehicle, including reading the warranty and determining whether to purchase an extended warranty on their new stereo system.

To adequately prepare our children for the financial bonanzas and bruises they're sure to encounter in life,  as parents and mentors we must look at our own relationship to money, bills, wealth building, losses, investments, and future planning. If we ignore these matters, or if our children hear us blaming an advisor or department store or credit card company for our woes, what lengths will we have to go to to empower them after just showing them others hold the power over us?

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