Teach Your Kids the Power of the Time Value of Money

Grandma Rie’s Money Camp was last week – it was another week of fun, learning and activities about personal finance .

One of the activities we did this year explored the concept of the time value of money. The grandkids are 10 and 7 this year – old enough to know how to save up for something but still really too young to ‘get’ the concept of compounding growth (although the 10 year old seemed to understand at the end of this years camp!!).

A penny doubled every day for 30 days.

Before starting the activity, I asked each of them which they would rather have – a penny doubled every day for 30 days or a million dollars. Of course they wanted the million dollars. Even one of the parents wanted the million.

I announced that I wanted the penny doubled because it would end up being way more money. The kids didn’t believe me, one of the parents expressed doubt and the other seemed a bit unsure as well.Penny doubled The activity we did required a bunch of pennies and a checkerboard. The youngest child was asked to put a penny on a corner square, then put two pennies on the square next to it, and so on until there were too many pennies to fit easily on the square. The older child then took over, helping figure out what the doubled number of pennies should be and helping to stack them. We doubled, counted and stacked until the kids grew tired of stacking – way before we reached 30 squares.

Although this activity was interesting to the kids and demonstrated the power of growth by adding to savings fairly dramatically, it still did not convince the 10 year old (or the Mom!) that a penny doubled every day would be way more than a million dollars.

So, here is the math to prove it – for any of you out there that may doubt the power of the time value of savings.

Day # Amt Multiplier Amt Doubled
0 $0.01 X 2 = $0.02
1 $0.02 X 2 = $0.04
2 $0.04 X 2 = $0.08
3 $0.08 X 2 = $0.16
4 $0.16 X 2 = $0.32
5 $0.32 X 2 = $0.64
6 $0.64 X 2 = $1.28
7 $1.28 X 2 = $2.56
8 $2.56 X 2 = $5.12
9 $5.12 X 2 = $10.24
10 $10.24 X 2 = $20.48
11 $20.48 X 2 = $40.96
12 $40.96 X 2 = $81.92
13 $81.92 X 2 = $163.84
14 $163.84 X 2 = $327.68
15 $327.68 X 2 = $655.36
16 $655.36 X 2 = $1,310.72
17 $1,310.72 X 2 = $2,621.44
18 $2,621.44 X 2 = $5,242.88
19 $5,242.88 X 2 = $10,485.76
20 $10,485.76 X 2 = $20,971.52
21 $20,971.52 X 2 = $41,943.04
22 $41,943.04 X 2 = $83,886.08
23 $83,886.08 X 2 = $167,772.16
24 $167,772.16 X 2 = $335,544.32
25 $335,544.32 X 2 = $671,088.64
26 $671,088.64 X 2 = $1,342,177.28
27 $1,342,177.28 X 2 = $2,684,354.56
28 $2,684,354.56 X 2 = $5,368,709.12
29 $5,368,709.12 X 2 = $10,737,418.24
30 $10,737,418.24

 

A “Lets Pretend” Game to Help Teach Your Grade Schooler to Manage Money

I’m spending the month preparing for my 2014 Grandma Rie’s Money Camp session which will be held at the end of July this year. This year’s camp changed location to take advantage of a Federal Reserve tour, tours of my own banks as well as a great location for a busy garage sale to house their annual kid business.

The main theme is going to be all about saving. Why save, where to save (that is where the bank tours come in) and how to save. Part of the lessons will involve learning how to track their money, and introduction to the B word (budget). To demonstrate why people need to save and why folks need to plan and manage their money, we are going to try out a pretend play game I made up.

Today, I’m sharing that with you, in case you want to try it but also to see if you have any suggestions that I can incorporate to make it more interesting to my 7 and 10 year old grand-kids.

Lets get started. Continue reading

Grandma Rie’s 2013 Money Camp – Part Three

coinsTeaching the next generation to successfully handle money and personal finances is normally a family responsibility. Although parents bear much of the burden to teach, train and model good personal finance, extended family members can also contribute.

Although my grown children do very well in the personal finance arena, they learned from us by osmosis, without any special or formal training by my spouse or I. When they presented me with grandchildren, I vowed that I would take an active part in teaching financial literacy to them.

As a result, I started a one week ‘Grandma Rie’s Money Camp‘ in 2011 and held our third annual one this year. In my last post on Money Camp, I gave you information on what we did and used with more of the money concepts covered in this year’s camp – Earning and saving.

Today, I will give you information on what we did and used with remaining concepts. Continue reading

Grandma Rie’s 2013 Money Camp – Part Two

Smudged shop

Their business – Earning money!

Teaching the next generation to successfully handle money and personal finances is normally a family responsibility. Although parents bear much of the burden to teach, train and model good personal finance, extended family members can also contribute.

Although my grown children do very well in the personal finance arena, they learned from us by osmosis, without any special or formal training by my spouse or I. When they presented me with grandchildren, I vowed that I would take an active part in teaching financial literacy to them.

As a result, I started a one week ‘Grandma Rie’s Money Camp’ in 2011 and held our third annual one this year. In my last post on Money Camp, we covered our activities in two of the concepts covered this year – compound interest and needs vs. wants.

Today, I will give you information on what we did and used with more of the money concepts covered in this year’s camp – Earning and saving. Continue reading

Grandma Rie’s 2013 Money Camp – Part One

Grandma Rie's Money CampTeaching the next generation to successfully handle money and personal finances is normally a family responsibility. Although parents bear much of the burden to teach, train and model good personal finance, extended family members can also contribute.

Although my grown children do very well in the personal finance arena, they learned from us by osmosis, without any special or formal training by my spouse or I. When they presented me with grandchildren, I vowed that I would take an active part in teaching financial literacy to them.

As a result, I started a one week ‘Grandma Rie’s Money Camp‘ in 2011 and held our third annual one this year. Continue reading

Teach You Kids to Be Entrepreneurs – Make Soap

One of my goals as a Grandmother is to help my kids teach their kids about personal finance. I’m hoping they will learn to be entrepreneurs as well as learn to be savers, investors and sound money managers.

As part of that goal, I hold what I call ‘Grandma Rie’s Money Camp’ each summer. During camp I always provide opportunities for the Grandkids to earn money – by tackling jobs I hire them to do or by having a ‘business’ for a day or two. One year, their business was a car wash, another year they had a lemonade type stand.

SoapsThis year I am going to try to get them to make a product and it will be melt and pour soap.

Here is how I will teach them about running a business which makes a product. Continue reading