OK, this one sounds complicated, but it’s really not. It’s a simple question, with a surprising answer. And a great lesson on the power of compound interest, for all of us.
The activity: 1¢ or $1000?
Ask if your child would rather be given $1,000 a day for 30 days, or start with a 1¢, and double that penny every day for 30 days. Which one would leave them with more money? Work it out at 5 day intervals, then ask if they want to change their mind at each stage!
FYI, what happens is:
Not until day 22 do the 1¢-ers start to beat the $1000-ers.
At the end of the 30 days…
…the 1¢-ers have a whopping $5,368,709.12
…while the $1000-ers have a modest $30,000
Here’s the full breakdown for the 1¢ doubled everyday (the $1000 a day is a bit simpler to work out :)):
| Day | Amount |
| 1 | $0.01 |
| 2 | $0.02 |
| 3 | $0.04 |
| 4 | $0.08 |
| 5 | $0.16 |
| 6 | $0.32 |
| 7 | $0.64 |
| 8 | $1.28 |
| 9 | $2.56 |
| 10 | $5.12 |
| 11 | $10.24 |
| 12 | $20.48 |
| 13 | $40.96 |
| 14 | $81.92 |
| 15 | $163.84 |
| 16 | $327.68 |
| 17 | $655.36 |
| 18 | $1,310.72 |
| 19 | $2,621.44 |
| 20 | $5,242.88 |
| 21 | $10,485.76 |
| 22 | $20,971.52 |
| 23 | $41,943.04 |
| 24 | $83,886.08 |
| 25 | $167,772.16 |
| 26 | $335,544.32 |
| 27 | $671,088.64 |
| 28 | $1,342,177.28 |
| 29 | $2,684,354.56 |
| 30 | $5,368,709.12 |
Take it further
Firstly, instead of just revealing the numbers to your kids, you could get them to work it out – a good bit of math homework. Secondly, you could explain how compound interest works, and that effectively is what happens to the 1 cent everyday. Use our Primer on ‘talking about compound interest’ here to help you.
Don’t forget: Prizes for sharing
COMPETITION HAS NOW CLOSED. Follow us on instagram to make sure you catch the next one.
Got any more activity ideas?
Please share with us at hello@roostermoney.com and we’ll share as many as we can on social, giving you the credit of course 🙂
