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.

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## Got any more activity ideas?

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