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Tuesday, June 28, 2011


What is a penny worth?

Only time will tell. Coaching clients often struggle with money in some way or another. The most common struggle is saving money.

Let me tell you, a little saved money over a long period of time will go far in helping you create a cash stash or retirement fund.

A few months ago I went to a Primerica presentation with a colleague, Robert Walker. I am not a Primerica rep, I don’t get a kickback for writing this or anything – I really respect their work and the help Robert has provided many of my clients.  During the presentation, the speaker asked if we had a choice, would we want either a check for $20,000.00 today or a penny every day doubled for the next 30 days. You know, 1 cent today, 2 cents tomorrow, 4 cents the next day, etc. Most people chose the check.  I knew the penny doubled everyday must have been the better choice. What shocked me was how much better.

The speaker showed the power of time on the whiteboard as he wrote out the following chart:

Day 1: $.01 
Day 2: $.02 
Day 3: $.04 
Day 4: $.08 
Day 5: $.16 
Day 6: $.32 
Day 7: $.64 
Day 8: $1.28 
Day 9:$2.56 
Day 10: $5.12 
Day 11: $10.24 
Day 12: $20.48 
Day 13: $40.96 
Day 14: $81.92 
Day 15: $163.84 
Day 16: $327.68 
Day 17: $655.36 
Day 18: $1,310.72 
Day 19: $2,621.44 
Day 20: $5,242.88 
Day 21: $10,485.76
Day 22: $20,971.52 
Day 23: $41,943.04 
Day 24: $83,886.08 
Day 25: $167,772.16 
Day 26: $335,544.32
Day 27: $671,088.64 
Day 28: $1,342,177.28 
Day 29: $2,684,354.56 
Day 30: $5,368,709.12

This is a great illustration of the time value of money – think of what will happen to your money over time if the interest is 2% greater than the rate of inflation. The key is to start young. Actually the key is to start!

How are you saving for retirement or creating a stash cash fund for emergencies?

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