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A Penny for Your Savings

January 18, 2017

Does a penny really amount to much in today’s American society? While stationed overseas, my family learned to live without pennies because they were not accepted at the facilities on base. They would round everything to the nearest $.05. Combining that with digital and electronic methods of keeping track of finances, one might argue that a penny is no longer worth a second thought.

A report done by The U.S. Government Accountability Office in December of 2015 details the cost to make all U.S. coins and noted that it actually costs $.017 to make a penny. The cost to make a penny actually exceeds its worth, making it a seemingly unnecessary waste of American dollars. The counter argument, on the other hand, is that the penny ensures that stores cannot round prices up to the $.05 and raise prices on goods and services. However, countries like Sweden, New Zealand, Australia, and Canada have gotten rid of their lowest cent coins and have not had economic ruin ensue. So, the debate continues . . . but what does that mean for your household?

My youngest child has recently taken to snatching up every penny she finds on the ground. This got me thinking about the value of the penny, and how we might use it as a catalyst to teach younger children financial lessons. Here are a few ideas to encourage our children to value every penny, and maybe renew our own perceived value in just one cent.

1.)    Match their find. We teach our clients to put as much as they can afford into matching investment programs. Try matching each penny your child finds to show them that a small investment can add up over time.

2.)    Help them set a goal for a purchase. First, have your child look for something they want. Then using a container like a piggy bank, a cup or a jar, have them save to afford that item. The visible accumulation of pennies and coins over time helps teach them the value of waiting to afford purchases. It will also help teach them that each penny counts towards the goal.

3.)    Teach them to give. Each time you match your child’s found penny, I encourage you to give them another penny for a designated "giving jar". Set aside a jar where those extra pennies can accumulate toward a charitable donation of their choice. My children like to give to missionaries at our church. Allowing your kids to give to the panhandlers on the side of the street, or to a local organization, teaches them the importance of being charitable, and letting them decide on the recipient of their generosity allows them to connect with those in need.

While a penny may not seem like much, it can be a powerful tool to teach valuable financial education lessons – while not breaking your own bank. Teach your children the value of every penny and the impact that each cent makes toward a financially secure future. And don't limit yourself to the penny! If you are willing, use these same tools for nickels, dimes, quarters, and even dollars. The lessons your child might gleam are worth every cent.

Guest Contributor: Ester Johnson, AFC®


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