There’s an old adage, “A penny saved is a penny earned.”
Well, how about “a penny saved is a million dollars earned?”
Second graders at Redmond Elementary School heard a surprising story about the big benefits of saving, when the non-profit coalition Jump$tart Washington sponsored a Jan. 12 Financial Literacy Reading Day for mayors and other elected officials in King County.
Redmond Mayor John Marchione visited the school and read a book called “The King’s Chessboard,” about making money grow and giving back to the community.
“I thought it sounded like a great opportunity for our second graders, as part of our second grade social studies power standards … to understand the basic elements of a community’s economic system, including producers, distributors and consumers of goods and services,” explained Marguerite Moskat, a teacher at Redmond Elementary, who learned about the program through Junior Achievement of Washington.
“What better way than to have the mayor come to read and discuss simple economics,” Moskat noted.
Before reading the book, Marchione asked the children, “If I came to you and made a deal … I can give you a million dollars today or I can give you a penny and double it every day for a month, what would you do?”
Most of the kids said they’d grab the cool million right then and there. A few mavericks said they’d opt for the penny and double it daily.
In the story of “The King’s Chessboard,” a ruler offered a faithful servant a sumptuous reward for his service, but the servant demurred, saying that serving the king was reward enough.
The monarch insisted that the servant choose a prize, so the servant asked for one grain of rice to place on a square on a chessboard, with the amount of grain to be doubled each day.
The king wasn’t sure what the servant had in mind — and was too proud to admit that he didn’t know how many grains of rice he’d eventually have to pay up.
Fast forward into the story. Now what started out as a few ounces of rice became pounds and then tons. As the wise man released the king from his promise, the king confessed that he’d been done a great service once again, because he now understood that pride could make anyone a fool.
Going back to the question of which was better, a million dollars now or a penny to double each day, Marchione asked the children to ponder how much money they’d have by day 19 — more than $2,600 — and how much by day 21 — more than $10,000 — and how by day 28, they’d surpass the million-dollar mark.
“What does this tell you about saving?,” Marchione prompted. “A lot of you wanted it all at once. If you waited 30 days, you could get a bigger reward.”
He asked the children about good reasons for saving, from paying regular bills to buying a car, a wedding dress or a college education.
“Or what about emergencies? Your car breaks, the engine falls out. Or if you get hurt, you need money to go to the hospital,” Marchione said.
“Let’s talk about how the city gets money,” he added. He gave the kids a quick lesson in what happens when you get a paycheck and some of the money you earned is gone.
The federal government takes out income tax. The state and city use sales tax to help pay for their services, he said.
“How many took a shower or washed your face this morning? Water comes from the city. Your parents paid for it,” the mayor explained.
If you walked on a sidewalk or drove on the street that morning, the city had to pay for those things, too — not to mention things like police, firefighters and parks, said Marchione.
David Bennett, a Jump$tart Washington volunteer who works for Washington Credit Union League, said he’s always pleasantly impressed by young students’ interest in learning about money, how to earn it and where it all goes in the community.
In this economic climate, a lot of parents are still learning these lessons the hard way.
