The Power Behind Financial Literacy



Financial Literacy

The month of April is Financial Literacy Month. What a great time for kids to learn about managing money. Here at Lemonade Day, we teach the principles of taking profits from a lemonade stand and sharing some, saving some and spending some. But is this truly enough to set the course for a financially secure future for the next generation? Honestly? I would have to say “no”.


I have personally witnessed hundreds of kids who have taken their lemonade stands and created viable businesses. These youth entrepreneurs are learning financial lessons that most adults never do. But beyond a child’s desire to earn money for a coveted item, I believe we – parents, guardians, and teachers - are missing an opportunity to further the conversation on budgets and saving money, to the power behind building their financial future by truly growing net worth – not just for personal reasons, but also for business reasons.


Albert Einstein stated, “Compound interest is the eight wonder of the world. He who understands it earns it. He who doesn’t, pays it.” Einstein understood that letting your money work for you over time makes the initial investment earn more money and then snowballs from there. So how do we teach this to kids?


I found several similar and simple examples on the Internet using pennies in a bowl where the money in the bowl would earn 10% interest – meaning for every 10 pennies in the bowl, another penny would be added. Here’s how it works:


  • Day 1 – put 10 pennies in the bowl
  • Days 2-10 – add one penny each day
  • On Day 11, there are 20 pennies in the bowl.
  • Days 12 – 15 – now we put two pennies in the bowl (10% more)
  • On Day 16, there are 30 pennies in the bowl
  • Days 17 – 20, now we put three pennies in the bowl (10% more)
  • On Day 20, we start to add four pennies to the bowl
  • On Day 22, we have 51 pennies and now add five pennies per day. Continue to increase the pennies by 10%.
  • On Day 30, there is $1.06 in the bowl and you now begin to add dimes and pennies.
  • By Day 40 or so, you start dropping in quarters.
  • By Day 50 or so, there is approximately $5.16 in the bowl.
  • Around Day 55 or so, you’ll start adding $1.00 to the bowl.
  • Sixty days after starting with 10 pennies, there will be more than $16.00 in the bowl! 


With a little bit of patience and willpower not to touch our earnings, our 10-cent investment has grown to more than $16 in 40 days. Whether your young or old, we can all use this example as a great conversation starter on how reinvested earnings generate even more earnings over time.

Let’s help our children develop good spending habits. Gallup research indicates that entrepreneurial aspiration is diminishing and that less than .25 percent of approximately four million high school graduates in the U.S. each is contributing to the economic vitality of their local community. Gallup’s findings reflect the current state of cultural and entrepreneurial deficits in our kids today, regardless of their parents’ income level.

Lemonade Day and Gallup are committed to youth entrepreneurship and empowering youth with confidence, valuable skillsets and strategic relationships. With small businesses becoming the center of the American economy, our kids need to understand the power of saving money and entrepreneurship skills. Small business owners can quickly get discouraged waiting for growth to happen - and then their small business fails.

Let’s all look to the future. Let’s ignite the sparks of entrepreneurship in young kids that will impact them for life. Growth can and will happen! Our economy depends upon this.

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