Left Penniless
Left Penniless
Isaac Cathey Humble Dollar December 31, 2020
AS A PARENT, it’s my responsibility to teach my children good financial habits. Core among these are deferring gratification, saving diligently, giving generously and making sensible spending choices. I feel it’s also important to make my children aware of financial pitfalls. Succeeding financially—and in life generally—seems to be as much about avoiding self-destructive habits as it is about cultivating good ones. My wife and I have been homeschooling our children for the last couple of years. Our attempt at home education has been a smashing success, thanks almost entirely to my wife. While she handles the bulk of the teaching, I do occasionally step in to teach certain concepts. Recently, I was tasked with helping my five-year-old daughter understand probability.
Seeing an opportunity to turn a dry academic exercise into a valuable life lesson, I designed a game for the two of us to play. In the game, I offered my daughter the opportunity to take money from her piggybank and quickly turn it into more money. To play the game, we needed 50 cents in pennies and a die (or dice for those who aren’t sticklers for proper English usage).
The rules were simple:
To throw the die, you must pay one cent to the dealer (me).
Before throwing the die, you must guess how it will land (one through six).
If you’re wrong, there are no consequences beyond losing the initial penny paid.
If you’re right, you get five cents.
At first, my daughter was doubtful that this game would be any fun. I started her with 30 cents from her piggybank. After her first couple of throws, she’d lost a couple of cents. But before long, she guessed correctly and was rewarded accordingly. My reaction to her losses was muted—basically a subdued shrug. I struck a sympathetic tone and reassured her that the losses were but a temporary and inconsequential setback. Meanwhile, when she won, my reaction was boisterous and jubilant.
This commotion attracted the attention of her younger siblings, who gathered around her to observe the spectacle and take part in the celebration. When her balance temporarily hit 50 cents, I pointed out that today must be her lucky day. When I asked if she wanted to stop playing, claim her winnings and go do something else, she enthusiastically responded that she wanted to keep having fun making money.
Within a few minutes, her luck predictably turned and (to borrow a phrase from John Bogle) the relentless rules of humble arithmetic took over. As her balance fell below her original 30 cents, she set the goal of breaking even so she could walk away. Ultimately, this attempt failed within minutes and she was left penniless (pun intended).
Interestingly, she asked me if she could take more money from her piggybank to try to make back her losses, but I decided it would be best to end the game and move on to the teachable moment. Here’s a summary of the lessons learned:
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