A wise person once said “A Penny Saved is a Penny Earned” – and as I recently found out that person was not Benjamin Franklin. Whoever it was that coined it is still pretty wise. The concept is simple, which is an important part of being timeless. I want to dig into this phrase, identify what makes it as true today as when it first showed up over a century ago.
A Penny Saved…
Start with the first few words – “A Penny Saved”. In 2013 Canada removed the penny from circulation which ended a 155 year journey into pockets from coast to coast. The penny was deemed quite literally not worth its weight. Even when its primary composition changed from copper to steel in the late 90’s it was more expensive to produce a penny than it was worth due to inflation. So if a penny is so worthless, why bother saving them?
When I was a kid my grandmother had this white cat that was actually a piggy bank. One constant across all grandchildren, was a fascination with this treasure trove of pennies. The cat was solid, so there was no way to know what fortune was encased in its porcelain fur. It was likely in the neighbourhood of $20-$30. However as a child – it may as well have been hundreds of thousands. When we would visit her she would teach my brother and I how to play penny poker. We regularly played One-eyed jack, Woolworth’s (Five and Dime), and my personal favourite Acey Deucey. Stacking those pennies gave me a huge sense of pride.
A single penny was nothing, a single penny was ante, there was nothing intimidating about a one cent bet. Where the power came was with the stack – I would stack them in groups of ten. Large enough to make an impression, small enough that they wouldn’t topple over. If they toppled it might expose a small shake in my hand as I pushed a massive bet in. In my mind I was dealing with the pros, and I had to be sure not to have any tells. So yes – a penny by itself is useless; but a stack of pennies can be better than a nickel or a dime. A roll of pennies is fifty whole cents…you can see where I’m going with this. There is power in numbers.
So a penny saved still has power, even in a world where in actuality they have been taken away from our pockets and purses.
A Penny Earned…
The second part of the phrase, “A Penny Earned”, takes on a whole other meaning for the penny. When I hear “A Penny Earned”, I think about self-control. When I was a little kid (around 6 or 7), money must have been made of lava. It would always seem to burn a hole in my pocket. If I had ten cents, I had to spend ten cents – it was really that simple. Luckily at that stage in my life I didn’t have much use for anything worth more than a couple of dollars. The clothes on my back and the food in my belly were taken care of. Even when I got my first job delivering newspapers there was simply no way I could fathom keeping some of what I had.
I wasn’t pulling in a healthy salary, if I had to guess I probably made about $20 a week for 5 or 6 hours work. I wish I could tell you the things I bought held some type of special meaning to me, but unfortunately that wasn’t the case. This is where the second part of the phrase really takes effect.
It hit me when I hit double digits…
I have to take a right turn from my personal story, because honestly even if I could go back in time and give my 7-year old self some advice I would not have the stomach to say to him “Scott, you need to save some of that money for your future”. When you are 7 your future is the next time you see your friends, the next time you have ice cream. Maybe your future is just one more sleep! It wasn’t until I was around 10 that I discovered the concept of saving my pennies.
I was obsessed with video games. I had a Nintendo previously (I have no recollection of who bought that) but what I wanted more than anything was a Super Nintendo. There was a game called Mario Paint. It was in a word, breathtaking – at least at the time. It had a mouse and a little plastic mouse pad. You could paint, animate and even compose music. The problem I faced was that Super Nintendo had a price tag of around $200.
Even though I had taken over my brother’s paper route I was still only raking in about $40 a week. This was the first time in my life that hole in my pocket closed up. I wish I could say I was responsible enough to purchase that system in 5 weeks. Some habits die hard and there was still some spending. After all Teenage Mutant Ninja Turtles came out in the theatre and I HAD TO SEE IT!
So Did I Do Right?
So by not spending (or by saving if you are a glass half full person), I earned that money. I earned it by working for it, I earned it again by not spending it immediately, and I earned it a third time by reaching my goal. Of course I did end up spending that money eventually, but the point of saving is not to be buried with a load of cash. The point of saving is to reach your goals. Those goals could be to pass on an inheritance to your children or grandchildren, to retire early, to pay off your mortgage early or to reach a certain net worth. The sky is the limit in terms of where your financial dreams can reach.
But Is It True?
This phrase is likely doomed to be buried in future generations, born into a world without pennies. For my part, I think the meaning of this phrase is much more valuable than the words that form it. Some would say that the phrase is about investing – like if you save a penny and it doubles in value, the penny is quite literally a penny earned. Doubling pennies sounds wonderful, though that isn’t what I pull from the phrase – but that really is just my two cents.
“When I was young I used to think that money was the most important thing in life; now that I am old, I know it is” – Oscar Wilde
What about you, do you have a curveball account in your budget? I’d love to hear your thoughts on if you think it is a valuable tool or a waste of resources.
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