Explaining personal finance to kids can be very challenging, especially when it comes to the logic around compounding.

Here’s a simple way to explain the power of compounding with your kids. Here’s how the conversation would be like between me and my imaginary son, Tom.

Mickey: Tom, what would you rather have, \$100,000 or a 10 cent coin that magically doubles its value every day for 30 days?

Tom: \$100,000, of course!

## Let the magic begin

Now let’s show Tom the difference between the 2 choices.

Here’s how the first 10 days would look like:

Day 1: \$0.10
Day 2: \$0.20
Day 3: \$0.40
Day 4: \$0.80
Day 5: \$1.60
Day 6: \$3.20
Day 7: \$6.40
Day 8: \$12.80
Day 9: \$25.60
Day 10: \$51.20

Oh boy we that 10 cent coin was only slightly over \$50 after 10 days.

Day 11: \$102.40
Day 12: \$204.80
Day 13: \$409.60
Day 14: \$819.20
Day 15: \$1,638.40
Day 16: \$3,276.80
Day 17: \$6,553.60
Day 18: \$13,107.20
Day 19: \$26,214.40
Day 20: \$52,428.80

Halfway there! Our 10 cent coin has grown to \$52,428.80.

Day 21: \$104,857.60
Day 22: \$209,715.20
Day 23: \$419,430.40
Day 24: \$838,860.80
Day 25: \$1,677,721.60
Day 26: \$3,355,443.20
Day 27: \$6,710,886.40
Day 28: \$13,421,772.80
Day 29: \$26,843,545.60
Day 30: \$53,687,091.20

Here’s where things get crazy. Our 10 cent coin has bloomed into \$53,687,091.20! …