Lesson Eleven: Future Value of Money

I am the proud owner of an MBA.  A degree that I earned as an adult, with much blood, sweat and tears.  While I am thrilled to have the degree, there were definitely classes that I did not look forward to at all.  Finance and Accounting classes were at the top of that list.  I didn't like them, didn't understand them, and told myself over and over again that I would not go into either Finance or Accounting.  (My last job was for a large financial services organization, but that is a totally different story!)

So imagine my surprise when I found myself  having a discussion with my daughters about the Future Value of Money.  My kids, like many, have certain chores that they are responsible for and for which they get paid.  We are pretty strict about chores and if the chores are not completed, they do not get paid for them.  We only pay for actual work completed.  Along with the chores, there are certain things that my husband and I view as just part of living in the house.

In our house, doing dishes is not a paid chore.  It is just part of the deal for living here in the house.  The other day after a quick after school snack, my girls left the kitchen table looking as if a hurricane had blown through the house.  Dishes on the table, garbage on the table, crumbs everywhere.  I asked the girls if they would please clean up their mess and put their dishes in the dishwasher.  While they were at it, there were a couple of glasses in the sink as well and I asked them to put those in the dishwasher as well.

"Those aren't ours."  Yes, well, I understand that, but it isn't going to kill you to put two extra glasses in the dishwasher.  "Is it part of our chores?"  Nope, that it isn't, but still would be nice for you to do.

While my girls sat there dumbstruck, my smart husband says to them.  "Maybe you should do it so you can bank it for the future".  Brilliant!  They are all about money right now so this perked up their attention.

We explained to them that sometimes the cost of doing something now (in this case, 5 seconds to put two glasses in the dishwasher) has the possibility of growing into some larger value later on.  We explained that maybe if they worked on "banking" chores that the next time they asked for something, we might be more inclined to say yes because the value of their going the extra mile would grow.

The future value of money, or in this case, time, had never occurred to them.  They put the two extra glasses in the dishwasher.  Then they went upstairs, cleaned out their closets, cleaned up the play room and made their beds.  Unbelievable!  I'm quite certain we are going to feel the repercussions of their grasp of the future value of money sometime soon.  But for now, I am basking in the glory of getting something useful out of those miserable Finance classes!

Lesson Eleven:  Future value of money