Hey everyone, it’s Finance Fridays and this post is a little late. Also, while somewhat related to Finances, it’s more of an introspective post. Today, I’m going to talk about how I came to understand The Value of a Dollar.

Stock Photo from: Pexels

So then, what’s the Value of a Dollar?

Well, technically the value of a dollar is constantly changing since inflation happens. ie. $1 today does have the same buying power that it did back in 1997 when I was 15 and working my first job. However, the general understanding of the value of a dollar is a concept that doesn’t change.

Time for a little story:

When I was 15, I got my first job at a mall store called Prints Plus. My sister’s boyfriend Todd at the time worked there and helped me get the job. By the way, they ended up getting married, so now he’s my brother-in-law. He was a great guy then, and he’s still a great guy now.

So what is/was Prints Plus? It was one of those stores in the mall that kids would walk by but never really go into. Basically, at its heart, it was a framing store. You would choose a print to buy, like Dogs Playing Poker, or Star Wars, or whatever. Then we would pull it from our stock for you. If you just wanted the poster we would just roll it up and hand it to you.

However, if you wanted to get it framed we would go over the many framing options. All of our frames in house were some kind of plastic or composite material (not wood). The reason for this is because we cut up our own frames in the back of the store with special machine and then stapled them together with another special machine. This machine was not designed to cut wood, so if you wanted a wood frame, then it had to special ordered.

Of course, a wood frame would be significantly more expensive than the plastic or composite frames, and also take significantly longer to get. So in that sense, this store was kind of a lower cost option for people who wanted to hang prints in their house but not opt for an expensive wooden frame.

I’m not sure when, but Prints Plus no longer exists. I’m not sure if it was bought out or went bankrupt or what.

So then, what was your particular job?

Well, since I was only 15, I wasn’t allowed to operate the special machines for cutting frames in the back. My job solely consisted of helping customers. This amounted to finding prints they wanted and then ringing them up on an IBM machine that was made back in the stone age.

The older guys loved it when I was there because they could hang out in the back and just do the framing, avoiding customers.

As for me, I had nowhere to run to. 

Oh wow, so you were dealing with customers all day long?

Yup.

This was my first experience with retail and customer service. Whenever I think about my time at Prints Plus, it literally blows my mind about how people can treat each other so poorly.

I can’t tell you how many times I’ve had people come in just to yell at me for the “poor work” that was done. Prints Plus had been around for probably 5 years or so. So people would bring in prints that had been framed years ago and tell me they wanted a refund. In some cases I could tell that they had opened up the back of the frame and then resealed it with scotch tape. It’s ok though, everyone has their customer service horror stories so I won’t bore you with those stories.

What really amazed me was how people would act toward each other sometimes. I’ve seen customers yell at each other and nearly break out into fights over something so minor. I mean, these people are complete strangers, do you really want to throw punches at each other because you “were in line first”? And this was during CHRISTMAS!

Ok, let’s refocus:

What that job really taught me was just how much $1 really was.

I got the job originally Christmas 1996 when I was only 15 with a work permit. I remember this vividly because the minimum wage back then was $4.75.

Let that sink in. 

$4.75 AN HOUR, probably around $4 an hour after taxes.

To help you understand, a Big Mac from McDonald’s back in 1996 was probably about $2.36. So I would guess the meal was right around $3.99. If you Super Sized it it was probably around $4.28. If I went to work for an hour and then went to McDonald’s to get a Big Mac Combo, I would basically break even. However, if I Super Sized it I was already in the red.

For those who don’t know, “Super Size” was a thing back in a 90s and early 2000s before it became “Make it Large”. This is almost certainly because of the bad press McDonald’s got for the Super Size Me movie.

Working for minimum wage gives you perspective on the value of a dollar. To be honest, I’m thankful I was given this opportunity at a young age. Although I didn’t have a term for it at the time, the seeds of my own Value Cost Ratio were sprouting. I think this concept is difficult to teach without having worked for it.

Here are some more examples:

I made $4.75/hour, or about $4/hr after taxes.

The Lemonade

Todd would always buy a large lemonade from Auntie Anne’s, the pretzel kiosk all the way on the other side of the mall. Every time he came in he would buy one. Now, I wasn’t a big lemonade fan. I mean it’s fine, but back then my preference was for soda, Dr. Pepper if they had it. There was a vending machine near the store so I usually bought a Dr. Pepper from there, for like 75 cents, if I recall correctly. So one day I asked him:

“Why do you always buy lemonade from Auntie Anne’s? Isn’t it expensive?”

“Nah dude, it’s cheaper. You get the mall employee’s discount so it’s only 50 cents, and you get free refills.”

Whoa. 50 cents and FREE REFILLS?

As you can imagine I started doing this every shift. I also would always remembered to fill up before the end of the night for my commute home.  The mall where I worked was about 30 minutes away. By the way, props to my boy Todd for telling me.

Now that I think about it, with the gas my parents paid for, it was not a very efficient usage of money for me to work. However, they probably understood that the experience itself was invaluable.

3 Tacos for 99 cents

I’ve already talked about how much a McDonald’s Big Mac Combo was, since 1 combo = 1 hour of work. So, my brain and appetite searched out the good deals. On the way home, there was a Del Taco near me. Now, this isn’t exactly the pinnacle of food or anything. However, it does fill an empty belly. In addition to that, on Tuesdays you could get 3 tacos for 99 cents.

So I tried to work every Tuesday if possible, and I always bought SIX tacos.

The Raise

By the way, in 1997, minimum wage went from $4.75 to $5.25 and this is how it felt to me:

So, how are you going to teach your kids the Value of a Dollar?

They’re going to work when they are old enough, like I did and like my wife did.

I don’t want them to work for family or friends. To be more specific, they’re going to work in either retail or fast food or maybe both.

Every dollar they make will go into their own Roth IRA up to its limit. I will then “daddy match” them dollar for dollar on everything they make.

Anything else?

Yes.

I also want to teach them the value of compound interest at a young age. The concept itself is difficult, but the idea is simple, as long as they understand numbers.

Let’s say Kylie gets $100 in total from the family for Christmas. I will tell her:

“Kylie, you can take this money and go buy whatever you want… or if you wait until next Christmas, it will be $200.”

Now, of course this is insane compound interest, but for a 4 year old to understand, the 2nd number has to be significantly bigger than the first.

$100 versus $110 – (not much)

$100 versus $200 – (twice as much = a lot)

However, I will also explain to her that if she uses the money at all before the next Christmas, then it’s only $100, even if she only uses $1, she doesn’t get the interest.

I’ll let you guys know how it turns out.

TL;DR

The value of a dollar is a concept that never changes, even if its actual value does.

I think it is difficult to learn this without working for it.

The value of the dollar is important for establishing your Value Cost Ratio later.

My kids will learn the value of a dollar just like I did, but hopefully understand compound interest earlier than me.

-Sensei

Agree? Disagree? Questions, Comments and Suggestions are welcome.

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