The other night I was picking up pizza from a national pizza chain. The cashier gave me a coupon with my purchase, which was for 50 percent of my next pizza if I ordered it online.
I was ecstatic!
My son looked at me, incredulously, as I carefully secured the coupon in my wallet and graciously thanked the cashier.
“Really dad,” my son said. “You make a pile of money and you are thrilled over a freaking coupon.”
His statement revealed how I had embarrassed him, yet again. It also revealed that as a father I had failed to impart any of my financial wisdom upon my offspring. Aside from the trait of humility, I had failed to educate him in the value of money.
Here’s how I look at coupons.
A pizza chain charges $16 for a family size pizza.
That makes the “half price” coupon worth $8 to me.
How much do I have to earn in order to put $8 in my wallet?
The IRS takes 25 percent of every new dollar I earn. I have to pay another 5 percent in Colorado state tax. On top of that, I make retirement contributions to PERA (or in the private sector, Social Security) and Medicare insurance for a total of another 7.6 percent or more.
That takes at least 37.6 percent of my paycheck.
In order to put $8 in my wallet I would have to earn an extra $12.82.
Let’s imagine that I’m a wealthy guy and I don’t have to work overtime to earn extra money. Say I’ve got money in a bank account that earns interest for me.
How much do I have to have in my savings account in order to earn $12.84 in interest in a year?
Currently, my credit union savings account pays a relatively good rate on interest at 0.1 percent. I would need to have $12,840 in my savings account to earn $12.84 in interest over the course of an entire year.
Why did I think a getting pizza coupon was great? It’s like having a freaking big bank account.