The Value of a Dollar

Laura Ingalls Wilder’s Father-In-Law, Almanzo Wilder’s father, gives a good lesson on what wealth is and how to become wealthy when his son asks him for a nickel to buy a lemonade.  Almanzo’s father is a rich farmer in upstate New York.  She writes about this encounter in the third book in The Little House series, Farmer Boy.  To paraphrase:

Almanzo’s friends dare him to ask his father for a nickel to buy some lemonade.  He reluctantly goes and asks, knowing that his father may scold him or even whip him for being so insolent.  His father instead pulls out a half-dollar – something that Almanzo has probably never had since a penny would buy a bag of candy back then. 

His father says, “What is this?”

Almanzo: “A half-dollar.”

Father:  “No, this is work, son.  How do you make a bushel of potatoes?”

Almanzo:  “Well, first you plow the field.  Then you cut up the seed potatoes and plant them.  Then you hoe them two times as the weeds sprout.  Then in the fall, before the frost,  you dig them up, wash and scrub them, then put them in a bushel basket.”

Father:  “And then when you sell it to the potato buyer, what does he pay you?”

Almanzo:  “A half-dollar.”

Father: :So this half-dollar represents all of the work that goes into growing a bushel of potatoes.  Now, I’m going to give you this half-dollar.  You can go and spend it on lemonade for you and your friends if you like, or you could go and buy a suckling pig.  You could raise that pig, and then raise piglets and sell them to earn more money.”

He gives the half-dollar to an amazed Almanzo who returns to his friends.

Friend:  “So you didn’t get the nickel, did you?” laughing.

Almanzo:  “No, I got a half-dollar.”

Friend:  “Wow – really?  Are you going to buy a lemonade?”

Almanzo:  ” No, I think I’m going to save it and buy a suckling pig instead.”

Most people work hard, but then piddle their money away on trivial things that are gone within a few minutes.  They buy $5 cups of coffee every day, eat out for dinner at places they don’t really like because they don’t cook, or they buy $40,000 cars on payments that are worth $30,000 the day they drive off the lot.  If we take some of that money and invest it instead, that work to make that bushel of potatoes can be used to buy us lemonade for the rest of our lives.  That’s Why Almanzo’s father was wealthy – not because he was fortunate somehow.

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Disclaimer: This blog is not meant to give financial planning or tax advice.  It gives general information on investment strategy, picking stocks, and generally managing money to build wealth. It is not a solicitation to buy or sell stocks or any security. Financial planning advice should be sought from a certified financial planner, which the author is not. Tax advice should be sought from a CPA.  All investments involve risk and the reader as urged to consider risks carefully and seek the advice of experts if needed before investing.

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