The Power of Doubling Money

Gather round kids, it’s story time.

Normally, when I say “story time” in the class, you can almost guarantee that there will be at least one audible groan. You can’t please them all. Secretly though, I think they like my stories.

But this is not my story. This is a folktale from India called “One Grain of Rice” by Demi.

It is a very powerful lesson on the monstrous power of doubling your money. It will help us understand how we can get our money working for us. That way we can double our money faster.

It will also connect to important financial concepts such as compounding interest and “the rule of 72”.

These ideas are keys for how I plan to retire from teaching in 5 years.

As you may know from my introduction, last year I came down with a serious case of teacher burnout. Since then, I have discovered the world of early retirement and it has given me hope. Hope, and the feeling that I can now persevere.

If you are suffering from teacher burnout and you want to tip the scales of hope in your favor, then you are absolutely in the right place.

First, let’s get to the story. You may also better understand how I chose my name!

One Grain of Rice

If you want to have the story read to you on Youtube, here is the link.

Summary of the Story

If you have not read the story for yourself yet, here is a basic summary…

Long ago in India, a greedy raja, whose province was largely comprised of rice farms, decided he would take and store all of the rice for himself. He convinced himself that he was doing it for the greater good and would then return the rice when times of famine descended.

Then, times of famine descended. The raja reneged on his promise.

One day, during this famine, the greedy raja ordered a feast for himself (Of course he did! Why wouldn’t he?). As the elephants were transporting the large quantities of rice from the storehouse to the palace, a village girl, Rani, noticed that some was spilling from the baskets.

Rani is our very clever protagonist.

She collects the rice in her skirt. Rather than keeping it, she returns it to the raja.

The raja, still fashioning himself as magnanimous, decides to reward Rani for returning “his” rice.

Rani simply requests one, yes one, grain of rice as her reward.

The Raja, wanting to feel benevolent, and perhaps looking down somewhat condescendingly on Rani, insists that she request more than one lowly grain of rice.

The trap was now set. If he insists right?

Rani changes her request. She still asks for the single grain of rice, but she asks that the quantity double each day for 30 days.

On day 1, one grain of rice. Day 2, she’d get two grains of rice. Day 3, she gets four grains of rice. Day 4, eight grains of rice and so on until day 30.

The raja, not suspecting a thing, and a little perplexed by such a modest request, agrees.

That very day Rani got her first grain of rice. Then she received two grains of rice, then four grains, and then eight grains in each successive day. Each day it doubled.

By the ninth day she received 256 grains of rice. All told this made 511 grains. This is only enough for a small handful of rice. The raja pitied her and her simple mind for only getting a small handful of rice after 9 days.

On the 13th day she was given 4,096 grains of rice. About one bowl. Now is when the numbers start to get very interesting and the power of doubling begins to unveil itself.

Day Sixteen – 32, 768 grains of rice received. That’s about one full bag. The raja begins to take notice, but is still not concerned.

Day Twenty-One – 32 bags of rice collected. That’s1, 048, 576 grains of rice or about one basket.

Day Twenty-Four – 8 baskets of rice received. 8,388,608 grains of rice. That’s 256 bags of rice.

Day Twenty-Seven – 64 baskets of rice were carried by 32 Brahma bulls. The raja is now officially troubled as the reality of the request begins to dawn on him.

Day Twenty-Nine – Rani was given the amount of rice equal to two royal store houses.

Day Thirty – The final day! 256 elephants (all pictured in a foldout section of the book) were needed to carry the contents of the final four remaining store houses. That’s 536,870,912 grains of rice! All told the total adds up to over 1 billion grains of rice.

Defeated, the greedy raja found himself completely out of rice. Rani distributed the rice back to the people of the province. She also gave a basket of rice to the raja. She made him promise that, from here on out, he will only take the amount of rice that he needs.

Humbled, the raja agreed. From then on, the raja becomes truly fair and just and the people live happily in his province.

The end.

Take-Aways from the Story

Besides wondering how possible it is to accurately count out so many hundreds of millions of grains of rice in the final days, there are a few powerful math concepts we can take away from this story.

These math concepts, when applied to our own personal finance, can begin to illustrate how we can retire much earlier than you may have been planning.

First Take-Away: The Power of Doubling!

Even knowing the outcome of the story, I am still always impressed with how quickly and massively those numbers grow. Starting with numbers like, 1, 2 and 4 it’s hard to imagine that, by the end of only 30 days, the number will be 536,870,912.

I want to harness the power of doubling with my own personal finances. Teachers that do so can get on the fast track to early retirement. But accumulating wealth is only one of the ingredients for personal finance.

We will get into all of them more thoroughly in future posts!

Second Take-Away: Little Amounts can Add up Quickly!

This speaks for itself. However, understanding this concept and actually applying it are two different things.

How many times, like me, have you marveled at how inexpensive an item is on Amazon? Then, like me, you mindlessly click “Buy Now” and go about your business until the package arrives a few days later?

One idea I hope to illustrate with this blog is this: Just like the rice, small amounts of money, when properly harnessed, can add up to large, life-changing amounts.

Take-Away #3 – An Introduction to Compounding Interest

The story doesn’t directly address Compounding Interest. But when you are discussing doubling your money, compounding interest is very much a catalyst.

Compounding interest is a driving force behind what makes our money grow and double more rapidly.

I will go into this more in-depth in the next post. And honestly, it’s not essential to understand. As long as my money is growing, you can tell me it’s magical elves right?

Essentially, though, it’s what happens when you earn interest on your interest.

If you earn 8% interest per year on $100, then after one year you’ll have $108 right? The next year you earn interest on the $108 so you earn interest on the previous year’s interest in addition to the initial $100.

Stated another way, the interest you earn on the $8 from the previous year is the compound interest.

It sounds small, but over time, we’ll see it can add up to huge amounts.

Lesson #4 – An Introduction to the Rule of 72

I will also discuss this in another post. It is directly related to Compound Interest.

The more times I see something the better I understand it. I’m hoping that it helps you as well.

Essentially, this rule tells you how quickly your money will double.

If you know how much interest you will earn, this rule (really it’s a guideline) tells you how many years it will take your money to double.

How it works:

72 ÷ interest rate = years to double

Always start with 72. Then divide by the interest rate you will earn. The result is the number of years it will take your money to double!

Example One: In the 80’s, I had a bank account that had an amazing 8% savings rate.

At that rate, my money doubled about every 9 years.

72÷8 = 9 (years to double)

Example Two: If you have a 12% interest rate, about how long would it take your money to double?

72÷12 = 6 (years to double)

It would take 6 years for your money to double at an interest rate of 12%

This is the rule of 72, and is a very helpful rule to know in the world of personal finance.

In Summary

Rani understood the massive power of doubling and she used her understanding to outwit the raja.

Afterall, who would suspect that measly sums of rice such as 1, 2 and 4 could ever amount to store houses filled with rice?

This story perfectly illustrates the power of doubling, and hopefully shows how beneficial it can be to apply it to our personal finances.

Maybe, like me, you suffer from teacher burnout? Maybe you just want to direct your life energy in other ways? Whatever the case, harnessing the power of doubling can drastically change your retirement outlook.

And if, like me, earning your full teacher pension after 30 years was too daunting, perhaps you can cut number down to a much more manageable number.

That might give you a little hope. It certainly did for me.

If this interests you, check out the plan I lay out for early retirement or just visit my early retirement page and find something that suits you.

Thanks for reading everyone. Please don’t hesitate to contact me or just leave a comment below. I’m very happy to try to help a fellow teacher (or anyone else for that matter) and will do my very best to do so!