How Do You Feel About the Penny?

by Carl Richards


Since 2006, the American penny has cost more to make than the penny is worth. Despite that knowledge, we haven’t heard much discussion until now about stopping penny production. A few weeks ago, President Obama hinted that it may be time to say goodbye to the penny. His comments came on the heels of Canada’s decision to stop producing its version of the penny.

Think about that for a minute. For seven years, we've known that it costs more to produce the penny than it’s worth, but we still continue to make it. And I think one of the primary reasons was outlined by President Obama: “It’s one of those things where people get attached emotionally to the way things have been.”

In a way, it makes perfect sense. Money decisions (even about coins) remain one of the hardest ones to separate from emotion. We know a lot of things, but emotion can make it really hard to act on that knowledge.  We know how important it is to save for retirement, but we feel like it’s a long way off.  We know we should have a financial plan, but it feels like we don’t know where to start.  We know that it makes sense to diversify, but it feels exciting to own one or two “hot” stocks.

So when you take a look at your financial life, what’s your version of the penny? What are you hanging on to or what are you avoiding because of emotion? What do you know, and why aren't you acting on that knowledge?

This is an incredibly hard conversation to have, either with yourself or your spouse, because it can lay bare some uncomfortable things. It can reveal that we've convinced ourselves that how we feel has trumped what we know. And I know hardly anyone who likes finding out they were wrong.

The next time you’re faced with a financial decision, I want you to think about the penny. Does the decision cost you more than the result is worth, or does it just make you feel good?


Carl Richards

Carl Richards is a CERTIFIED FINANCIAL PLANNER™ and the director of investor education for the BAM ALLIANCE, a community of over 130 independent wealth management firms throughout the United States. He is a weekly contributor to the The New York Times, and is a columnist for Morningstar Advisor. Carl has also been featured on Marketplace Money, The Leonard Lopate Show, and In addition, Carl has become a frequent keynote speaker at financial planning conferences and visual learning events around the world. Through his simple sketches, Carl makes complex financial concepts easy to understand. His sketches also serve as the foundation for his first book, The Behavior Gap: Simple Ways to Stop Doing Dumb Things with Money (Portfolio/Penguin). Carl’s art appeared in a standalone show at the Kimball Art Center, in Park City, Utah. Other showings include The Parson’s Gallery in New York, The Shultz Museum, and Lords Manor in London. His commissioned work is on display in businesses and educational institutions across the country. He lives with his family in Park City, Utah.