By Taylor J. Kovar – CEO & Founder, Kovar Wealth Management
–Hi Taylor: The penny is coming to an end, I hear. Does that… matter? It’s not like I do a lot of paying for things in pennies, but some people seem to think it’s a big deal. – Freddi
–Hey Freddie: You’re right, the one-cent version of Honest Abe will cease production in 2023. This has been a long-time coming, as the value of a penny has dropped and people generally use of physical currency less. Still, it’s gotta matter in a couple of ways, right?
Sentimental woes. While we’re saying goodbye to a tiny copper circle, it’s also one of the very first coins that was created by the U.S. Mint. The penny is 230-years-old, and this is the first time in over 160 years that a coin has been phased out. This could really bum out the people who long for the way things used to be when a movie cost a nickel and candy cost one or two cents.
Positive news. There’s been chatter for years about how a penny costs more to make than it’s worth, so striking it from our list of coins will save money at the federal level. For the coin enthusiast, the final batch of pennies will be limited and auctioned off, creating immediate collector’s items and investment opportunities for someone with their sights set waaaaay down the line. My guess is that we’ll also see a bump in the value of other old pennies and coins, so this move will generate money in a couple of different ways. When you look at it from all angles, the decision makes a lot of sense.
What about $.99 cent stores? The biggest question mark might actually be the millions of goods sold for a dollar minus one. Theoretically, everything will be one cent more expensive. Inflation already has the price of most things going up so the anti-penny price hike isn’t the most terrifying thing. Taxes push most of those prices into the next dollar threshold anyway; it’s hard to imagine anyone feeling the impact of losing $.99 items. I’d worry less about that and more about what will happen to sales taxes to accommodate the loss of the singular-cent piece.
For those of us who have grown up with change dishes full of pennies, this could feel like a big shift. In practice, the impact will be pretty minimal. Like the half penny before it, our pennies have seen their best days and it’s time to let them retire.
