Saturday, January 10, 2009

Save $1 a Day and Get $30,000!

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Can You Save $1 a Day?

I bet you can scrape up $1 every day. I know that I find that much change around the house as I l clean off counters and the top of the washing machine. As I cleaned my floor, I kept finding change I needed to put in the change jar I keep on the fireplace mantle. Every few days, I open my billfold and scrape out an assortment of pennies, nickels, dimes, and quarters that also need to go into the jar. So what do I do with the change?

Well, I save it. It is, after all, money. But also, I want to teach my kids the value of a dollar, and how with compound interest, a bit of savings can really add up over time. I have a goal of putting aside $1 every day, and I usually meet it. Sometimes I add more, especially right after I have done a few loads of laundry. In my home, the best place to find change is in the pockets of dirty clothes. I might even score a couple of paper bills, and according to the rules, anything smaller than a $5 goes into the change jar.

When Do I Empty My Change Jar?

I am lucky because my bank has a free change machine for customers. If you use one of those grocery store change machines they charge you a lot. The one closest to me charges 8%, so if I save $50, they take $4. The bank does not charge, and the slip can go right to the teller so she can make a deposit. Think about it. If you can save $1 a day, that is $30 a month or $360 a year. At 3% interest, you can save $4,000 over 10 years. If you can get your kids to do this for 30 years, they should have $15,000! And I made this calculation by taking a 28% tax rate into account too.

Think a little bigger and your savings can grow a lot faster. If you can set aside $5 a day, or $150 a month, you can save $30,000 in 15 years. If your kids are only 15 years old, tell them to begin this habit now, and then they can pay cash for a car (hopefully) by the time they are 30 years old

Where Do You Get the $1 or $5 a Day?

I know my big weakness, the small expense that adds up into a large spending habit. I will stop at the neighborhood drug store for a couple of things I need, say dog treats or soap. But by the time I get to the checkout counter, my basket is full of things I never intended to buy. A $5 purchased turns into $50 worth of things I just did not need. Debit and credit cards make it really easy to run over a budget.

I have learned that I need to take cash with me like I used to do before debit cards became so popular. I allocate cash to myself every week and force myself to use it to pay for things at the store. Sometimes I blow it, and I need to pull out more cash. But I am aware that I exceeded my budget so I do not spend as much as I used to. Besides, it is inconvenient to find a bank or ATM machine, so that helps limit my purchases. When I used my debit card for everything, I would not keep track of how much I spent so this really helps.

For example, when I am out running errands or conducting business I may decide to stop for coffee. If I am trying to hoard my weekly cash supply I am much more likely to pick up a $1 cup of coffee at a convenience store than a $5 cup of coffee at the local coffee bar.

Try It For 30 Days

Allocate yourself cash to spend upon store purchases. Some weeks you may need to pull out more money than you allocated yourself, but that is fine if you have the money. I'll bet you still spend less than you would have when you used a debit card.
Try to put all loose change or small bills you find in a change drawer. Set yourself a reasonable goal of finding at least $1 a day. By the end of the month see if you have enough to make a deposit in the bank or treat your family to a night out that does not require using a credit card!

I think you will be a proud saver, and these tips will get you in the savings habit. You will also set a good example for your kids.

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