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The $5 Savings Plan

It’s ideal to have 6 months of expenses in your savings, but that can often be a daunting amount. Not everyone is in a position to set aside this kind of money, but it’s important to start somewhere. When I was in college, I used what I called the 5 dollar savings plan. It was simple – every time I ended up with a $5 bill in cash, I would stow it away in my secret box. Why President Lincoln’s face, you ask? Setting aside $1 bills would take a long time to save anything substantial and the disappearance of a $10 or $20 bill was always felt more. Five bucks was the perfect amount as it’s an amount that could be “lost” without being noticed and could add up to a moderate savings before you know it. I worked a meager minimum wage job in college so the cash wasn’t exactly flowing in and out of my wallet, but despite this I was able to save nearly $1000 in just my first year! Now that (to me at the time) was substantial. Consider the average millennial only has that much in their savings today and it’s not a bad start.

However, it’s important to be realistic about this savings method and it’s not for everyone. You’re probably not going to retire at 40 on the beach because you stashed all your $5 bills. Also, if you’re making $50,000/year, you should be putting more than ~ 83/mo away! It’s primarily a method for individuals who have little or no savings at all to develop good habits. I know it’s tempting to see a slight excess in money just sitting in your account after all the bills have been paid, but it’s important to be disciplined with your extra fluff. Paying down debts or saving for the unexpected is much more responsible and wise than blowing it on fancy clothes or other expendables you could live without.

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CB

Save your first $1,000

Save your first $1,000

Saving is one of the biggest hurdles anyone can face in their personal finance journey. Often times, it seems like you need every last cent in order to just scrape by. After all, 78% of Americans live paycheck to paycheck at certain points just to make ends meet. So how can you break this vicious cycle, and save your first $1,000? The answer is simpler than you might think.

 

My philosophy on saving is simple, but I’m not going to promise you it will be easy. In life, there are things you want, and then there are things you need. Food, fuel, and a roof over your head. These are things that we need. That 65” 4K television you saw at Best Buy last week? That is a want.

 

Track what you purchase for a month. Take a note of all the things that you could’ve lived without. For instance, that morning coffee stop. This is the key to getting the savings ball rolling. Instead of making those same “want” purchases next month, put that money away. Think of it as an investment in yourself.

 

As the saying goes, you eat an elephant one bite at a time. The same principle works for saving. Put away a little bit every month, and see how fast it starts to add up. Before you know it, you’ll look in your bank account and see $1,000 looking back at you!

 

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