If you’re looking for tips on how to save money, you might stumble upon online articles on how you can become a millionaire by simply setting aside $5 per day. There are also $1 savings plans, as well as tips on how you should have money jars filled with bills and coins.
The point of these practical financial plans is that as long as you are saving, no matter how small an amount it is, you will be able to compound the interest in your savings and bump it up for future use.
Whether you’re saving for retirement, a luxury cruise, down payment for a new car or a new house – these little savings will add up, especially if you do it on a daily basis.
An excellent way to jump start your plan to set aside funds for the rainy days is to save a certain amount per day. What about $5? For the price of a cup of coffee, a video rental, ice cream, a lottery ticket, peanut butter cups, or five random items from a dollar store, you can save $1,825 per year.
Read on to find out how you can actually start saving $5 per day, and what saving that exact amount could buy you in two years.
How to Save $5 Per Day
Five dollars might not seem a lot, especially if you do not strictly stick to a daily spending budget. When going on a road trip, you’ll buy that pack of candy at the gas station which you know is quite expensive but since it’s convenient, you pull out your billfold anyway.
When going out on a drink with friends, you hand out that five dollar bill to the bartender after gulping down one bottle of beer after another. You pay for pricey salads, sandwiches, and drinks when dining out.
By cutting back on these little, convenient expenses, you can easily save five dollars per day.
Take a look at the specific ways by which you can save $5 on a daily basis:
- Lessen the frequency of your dining out.
If you’re a working mom with three kids, you might get tired of hearing the children ask what you are having for dinner. Or, you might not necessarily have the time to prepare dinner from scratch so you just end up ordering in or get all the kids together so that you can eat out somewhere.
There’s nothing wrong with dining out once in a while but doing so too often will put a big dent on your budget. By eating out less frequently, it will be easier for you to reach your goal of saving $5 per day.
- Brownbag it.
That sandwich and salad at the deli near your office will cost you a mint, especially if that’s how you eat every day. By brown bagging your lunch, you can save money on daily food expenses at the office.
Cook food in large batches and freeze half so that you can save money on cooking fuel and ingredients, as well as time and effort. Make sure that you have a stock of cold cuts, veggies, a trail mix of nuts and fruits so that you can have a complete, balanced yet cheap meal at work.
- Maximize your use of the public library in your area.
Instead of paying for movie tickets or subscribing to Netflix, check out the local library in your area. It’s a public place where you can use the Internet for free, borrow books, CDs, DVDs, magazines and newspapers.
- Exercise at home or outdoors.
Stop paying for pricey gym membership fees and simply exercise at home or outdoors. The entire neighborhood can become your jogging trail, and the local park can serve as a free gym. Besides, it’s a lot more fun to soak in the sun and work out in an open area instead of an enclosed gym.
- Skip the fancy lattes.
If you always stop by a coffee shop near your office before going to work, you are also skipping the opportunity to save $5 per day. Those fancy lattes cost more than brewing a cup of Joe right in the comfort of your home. Invest in a good quality at home brewer and get your caffeine fix at a portion of the price.
- Always have a list when going grocery shopping.
If you go grocery shopping without a list and while you’re hungry, those hunger pangs will make you reach for snacks and other easy to eat items that you are craving for – instead of what you actually need for the week. To save money, always make a list of the things that you need to buy before grocery shopping. Conduct an inventory of your pantry and see which dishes you can cook using the ingredients that you still have. Not only will this save you big bucks, but it will also help you eliminate food wastage.
- Skip the features you don’t need on your mobile phone plan.
How much are you currently paying for your mobile phone plan? Based on your phone usage, you can probably eliminate the extra cost for data, texting or calls. Only pay for what you most frequently use, and save the money slashed off your monthly subscription fees.
What Saving $5 a Day Could Buy You in 2 Years
There are plenty of other small things that you can skip buying in order to save five dollars per day. Do it for a couple of years and you will save $1,825. What exactly can this amount buy you? Here are a few suggestions:
1. Turn that $5-a-day-savings into an investment.
Five dollars might be a minimal amount especially when you consider it as an investment, but you can actually use it to grow your funds.
With a very conservative approach of investing $5 per day at 8% return, you will earn $4,100 in two years (calculate your earnings here).
In ten years, it will grow to $28,553 and double that time frame will make you earn $90,197. Sometimes, the simplest approach in investing is what works.
2. Invest your $5/day into tech stocks.
Your other option is to pool together all your five dollar savings for two years. The resulting amount is $1,825 and with this money, you can purchase tech stocks.
Depending on the current rates in the market, you can buy roughly three shares of Google, three shares of Apple, four or five shares of Amazon, twenty or so shares of Facebook, fortysomething shares of Yahoo or HP, less than forty shares of Microsoft, or sixty-plus shares of Cisco.
3. You can purchase a really cool high-tech gadget.
If you’re tech-savvy and you have been salivating over Google Glass since it first came out, the money that you will save by saving $5 for two years will allow you to buy the high-tech gadget – with a few more hundreds to spare.
Other cool high-tech gadgets that you can buy with $1,825 are a desktop PC, a pretty good gaming laptop computer, two 32GB iPhones, around a year and a half’s worth of subscription to Google Fiber if you live in Kansas City, streaming service, Oculus Rift headsets, or any other gleaming, high-tech device that you have long been wanting to buy.
4. You can pay off your debts.
There’s no better way to spend your two-year savings than by paying off your debts. If you are still knee-deep in student loans or credit card loans, cut a significant chunk off the amount by using your $1,825 to pay off debts.
5. You could pay for a really nice vacation.
Have you always wanted to go on a road trip somewhere nice, fly out of state or out of the country? By booking the flights in advance and planning your trip accordingly, you can use your savings to pay for a really nice vacation.
6. You could use the money as a down payment for a new car.
If your car is pretty old or is in bad shape, you can use your savings as a down payment for a new car. Depending on the model and make of the car that you would like to drive home, your two-year savings should be enough for a down payment.
7. You can donate the money to a charity of your choice.
Why not use the money that you saved to give back? Donate all the money to a charity of your choice, or divide the funds to give to different charities.
8. You can enrol in a class of your choice.
Check out the courses available at a college in your area and use the money to acquire new knowledge, skill or training.
9. You can place the money on an emergency account.
A rule of thumb to follow when setting up an emergency account is that you need to have money set aside for three months of living expenses. Instead of thinking of ways to spend the money, you can put it all towards an emergency account instead.
10. You can pay for two to three months of rent in advance.
If you’re renting a house, you can simply put your savings towards advanced payments. This way, you won’t have to worry about rent money for the next two or three months.
Five dollars may not seem like a lot but when you try to save the same amount for two years, there are a lot of things that you can buy from the resulting funds.