Saving money isn’t something that just happens. For many people, saving money isn’t even something that comes naturally to them. I believe that people are born as natural spenders or savers. Not to worry. Even if you are born a natural spender, saving money is a process that can be learned. The key is to make an effort and start small, no matter the amount. Start by saving small amounts – even just a few dollars a month. Over time, saving money will become second nature to you, and you will have taught yourself how to become a saver.
Unfortunately, seeing the results of your saving takes time. You aren’t going to be able to save thousands of dollars overnight. However, every little bit counts. That is why saving money, even saving small amounts of money, is important.
The Importance of Saving Small Amounts of Money
There is a saying that if you watch your pennies, you won’t have to worry about your dollars. I believe this saying to be true. Constantly spending small amounts of money can add up to big expenses. For instance, if you spend $4 a day on coffee, 5 days a week, you are spending $20 a week on coffee. That equals about $87/month or $1,040/year on coffee alone. If you add a king size candy bar to that every day for $1.20, you are spending another $312 a year. So, for your morning coffee and snack you are suddenly spending $1,352 a year!
While spending small amounts of money can lead to big expenses over time, saving money in small amounts can lead to big gains over time as well. Did you know that if you save just $20/month starting when you are 20 years old, by the time you are 50 you will have saved $7,200. If you invest that money with an average rate of 10% (which is standard for the stock market over the last 70 years), you will have $41,256! If you invested until the time you were 62, you will have $134,845. If you continue to do this until the age of 65 (the current full retirement age for social security), that $20/month will have turned into $180,309!
On a smaller scale, my young daughter has been earning money for doing some light chores around the house. Each time she cleans up her toy room we have been rewarding her with some of our spare change. After she earns the money, we then have her save it in her piggy bank. Over the past few weeks, her savings have increased from just $2 to almost $10. (I think we need to lower her wage a little bit!)
As you can see, saving money, even in small amounts can really build up over time. Of course, you have to be patient and continue to save. However, if you can save even small amounts of money, you will see a significant savings over years and months. So, even if you are a natural spender, you can teach yourself how to become a saver. Get into the habit of saving small amounts of money starting today! After a while, your progress will motivate you to save even more!
Saving Money – The Giveaway
Speaking of saving small amounts of money, we are going to give you the opportunity to kick-start your savings! Over the next two weeks we are participating with a group of bloggers in a fun Rafflecopter giveaway. All you have to do is like us on Facebook, then, enter below and earn entries for a chance to win some cash money homes! There is a $25 cash grand prize and five $5 cash prizes! So, sign up for the giveaway and start earning entries today!
(For bloggers who are interested in joining this giveaway or future giveaways, please visit the giveaway project site.)
About Greg
Saving money really does add up over time. When you look at the amount of money you can have in a few years from just saving $5 or $20 a day it’s a bit shocking! Great motivator for saving small amounts on a consistent basis.
DC @ Young Adult Money recently posted..How Zillow Fueled My Real Estate Obsession
Thanks DC! You don’t realize it, but a dollar here and two dollars there really does add up.
Saving money was even more fun when the interest rates were higher. These small savings would go to a savings accounts and start earning interest, the compound impact of which can be huge.
Rohit @ The Money Mail recently posted..How to Set Goals and achieve them – Going beyond the SMART framework
Yeah, my mom once told me that back in the day they made something like 15% in their regular bank savings account!!!
Totally agree. I think saving small amounts can be a great way for someone who does not have that saving mentality to begin the discipline of saving. It’s also a great way to teach children the power of saving.
John S @ Frugal Rules recently posted..Why We All Should Care About High Frequency Trading
It is a great starting point for people. If you can get into the habit of saving small, saving larger amounts will just come naturally.
I personally believe that its the little things that end up making the biggest difference to your financial situation.
Often they are the easiest to cut out of your spending and there are normally plenty to choose from. At least there was for me when I first started looking into it.
Glen @ Monster Piggy Bank recently posted..Facebook Giveaway Winner – Best Sites and Lessons Learnt
I hear you. We found a lot of little stuff to cut out as well.
We put spare change in a big jar and cash it in before we go on a vacation. There is usually $70-$100 in there and it is painless savings for sure. I also automate savings from my paycheck into an online acccount and don’t look at it often. It’s always surprising how fast that builds.
Kim@Eyesonthedollar recently posted..Can You Avoid Spending Money on School Fundraisers?
That is a great idea Kim! I used to save my spare change for something special. Unfortunately, I hardly every use cash anymore.
Cutting on small things that don’t really matter for you is a great way to build a decent money fund to spend on what is really important.
Pauline recently posted..How I sold my flat… again!
Cutting small things out also seems less painful:)
I just read the title and thought oooh great a giveaway.. then I realised I am also a part of this! Hahaha! Good article. Will try not to copy you when I write mine later on today
Savvy Scot recently posted..The Sunday Review – Top Posts of the Week
Ha! We’ll be sure to check out what you post later on today:)
It so adds up. Compounding interest is great ! I never buy coffee or fast food and it saves me a ton of money!
Gillian @ Money After Graduation recently posted..I know a Real-Life Princess
Compounding interest can be a beautiful thing can’t it? We used to spend $5 here $5 there eating out. That really put a big dent in our budget without us knowing it. Now, we’ve got that under control.
Hah! My guest post today is also about savings! I love adding up all the things I could be spending money that I am not to see how much I am savings. Things like haircuts, coffee, lunch out, etc…
Hoping I win that grand prize!
iHeartBudgets recently posted..How To Assess The Effectiveness Of Your Savings Account
I hope you win too! Twenty-five bucks for signing up and registering is a pretty sweet deal, right?
For me, it’s not coffee, but getting that candy bar and coke at the gas station. Then I throw in my wife getting something as well and yes, it adds up.
I didn’t really realize how much we were spending at gas stations (isn’t gas expensive enough) until I added up on a weekly basis. Needless to say, we only get drink/food when filling up on a long road trip.
Actually, I have the same vice. I was thinking about grabbing something on the way back from my lunch break. Thanks for ruining it for me Seth;)
I save up a little bit at a time in my own way by throwing my coins into a bowl in my dresser. Its not much money, but by Christmas, I usually have just enough for one more present. I’ve got a lot of other little examples where just that small little action results in a nice chunk of change by the end!
My Money Design recently posted..My Money Design – October 2012 Update
It is so easy isn’t it? That money is essentially forgotten money, and it can really add up!
Great tips on saving money. Even a little bit can add up if done consistently. I also like how you’re teaching your daughter to save. We use the same method and she has a piggy bank split into 3 sections of savings, spending, and giving… she loves it.
Jason Clayton | frugal habits recently posted..5 Tips for Getting a Higher Starting Salary
We haven’t done the spend and share jars yet…but I expect that we will. However, when we asked her what she was saving for she said that she was saving for a Christmas present for her little sister!!! How sweet is that?
I love imagining your little girl with her piggy bank! So cute!
L Bee and the Money Tree recently posted..How long have you been a prostitute?
She is a cutie:)
My life goes through cycles. Some years I am a saver and others I am a spender. As a teenager I saved a lot of money and was able to pay for my college tuition and a new car on my own. Later in life I found myself buying all kinds of stuff and not even thinking about saving. Today we are on the saving path again.
Tackling Our Debt recently posted..How to Save Money on Home Improvement Projects
Wow! That is very impressive to be able to save for your college tuition as a kid. I think I was similar. As a kid, I saved as much as I could. Then I went through a period of spending until I got back to my roots.
Saving small amounts of money is my favourite way to save
Mo’ Money Mo’ Houses recently posted..How Saving Small Amounts of Money Can Payoff Big
It seems pretty simple doesn’t it! I love it!
Saving money does really add up quickly; I’ve been surprised at how quickly our retirement accounts have grown even though we’re not contributing a lot to them! Compound interest is an amazing thing and it’s a lot of fun to watch when it’s in action.
Jason @ WorkSaveLive recently posted..When Is the Right Time to Have a Baby, Financially?
Love me some compound interest!
I have been trying to knock this truthful statement into my bf’s head for quite some time. He’s like it’s only a little bit, it won’t make a difference. Um, YES IT WILL. You guys are great parents for teaching your daughter early on the importance of saving.
MakintheBacon$ recently posted..The Final Day of Civilization Before The Trek
Awww, thanks:) Now crack the whip on that boy and get him in line;)
The thing I learned to counter “It’s only five bucks” with is “If you spend it, it’s five dollars you won’t have. If you don’t, you’re five dollars ahead.”
Pamela recently posted..Stuffed acorn squash
That is so very true Pamela. I like that reply.
I always say every penny counts and if you save it and have patience it will grow. It’s better to have something than nothing at all. Followed a bunch of new pages on Facebook thanks.. hope you all LIKE me back! Cheers Mr.CBB
Canadianbudgetbinder recently posted..Welfare Food Challenge- $26 A Week for 1 In The Grocery Budget
Of course we like you! We’ve been a FB fan for several months now.
Thanks for entering Mr. CBB!
I think I just commented on a similar post today, except their latte factor was 2K/year. (A trip to the Caribbean, the other blog post which I cannot remember, said.)
I will say here as well, that I am glad that 2K isn’t that much money for me any more! The latte factor was important when I had less money, but now I can afford to indulge in little treats if I want to. And I’d rather have weekly fancy cheese than a vacation for just me to an island resort. Or the compound of 2K/year when I’m old and have a ton of money saved up already. My heirs don’t need that money when they’re grown and we’re dead as much as they need little extras now.
And how did I get to this point? Partly by not having a latte factor when I was younger. Staying out of debt and saving instead.
Nicoleandmaggie recently posted..Scholastic Dilemma
That is true. As we’ve grown older, make more, and have more saved, we don’t pay quite as much attention to our “latte factor” either. That is the benefit of sacrificing to get ahead early!
My van’s Friday coffee habit costs me about $100/year, even at only $2. Knowing that amount helps me resist it on other days. Our income has increased a lot and it’s the little things that make such a difference. I used to care so much about buying a $3 bagel out… whereas now I won’t really consider whether or not I do it!
Anne @ Unique Gifter recently posted..I’m Giving Away a Gift!
I am a coffee ADDICT so I will never quit no matter how expensive it is.
But, right now I make my coffee at home and drink for free at work so it isn’t so bad!
It’s funny. People say, “well, it’s just this little thing….” but those add up. Just don’t call it a Latte Factor and we’re good……
AverageJoe recently posted..Did You Miss the October Tax Filing Deadline?
What’s wrong with calling it the Latte Factor? Too cliche for you?!?!?!?
=)
I have been making my own tea and coffee and bringing my own lunch to work and I have saved a ton. I love it.
Miss T @ Prairie Eco-Thrifter recently posted..Are You Getting Ripped Off At The Gas Pump?
I always bring my lunch to work as well. It saves a ton of cash not only by not eating out but also in gas since I don’t have to drive anywhere!
I mystery shop and take surveys!
Michelle recently posted..Giveaway!
I think I might start taking some surveys myself. I didn’t realize that you could make money doing that.
I budget a specific amount for groceries each week, and I shop only once. Whatever amount I am under budget goes directly into a savings account. Right now that savings is designated for Thanksgiving dinner, since we host the families and put out a big spread.
That sounds like a winning strategy, Anne!!!
To save money, we always try to avoid eating out and make all of our meals at home.
Jefferson @SeeDebtRun recently posted..Shortcuts to Financial Freedom
We do the same. Before we started a written budget, I think most of our money was going out the window in eating out. It is amazing how quickly that adds up!