Here at The Penny Hoarder we have something for Abe Lincoln.
After all, his face is depicted on our favorite coin.
But as much as we love our pennies, we also love seeing Lincoln’s bearded mug on the front of the $ 5 bill. And saving 5 dollar bills is far more lucrative than hoarding pennies.
How to save money with the Five Dollar Challenge
The Five Dollar Challenge is a simple strategy for saving money – one that doesn’t require a lot of thought or effort. You don’t have to do the math. You don’t have to cut your expenses. You don’t have to set aside an obscene amount of money every month.
All this challenge requires is that you tuck away every $ 5 bill that you receive as change. That’s it.
If you’re paying for something and the cashier returns you a bill with Lincoln’s straight face, don’t use it to buy coffee or a cheap lunch from the drive through. Set that $ 5 bill for your savings.
Depending on how long you have been on the challenge, you can end up cashing in a lot of cash. Five dollar bills can add up quickly. If you set aside just two $ 5 bills a week, you’ll save $ 520 after a year. And since the amount is pretty nominal, your savings can grow without missing out on your $ 5 bills.
Where to keep your money
Separating all of your $ 5 bills from the rest of your pocket money is key to completing this challenge. Many people taking part in the $ 5 Challenge put their money in jars, envelopes, or even shoeboxes.
You can count your balance continuously or just wait until the end of your challenge to be surprised by the total.
However, if you don’t want to keep all of the money at home, deposit into a savings account weekly. Your savings are insured, you distance yourself from your stash, and you can even earn interest – especially if you have one High yield savings account.
Participate in the challenge if you are not using cash
If you’re used to swiping your debit card everywhere, it doesn’t mean the five dollar challenge is not for you. You just have to do a little extra work.
When you buy, think about what change you would have received if you had paid in cash. For example, if your target run was $ 84.25 and you paid with a $ 100 bill, you would likely get a $ 5 bill, a $ 10 bill, and 75 cents back in change. Before leaving the parking lot, log into your online banking account to transfer $ 5 towards your savings.
To make it easier, you can choose to add $ 5 to your savings account every time you swipe your card. Or you could be more selective and only add $ 5 to your account when you make a specific purchase, such as: B. refilling your gas tank.
Another option is to switch to cash – but only for you Fun money Expenditure. Make sure to steal your card to buy groceries or get toiletries, but pay with cash when you shop or eat out. Every $ 5 bill you get in change goes – you guessed it – straight to your savings.
Customize the Five Dollar Challenge
If throwing away $ 5 bills doesn’t work for you, you can change your money-saving endeavors while continuing to adhere to the basic premise of the challenge.
Save any coins you get as change. (Piggy banks aren’t just for kids.) Or, you can put aside any $ 1 bills you get.
Choosing a smaller denomination does not automatically mean that you will save less. For example, if you often get more $ 1 bills for change than $ 5 bills, you may end up saving more.
Have a goal for your savings
Whether you want to stick with this savings challenge for a few months or all year, it is good to have a plan for how to deal with the money you are saving.
You could afford something nice, like taking a much-needed vacation or buying something on your personal wish list. Or, you could use the money for something that reflects your financial goals, such as: Make a nice bump on your student loan or Credit card balance.
Whichever way you choose to use your savings, keeping an end goal in mind can motivate you to stay consistent – and not dig into your stash before the challenge ends.
Nicole Dow is a senior writer at The Penny Hoarder.
This article originally appeared on www.thepennyhoarder.com