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How Saving $5 A Day Can Change Your Life

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How Saving $5 A Day Can Change Your Life

How many times do you spend $5 each day? That morning coffee, a quick sandwich at lunch, a snack at the gas station after work, or a drink out with friends at night can all cost $5 or more. What if you decided to not purchase one of those items each day? What if you made your coffee at home instead of buying it at a fancy coffee shop? What if you packed your own sandwich or decided to get water instead of a coke when you went out at a restaurant? Many people will say they don’t want to give up life’s little luxuries, but here’s what could happen if you did and saved the money instead.

If you saved $5 a day for a month, you would have $150. With that money you could do the following things:

  • You could buy a new smart phone.
  • You could buy a new bike.
  • You could buy a brand new outfit.
  • You could buy a really expensive pair of shoes.
  • You could pay your friend back.
  • You could buy your books for school.
  • You could have a nice day at the spa.
  • You could purchase birthday gifts for 5 friends or family members.

This could change your life significantly if you, for example, rode a bike every day and got in great shape. It could also barely affect your life if you only got to enjoy your new shoes every now and then. So why not save $5 a day for a little longer?

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If you saved $5 a day for six months, you would have $900. With that money you could do the following things:

  • You could finally repair your car.
  • You could pay for a month of rent.
  • You could buy a plane ticket to New York City for two.
  • You could pay for your gas for 3-5 months in cash.
  • You could get ahead on your electric bill.
  • You could finally start that emergency fund.
  • You could pay off your credit card.

Not bad for just giving up a tall café mocha every day for 6 months, right? You can easily see how $5 a day for six months can change your life. Having an emergency fund just in case could prevent you from going into credit card debt. Paying off your last credit card would make you feel so much freer, knowing you were financially stable. Buying a plane ticket somewhere fun could give you memories for a lifetime. Yet, if you saved for a little bit longer, here’s what could happen:

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If you saved $5 a day for a year, you would have $1,825 dollars. That amount of money could get you the following items.

  • You could go on a really nice weekend vacation.
  • You could finally buy your girlfriend that engagement ring.
  • You could put a down payment on a car.
  • You could donate it and make a difference to a charity of your choice.
  • You could pay for a college class.
  • You could fully fund an emergency account.
  • You could finally see the Leaning Tower of Pisa.
  • You could buy a really nice watch.
  • You could pay for 2-3 months of rent in cash.

All of these scenarios so far have involved spending the money you save right away, but what if you grow it instead? Many people say they don’t have enough money to do this, but here’s what could happen if you only save $5 a day for one year.

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You could take the $1,825 and invest it. Even if you add nothing to it, you could reap significant rewards. A very conservative estimate if your investment earns 4% and is compounded once a year shows that you could have $147,000 after 35 years. All you would have to do is give up life’s little luxuries for 1 year, invest that amount, and theoretically let it sit for 35 years.

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With $147,000 to spend, you could not only change your life, but the lives of your family. With that you could do the following:

  • Pay for a modest home in cash.
  • Send all three of your kids to college.
  • Go on a luxury trip around the world with your spouse.
  • Start your own business.
  • Invest even more and make even more.
  • Buy an outrageously expensive car.
  • Quit working for 5-7 years.
  • Pay off all of your consumer and student loan debt and that of your children.

As you can see, the best way to change your life with just $5 a day is to save the money for the long term. Sending your kids to college will definitely change their lives. Quitting work for a little while and seeing the world will give you the experience of a lifetime. Paying off debt or buying a house in cash would be a tremendous personal accomplishment. The truth is, no matter what you do or how long you save it for, saving $5 a day for any length of time can make your life better whether it’s in a small or in a really significant way.

Featured photo credit: Making money concept via Shutterstock

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More by this author

Catherine Alford

Catherine is the go to personal finance expert for educated, aspirational moms who want to recapture their life passions.

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Last Updated on July 20, 2021

Financial Freedom is Not a Fantasy: 9 Secrets to Get You There

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Financial Freedom is Not a Fantasy: 9 Secrets to Get You There

Have you ever considered your life now, and how it would be if you had more time to spend with your family and less worries about money?

Nowadays, financial stress is one of the most troublesome weights in life. If you’ve ever encountered financial stress, you know the difficulty of not having enough income to pay your obligations or bills.

Many people say that money is not the ultimate goal of life. While that’s true, money certainly plays a very significant role. The meaning of financial freedom changes with the different phases of our life, but ultimately, it is something that many people strive for.

In this article, we’ll explain how to capture that financial freedom you’ve been looking for. Read on to learn the secrets to financial freedom.

Break Free of Your Finances

Financial freedom is about having a constant flow of cash from your assets to cover all your regular needs.

When you are not worried about your income, or living paycheck to paycheck, you gain a great sense of freedom. It’s the freedom to be obtain and do what you truly need to make your way through everyday life.

Gaining financial freedom, though, is a process of growth, making small improvements and gaining emotional strength.

Though it seems hard to believe, it is really very simple to get financial freedom.

To do so, you simply need to make sure that your assets exceed your liabilities. In other words, you’ll need to find the sweet-spot where your residuals meet or surpass your expenses. This is something that you can achieve with the proper plan.

While not every person will accomplish financial freedom, the potential for anyone to do so is certainly there. Anyone can achieve this success, regardless of their income level.

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Outlined below are 9 secrets that will help you in your goals of achieving financial freedom.

1. Stop Unnecessary Spending

We often spend money inwardly, instead of objectively.

For example, you may spend when you’re anxious, depressed, restless, exhausted, from fear of missing out, or to please others. This is a very unhealthy way to handle your finances.

To stop this habitual spending, log down all your spending over the course of a month.

Just as some people keep a food diary, keep an expense diary. Remember not to just write down how much and what you spent the money on, also include the circumstances of why you spent the money. Was it an impulse buy at the checkout line or was it something you planned to purchase?

This increased self-awareness could enable you to avoid triggering situations in the future when you are considering an impulse buy.

2. Plan a Monthly Budget

This is a great opportunity to get serious.

Take a seat with your spouse or partner and make a monthly budget based on your income, not your expenses. You are never again going to spend more cash then you have on hand.

Overspending is the thing that led you to more financial obligations. Make sure you decide every month what is coming in and what will be going out and stick to that budget… no matter what.

3. Cut-up Credit Cards

Perhaps you are the type of person who always pays your credit card balance in full before the end of your billing cycle, and enjoys the reward points you gain. If this is the case, then you’re already way ahead of the game.

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If not, you may want to consider ridding your life of the burden that credit cards bring.

Many cards have strategies set up so that if you make a certain number of late payments, they will raise your interest rate much higher. This can really add up in the long run and you won’t be doing your financial situation any favors. If you’re prone to late payments or have a large balance due on your cards, cut them up!

Without proper self control on credit card spending and payments, you are basically throwing your money away. To ensure that you have better control over your spending, use only cash or debit for all future purchases (and don’t forget to pay at least your minimum payment on your cut-up cards each month!).

4. Increase Savings

There is no doubt that for a comfortable retirement you must accumulate satisfactory savings throughout your working life.

It’s good practice to save up to 15% of your income.

Start with your workplace 401(k), if you have one. If not, a Roth IRA (if you are eligible) or a traditional IRA (if you are not eligible for the Roth) are the next logical steps.

Increase in longevity means you might be able to look forward to 25 to 30 years in retirement, or possibly even significantly more. Investing now in good retirement plans will ensure that you have a guaranteed a stable monthly income when the time comes to stop working. [1]

5. Invest Wisely

Consider investing in funds.

Specifically, you will gain higher returns if you invest in different types of mutual funds such as Debt funds, Equity funds and Hybrid funds with a proper balance, although it absolutely relies on your personal preferences and sense of risk taking.

To get the most of these benefits, make sure you are investing in a variety of assets. Another resource of investing in mutual funds is SIP (Systematic Investment Plan) where you invest some money every month in funds. SIP works by averaging the per unit price of the stock.

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Mutual fund investors are aware of the benefits of an SIP (Systematic Investment Plan). For one, it is the most secure way to invest in equity mutual plans so that wealth is created over a long period of time. This plan also helps you to gain a better sense of financial discipline, which will come in handy in all your financial endeavors.

6. Invest in Gold

There isn’t really a better way to invest in gold than to have the physical gold itself in your possession.

You can purchase gold coins and bars from mints as well as from coin dealers and other private sellers.

Another way to invest in gold is through ETFs (Exchange Traded Funds).

These are is similar to mutual funds but they are exclusively investments of gold. ETFs are great because they offer more liquidity; the ETF owns the actual physical gold, stores it, and retains the value of the shares. These shares can then be bought and sold in the stock market, and one big benefit is that the transaction costs of gold ETFs are much lower than the that of physical gold.

With its consistently-increasing demand, investment in gold can be very wise long-term investment to make.

7. Stash Emergency Funds

Whether it’s a cash gift or a work bonus, always try to save any extra money that comes your way rather than making unneeded purchases.

If you get paid every other week, you’ll get an “extra” paycheck (three rather than the usual two) twice a year. Either save those paychecks towards your emergency funds or utilize the money to pay down other obligations, such as loans, credit cards or other debts.

Make it hard to get your cash.

Put your savings in an alternate bank, maybe an online bank that forces you to delay for several business days before transferred money hits your regular bank account.

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8. Find Fabulous Mentors

Find a mentor, such as a friend or family member, who has exceptional control over their finances and pay attention to everything they do.

If you do not have any friends or family that are enjoying financial freedom, then find a mentor online! There are numerous blogs and guru websites featuring the advice of many people who have reached financial freedom, and they exist primarily to let you in on how to achieve it for yourself.

There are also plentiful forums available that share tips and tricks on how to best achieve financial freedom. Read as much as you can and start changing your habits for the better.

9. Be Extra Patient

Patience is the key of financial success.

Being patient can be quite tough, especially when you’re struggling with your finances, but having faith is worth it. You’ll continuously be on the right track if you are taking the proper steps above.

So don’t be discouraged, even if you are only saving a few dollars a month; it all adds up. Within just a few years you’ll look back proudly at your accomplishments and be glad that you had the patience to get there.

Financial Freedom for All

Anyone can achieve financial freedom, regardless of their financial circumstance.

Use the tips provided above to get yourself on the track to financial freedom and toss your monetary concerns out the window. If you wish to achieve a life with financial freedom for yourself and your family then you must adopt a disciplined approach towards your finances.

Following the simple secrets above is a great start to making your money work for you, so you can work less and live more!

Featured photo credit: rawpixel via unsplash.com

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Reference

[1] Hartford Gold Group: IRA Retirement Accounts

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