Save $5 Dollars a Day for a Year: Will it Make You Rich?
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You’ve been looking around for ways to save money. Being wealthy is your big goal, and you’ve heard of the 5 dollars a day for a year challenge.
Will this saving method make you rich, and should you try it? The answer is actually yes and no. Find out more here!
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How Much is $5 a Day for a Year?
Before you even decide to try this out, let’s go over the facts. How much does $5 a day add up to over the course of a year? If you are consistent, you’ll end up with $1825 after an entire year.
This is a pretty great start to a savings goal, and it can definitely help you make a purchase if you’re saving up for something. However, $1825 on its own isn’t going to make you wealthy.
That being the case, let’s look at an alternative.
How Much is $5 a Day for 40 Years?
So, saving for a year will give you nearly two thousand dollars. But what if you changed the time factor?
What if you save $5 every day for 40 years? This would get you $73,000. Now we’re talking!
But obviously, you don’t want to just save this money. So what would it amount to if you invested it? With an 8% rate of return, adding $1825 to your investment annually, you’ll end up with over half a million dollars in 40 years.
So over time, saving this amount of money can make you wealthy. But the essential thing is to be patient and continue investing.
What is the Save $5 a Day Challenge?
As you now know, the 5-dollar-a-day challenge is when you save $5 every day without fail for an entire year. While this probably seems like a lot of money for a long time, the chances are good that you won’t notice this very much.
After all, $5 a day is $35 a week, and many people spend that much on coffee, snacks, or subscriptions without even realizing it.
To help you stay encouraged and keep track of your progress, use this printable. It will help you see how far you’ve come and how much you’ve saved every month.
Using a visual reminder of your savings is a great way to stick with it.
Is saving $5 a day good?
Anytime you are able to save money, that’s a pretty great thing. After all, you’re thinking of the future and making sure you don’t live paycheck to paycheck. Here are some great reasons to save.
Builds Savings
First of all, saving $5 a day is a way to build up your savings fairly quickly. No matter your financial plan for the future, having a good amount of money saved up is rarely a bad idea.
It Helps Develop Good Saving Habits
Habits can be difficult to form on your own. That’s why the 5 dollar savings challenge is so great. It’s a proven method for introducing good savings habits that will actually get you results.
You can make this a practice in any way you choose. From checking your wallet at the end of each day and adding some money to a jar to adding to your savings account weekly, you can form whatever sort of habit you want to go along with this.
But above all, this challenge gives you the chance to start saving and to realize that you can. If you stick with it or try some other challenges, you’ll notice that saving becomes a way of life, helping you to do what you want to do financially.
Helps You Learn Patience
Saving $5 instead of spending it on snacks or coffee takes some self-control. It’s good to start teaching yourself how to wait for things and save with small amounts. The 5 dollar challenge can really help with this by reminding you to save money instead of spending it.
It is a Step Towards Financial Freedom
Any saving helps you out financially and prepares you better for the future. The 5 dollar challenge can help you take a step toward financial freedom.
Whether that’s building an emergency fund or making a big purchase free of debt, you’ll get closer to your goals.
Does Saving $5 a Day Really Matter?
You might still be wondering if $5 a day is really going to make a difference. After all, it doesn’t add up to millions of dollars, right? Here are the reasons why it matters.
Investing $5 a Day Can Really Pay Off Over Time
Investing $5 a day may seem like almost nothing. Why even bother, right?
Think again – remember that half a million dollars? That could be super helpful with retirement.
Create an Emergency Fund
Doing this challenge could help you create an emergency fund. After all, in a year, it adds up to nearly $2000.
While that might not get you to your entire emergency fund savings, it can definitely help and shorten the time taken to complete your goal.
Get Out of Debt
Are you struggling to get out of debt and feel like you don’t have any money? The 5 dollar savings challenge is the perfect thing to help you out.
Save up all your challenge money from each month and pay extra towards your debt. This will help you make a dent in what you owe and pay it off faster.
Save for Major Purchases
The challenge can make major purchases that seem out of reach easier to get to. Maybe you need a new phone, a new used car, or a TV.
If you do the 5 dollar challenge for a year, you might be able to pay for the entire purchase in cash or significantly offset your costs.
Fund Retirement
The nearly 2k you will save in a year can help you fund your retirement. This is especially true if you’re barely starting to invest for the future or are on a very strict budget.
$5 a day can help you to get what you need to enjoy retirement and pay for retirement expenses if you continue with it over time. While you won’t want to rely on this method to do all the work of saving for retirement, it can for sure make things easier and help you have more money later.
How to Build Wealth With $5 a Day?
5 dollars may not seem like enough to build wealth. But the fact is, over time, by investing, you can turn 5 dollars a day into hundreds of thousands of dollars.
This can definitely put you on the right track for building wealth. The key is to understand what you’re investing in so you don’t lose the money.
How to Save $5 a Day?
Maybe you aren’t sure where you can cut back in your budget to save $5 a day. But consider these ideas that people typically spend money on, and notice where you might be able to save.
Make Your Own Breakfast
Grabbing breakfast on the go usually amounts to a few dollars, at least. While eating out is convenient, making a simple breakfast at home can help you save.
A bowl of cereal at home instead of a $7 muffin can make a difference over time.
Make Your Morning Coffee at Home
Rather than heading to your favorite coffee shop, consider making your coffee at home. It won’t take any time at all if you program your coffee maker to start right when you wake up.
And then you’ll have the energy you need for the morning, plus extra money. It’s been said that cutting out your morning latte isn’t going to make you rich, but changing your spending habits can change your relationship with money into one with savings.
Drink Water Instead of Soft Drinks or Energy Drinks
Soft drinks and energy drinks are tempting, but they’re usually unhealthy and expensive. Water is good for you, many times free, and it’s a simple switch to help you save.
When you go out to eat, skip the drink and opt for water. Or bring a water bottle from home and avoid purchasing other drinks during the day.
Cancel Subscriptions You Rarely Use
If you haven’t used a subscription in months, cancel it. If you use this idea with a few different subscriptions, you could save way more than 5 dollars. Plus, you won’t really lose anything because you weren’t using it anyway.
Don’t Eat Out
Skip the fancy restaurants and fast food. If you go out to eat, you’re likely to spend anywhere from $10 to $100. Imagine how fast your savings would add up if you just use that money to save 5 dollars a day for a year.
Set Up an Automatic Transfer of $5 to Savings Every Day
Want to save 5 dollars each day but don’t have time or are concerned you’ll forget? No problem – set up an automatic transfer for every day or every week. You’ll save money without paying any attention to it at all.
Don’t Impulse Shop
If you struggle with impulse shopping, this can eat into your savings. Stay away from stores and online shopping and transfer some money to your savings account instead, or throw $5 into a change jar.
Related: Tips for Stopping Impulse Shopping Fast
Saving $5 a Day Can Really Help You Build Wealth Over the Years
It’s a small habit that can really add up over time. Saving 5 dollars a day for a year is a great start to your financial journey. Not only that, but it can easily help you become wealthy.
As you earn more money or get better habits, you can switch from saving $5 a day to even more. And once you start investing, you’ll be able to really affect your financial future and be more secure with money.
Related Articles:
- How to do the $5 Challenge
- 52 Week Money Challenge [with Printable]
- 100 Envelope Challenge that Saves Over $5k
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