The headline is a bit of an exaggeration. But I thought I’d try and write up a blog about how to save money easily.
The first problem of course is that you need to be earning money in order to save money. If you don’t have a job, then I’m afraid this article isn’t going to help.
For those also looking for the secrets to saving a ton of money, please move along. There are no secrets, and if you think there are, you’re going to be looking for the proverbial pot at the end of the rainbow for the rest of your life.
But if you stick around, you just might be on the right track to sorting out your finances and having a healthy savings account for your future.
The best way to make savings a reality is by making savings fun. There have been a lot ideas on savings fun, and the one I like a lot that would be easy for just about everyone to do is called the 52 week saving challenge.
It’s really easy, and it’s something that pretty much anyone can do. Here’s how it goes. Starting the week of January 1st, or any week you want to start really, you put $1 away in your savings account. The second week you put in $2, the third week $3 and so on.
It’s easy, because if you start in January, even after all the holiday binge shopping you can still come up with ~$10 for the month of January (1st week of January $1, 2nd week $2, 3rd week $3, 4th week of January $4 = $10).
And the most you’ll ever put into a savings account in the year is $52 in the final week of the year. That shouldn’t be especially onerous for most of us. The cool thing is that at the end of the 52 weeks you would have saved an astonishing $1,378!
For some, putting in more than $25 a week might be difficult, but everyone can put in $25 a week. It might require sacrifices, but it’s doable. So if you start off at $1 the first week of the year and work your way up to $25 a week in the 25th week of the year, and maintain that $25 for the remaining weeks of the year, you’ll save a cool $1,000 even by the end of the year. Still not bad!
Now if you can manage saving $1,000 a year for 45 years, and you can earn a consistent 8% per annum, you’ll end up with over $1,000,000 by the time you’re ready to retire. And that’s only saving a measly $1,000 per year, and for the first four months of each year, you’re never saving more than $20 a week.
If you can do the unabridged 52 week savings challenge, you’ll have over 1.5 million dollars if you save that way at 8% for 40 years.
Want to make it even more fun? Do what I call the Advancing Age Savings Plan. With this one, you basically save the same amount of money each week as you are old. So if you start at the age of 20, then you save $20 every week that year. When you turn 21, you start saving $21 a week and so on and so forth.
Doing this for 40 years and earning 8% will earn you almost $2,000,000 (2 million) by the time you’re ready to retire. And in thirty years when you’re 50, saving fifty bucks a week will be nothing.
And if you do that in the reverse order. If you save $65 a week the year you’re 20 and then save $64 a week when you turn 21, ending up saving $20 a week when you’re 65, you’ll have saved over 3 million dollars. That’s the power of saving more, earlier, so that it can grow longer.
This is how you can have fun with math and grow your savings at the same time.
The above are only examples of the power of savings, and they all don’t require you to be saving an arm and a leg in order to reach a million dollars or more by the time you retire. I’m sure you can come up with a ton of different ideas too.
The most important part of saving money like a mad man is to do it consistently, even if you have to start slowly.
And to keep at it consistently. Now in order to do that, you’ll have to change your mindset and start looking at saving as a game and a joy rather than a chore of deprivation. The first step is to start lowering your desire for things. But that might have to wait for a new blog on another day.