A couple of weeks ago, I read the story of a lady who built up a $12,000 savings account just by saving her $5 bills. Since I have such a taste for experimentation, I decided to try this out for myself and I have to say I’m surprised with the results.
First of all, this plan requires you to pay in cash whenever possible – you’re not going to collect any $5 bills if you’re using a credit card. But paying for things in cash is a major departure for me. It’s not that I have anything against cash, it’s just that I never seem to have any. Trips to the ATM are few and far between, so I’m used to walking around with a few dollars or less in my wallet. Now, I have to make sure my wallet is fully-funded so I’m not forced to pull out the plastic. I’m not going to go out of my way to hit the ATM since that would be a waste of gas, but instead I’ll request cash back at the grocery store until I finally make it to an ATM.
Second, the plan requires commitment and discipline. Once you decide to start saving your $5 bills, you have to protect them and squirrel them away, otherwise you’ll just end up stealing from yourself as those bills disappear into a cash register. I’m still getting used to this part. Last week when I was on my business trip, I took $100 in cash to pay for lunches and it seemed that no matter where I went, the business was out of $10 bills and could only give me change in $5 increments. Within the first four days, I was already out of $20 bills because I was avoiding spending the $5s. By the 6th day, all my $1s were gone and I was left with a stash of $5 bills and a mass of change in my pocket. Rather than try to find an ATM in this unfamiliar town, I dipped into my wad of $5 bills and made a mental note of how much I had to pay myself back. There was a bit of pain when I handed over the coveted bill since I knew I wasn’t supposed to spend them – at least the cognitive dissonance registered that I was behaving “inappropriately.”
What brings the most surprise, though, is the difference this savings plan has made in just 2 week’s time. Sitting on the kitchen counter, awaiting deposit into our savings account, are 18 $5 bills. Yes, we were able to save $90 just by avoiding spending our $5 bills. Granted, this has forced us to pull more cash out than we would have, so it’s a double-edged sword. But as we see our cash moving from checking to savings, that will force us to continue reducing our spending. In a sense, this plan will go a long way toward helping our savings and our excessive spending.
I believe this experiment can easily be declared a success after just 2 weeks and I think we’ll keep going for now to see if we can sustain the plan for a longer term. I definitely recommend trying this and see if you can also surprise yourself about the results!
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I know someone who finances her vacation each year with her change. She does basically the same thing – always pays in cash and saves all her change. At the end of the year she always has enough to take a 5 day vacation.