Believe it or not, most people can start saving money with just one penny. The intuition is similar to Couch to 5K: Start with an insanely small amount and work your way up. Instead of nine weeks, this entire activity will take you a year to complete. If you follow the goals that I set for you, you will have saved over $1,700! The secret is simple: Literally start saving with just a penny.
Some of you may be thinking, “I’m not starting with just a penny.” But it’s important to start with such a ridiculously small amount. Before you start moving any real money, you need to make a commitment to start saving. It doesn’t have to be right when you read this. But you do need to actually commit before you start moving money. However, this isn’t why I say to start with a penny. Write down in a notebook the date and the amount you’ve saved. This will come in handy later.
Start with one penny per day for one week. The next week, bump it up to a nickel per day for one week. Then a dime every day for a week. Lastly, a quarter every day for a week. By doing this with just these four coins for 28 days, you will have saved $2.87. Did it seem ridiculous? Good! This is just the beginning.
The Big Boys: Paper Money
Now you should save $1 per week. Did you just groan? Great! You’ve just displayed evidence that you’re just itching to save more. Fight that urge to put in more money and write $1 each week for a month in your notebook. After doing this for a month, you will have saved a total of $6.87 over two months. Outstanding! Bump it up to $5 per week for the next month, $10 per week for another month, then $20 per week for another month.
The first month of paper money has you saving $4. In the second month, you save $20. In the third month, you save $40. And in the fourth month, you save $80. Now you’ve saved $146.87 in the course of just five months. Let’s make this a little more interesting for your sixth total month: $50 per week. At $50 per week, you’ve saved $200 in a single month. Your grand total of savings over the course of six months is $346.87.
The last part is usually the trickiest for people with lower incomes: $100 per week. If you make it happen and actually put away this much each week for a month, then you will have saved $400 for the month. This translates to $746.87 for seven months. It may not seem like much. But now you can adjust the amount you save. Perhaps $200 per month doesn’t seem like so much now that you’ve just done $100 per week. Just a quick pro tip: $200 per month becomes $2,400 in one year. If you save $200 per month for the last five months of your year-long saving activity, you’ve just saved $1,746.87 in one year. Congratulations!
Why the Notebook?
Pull out your notebook after six months and you will notice that you likely only have one page used. That single page is a six-month testimony that you’ve made a serious effort to save money to the point that it has likely become a habit by the end of your first six months. This notebook forces you to keep your commitment to save money because it will literally be the one thing that you can show yourself how far you’ve come. After you’ve done this for a year, you may even start to realize that you haven’t even touched the second page in your notebook. You can either continue to what you’ve been doing or you can do whatever you’d like as long as you stay in the habit of saving money.
Why This Works
There are a few reasons why this works: Discipline, repetition, and goals. It helps you build the discipline to actually save money by constantly writing down how much you saved. Repetition helps solidify this method of saving into a real habit. Lastly, setting goals and actually attaining them makes you feel good. That’s why I make you start with just a penny. I also make you start with a penny because you’re much more likely to think ahead about how you’re going to make it work with the next amount less that week. It sounds ridiculous to think about how you’re going to work with $5 less than you usually do next week, right? By doing this activity, you will find out for yourself that one of the best ways for some people to start saving is to start with just one penny.