Saving money for a vacation, an emergency fund, or to just improve your financial situation is a great goal. In this post, you’ll learn how you can save $100 a week, and after a year, you will have saved $5,200!
Saving money certainly can feel like an intimidating challenge, especially if you currently save little to none of your income.
A great first step would be saving your first $1,000. But once you save up this small cash buffer, where do you go from there?
This $100 per week money saving challenge is a great way to start the habit of continuously saving. You’ll end up with $5,200 one year from now. Keep it up for 10 years (investing $100 weekly at a conservative 5% annual return) and you’ll end up with a grand total of $67,396.73!
Well, there is one main reason besides the obvious of $100 per week being a nice even number. It is a fairly reasonable goal for a household with a near-median income.
There is one slight issue when it comes to using dollar values in your money saving challenge. $100 a week, or $5,200 a year, may be too easy or too difficult depending on your household income and household needs.
The median household income in the US was $61,372 in 2017. Everyone’s tax situation is different, but a household with this exact gross income may generally see between $45,000 to $50,000 of net income.
Let’s pick a nice number in the middle: a net income of $47,500. Your net savings rate after completing the $5,200 money saving challenge would be:
Net Savings Rate = ($5,200 / $47,500) x 100
Net Savings Rate = 10.95%
Overall, a household with the median income who follows this challenge successfully would save about 11% of their take-home pay. 11% may not sound like a lot, but it’s reasonable and actually slightly above average. The average savings rate for Americans was just 8.1% as of June 2019!
You can calculate your own net savings rate to see how this money saving challenge works for you.
$5,200 a year may not be the right goal for you if your household income is much higher or much lower than the median. There are other factors such as cost of living and household needs as well. It’s important after all to set goals that you can achieve!
If you are currently saving little to no money, a good starting point is to aim to save 10% of your net income. Taking your net income and dividing it by 10 will give you a personalized money saving goal if the $5,200 doesn’t feel like a reasonable goal to you.
Regardless of the amount you choose to strive for in this challenge, the principles you apply to accomplish it are the same!
In order to find more ways to save money, you must widen the gap between your income and expenses. You can then put this money away to save towards your goals.
This is why it’s important to have well-defined goals that can be broken up further. Remember the $100 per week goal? You can break that down to just $14.29 a day. From there, you just need to actually find that $14.29 gap daily.
In David Bach’s book The Automatic Millionaire, there is an interesting concept coined as the “Latte Factor”. This term describes the small daily purchases that have the potential to add up to a huge sum. We are talking purchases such as fancy coffee, take-out lunches, etc.
How much can you actually save with this method? Well, it all depends on how much you’re spending. If you’re buying a $4 latte daily, choosing to make that coffee at home will save you $3.50 at least. That already puts you a quarter of the way there!
Likewise, if you eat out on a daily basis, cooking at home can save you hundreds if not thousands per year. Did you know that 54% of American food spending is on eating out? If you find yourself spending more on restaurants than groceries, rebalancing this may instantly put you in a better position to save money.
Other small expenses that can add up include:
The list goes on!
There is another method which can either be used separately or in combination with the above; focusing on large expense categories can save you thousands a year without giving up small daily luxuries such as morning lattes!
This method involves managing the “big three” expenses: housing, transportation, and food.
We already discussed food briefly above. Small purchases of coffee and snacks may be included under the “Latte Factor”, but spending thousands per year on restaurants likely falls here. Cutting back to eating out just two or three times a month can help keep your food budget under control!
Housing is the biggest expense category for Americans and holds significant saving potential. Downsizing your home and practicing house hacking (my personal favorite) both have the potential to save you hundreds every month, putting you well on track to complete this savings challenge.
Transportation is the third and final of the “Big Three” expenses. Buying a used car with cash is arguably the biggest change you can make, especially if you’re making payments on a shiny new car that has already depreciated by thousands of dollars. My 2014 VW Jetta cost me just $13,000; it has served me well for the past five years and hopefully will for another 10-15!
An increase in income is arguably the fastest way to succeed at this money savings challenge, however it is not easy.
The simplest situation is a promotion or new position that comes with a sizable salary increase. Say your net income increases by $6,000 per year with a new job position. Your savings challenge would be instantly completed, provided that your lifestyle cost doesn’t increase as well!
The vicious loop of increased spending/increased earning is why people with six or seven-figure salaries may still suffer from alarming financial problems. Getting out of it by boosting your savings rate after a pay raise is a game-changer.
The above also applies to increases in annual income through side hustles or passive income from investments.
Want to know the best way to stick to this money saving challenge? Automate your contributions.
The pay yourself first mentality is a common psychological trick in the personal finance world. An automatic transfer to your savings account makes it one step harder for you to make discretionary purchases with the money that was meant for saving. It also is one less thing to think and worry about in general.
Make sure to run the numbers beforehand and make sure you can afford your mandatory expenses with the money left over from saving. If you can’t, then you’re probably saving too aggressively.
The act of putting aside money isn’t enough; it also matters where you’re putting the money.
There is no shortage of options when it comes to investing, and the proper allocation all depends on your goals. After all, personal finance is personal!
You likely have more than one goal, and you’ll want to contribute to them all simultaneously. However, it’s important to know the simple strategies for each type of goal.
The importance of saving for your own future cannot be understated. Luckily, there are many different tax-advantaged accounts that are created to encourage money saving.
Maxing out your employer’s 401(k) contribution matching (if available) is one of the few no-brainer pieces of advice in the personal finance world. If you do not take advantage of this, then you are leaving your compensation right on the table!
An IRA is also a great choice for retirement savings. It is less restricted than the employer-sponsored 401(k), but doesn’t have the powerful benefit of contribution matching. Many people have a combination of both these accounts.
There are many other accounts to be aware of (notably Roth IRA’s) and far more strategies to learn. Check out this beginner guide to investment accounts for more.
Are you saving for a big purchase, or perhaps want to boost your emergency fund? Saving for short-term goals requires a different strategy. You’ll want to save your money somewhere where there is virtually no chance of losing money.
One place this is possible is in a high-yield savings account. Your money can earn 2% to 2.5% in interest, likely just enough to counter inflation. If you plan on using the money within a year or so, that likely shouldn’t matter to you! I like to check Bankrate to find the best high-yield savings rates offered at any given time.
Taking on a money saving challenge can be a fun way to boost your savings. Making it a structured challenge of $100 per week encourages accountability on your part, especially if others are aware of your participation in the challenge.
Whether you are saving zero percent of your income or 10+ percent, there are many ways to further widen your income-expense gap.
Finally, remember the importance of breaking down your big goals into little chunks. The $5,200 may seem large and unattainable, but you’ll be there in no time if you succeed at saving $100 per week!
Are you looking to find some cheap and easy budget meal plans? In this post, you’ll find 21 delicious budget meals which you can cook in a short amount of time!
When you’re juggling a career, family, hobbies and a social life, it can be difficult getting a delicious meal on the table.
Sometimes it seems like there just isn’t enough time in the day to do everything we want – including making a healthy, from scratch dinner.
Fortunately, we’ve compiled a list of tasty, delicious meals that can go from kitchen to table in 45 minutes or less.
They’re as easy on your brain as they are on your wallet.
Here are 21 delicious, quick meal ideas for when you don’t have a lot of time (or cash).
I’ve split up the post into multiple sections – you can navigate to each one using the list below (or scroll):
Below, you can click on the recipe images to go to the website with each recipe.
Breakfast is a wonderfully delicious way to have dinner.
Not only is it generally inexpensive, it usually comes together quick and uses ingredients most people already have on hand, like milk, flour, eggs, and butter.
Whether you’re whipping up some fresh pancakes or feeding a crowd with a casserole, having breakfast for dinner is a great way to save time and money.
Add some fruit or eggs to make it a complete meal!
Here are three breakfast recipes to make when you’re low on time and money:
Can’t get enough of warm, fluffy pancakes? Check out these 55+ pancake recipes for when you’re looking to change things up.
Pasta is one of the world’s most perfect foods – it cooks quick, is versatile, and can be as healthy or indulgent as you want.
Nothing seems to satisfy like a big bowl of hot noodles smothered in rich sauce. Topped with a protein like grilled chicken or meatballs, and it makes a hearty meal.
Here are three pasta recipes to try when you’re short on time but want to pack in the flavor.
Sandwiches can be the ultimate comfort food – they’re also super easy to prepare, making them a great lunch or dinner.
Here are three wonderful sandwich recipes for when you’re craving that gooey comfort-food goodness and don’t have a lot of time.
Tacos are one of America’s favorite foods, and for good reason – they’re tasty, cheap, and come together pretty quick.
Whether they’re filled with chicken, beef, pork or fish, tacos are a delicious weeknight meal when you need to get something on the table fast.
Here are three taco recipes that can go from stove to table in 35 minutes or less.
There’s nothing like warming up with a big bowl of soup or chili on a brisk Fall day.
It’s also the perfect dish for busy families, as all the ingredients can just be thrown into a pot and cooked while you’re at work or watching the kids, with minimal prep work.
These can all be made specifically in the slow cooker/crock pot for extra convenience. They also go great with sandwiches – another easy dinner idea!
Here are three soup and chili recipes to use when you’re short on time.
Stir fries are a great weeknight meal, as they don’t take long to whip up and are chock-full of veggies and protein.
The best part? It takes less time to make than ordering take-out!
Here are three delicious stir fry meals to try when you’re craving Chinese take-out – without the waiting.
Can’t get enough Chinese inspired dishes? Check out this list of 70+ authentic Chinese food recipes from Delish.
Wraps, while closely related to the taco, have their own wide variety of mouth-watering flavors to try.
Wraps are perfect for when you don’t have a lot of time, as they can be made in under 30 minutes.
They’re also perfectly portable for when you need to take a meal or snack on the go.
Getting a delicious, healthy meal on the table doesn’t have to be complicated, time consuming or a chore.
Simply use one of these easy to make recipes, and you can have a tasty, hearty meal that’ll be on the table in less than 45 minutes!
Investing money to build wealth is very important on the path to becoming financially successful. If you’ve waited a long time to start, don’t worry. There is always time for you to start investing money for your financial future.
Want to hear a scary statistic?
It can be easy to prioritize other financial goals over retirement when you’re young, because retirement seems so far off.
Unfortunately, before you know it, retirement will be here – and you’ll either be able to pay for it or you won’t.
While this is a heartbreaking statistic, if you’re in the same boat, there’s good news; it’s never too late to start investing for your financial future – you just have to be more diligent about it if you’re starting later.
In this post, you will learn about the power of compounding and compound interest, and learn why it’s never too late to start investing for your financial future.
Before we get into some tips on how to save more to invest for retirement, it’s helpful to see an example of just why it’s so important to start investing as soon as possible.
Two words – compound interest.
Most people are familiar with the term interest – the money you get in return for loaning money to a bank, for example.
But compound interest is an even greater being.
Compound interest is the money you earn on your initial investment, plus the money you earn from accrued interest.
Simply put, it’s the interest your interest earns.
For example, let’s say you put $1000 into the stock market, and you average a 10% return every year. After that first year your investment gained 10%, or $100.
While this is an amazing thing – yay, free money! – even better is what happens a few years later when compound interest starts taking over.
Let’s see how it affects your investment using a compound interest calculator from the IRS website.
After 10 years, you would have earned a total of $1,593.74 in interest without contributing anything more.
You can see how during the first few years, our investment returns don’t make us much.
But once compound interest starts to take over, it really starts to take off!
Even with an amount as small as $1000, over time, the interest you earn from your investment and the interest your interest earns really starts to affect your returns.
This is why it’s so important to start investing early – because compounding takes time.
The point of this example isn’t to make you feel bad – it’s to help you understand how much compounding interest can help you reach your financial goals.
Another important factor when it comes to investing is time. Time allows compounding interest to do the heavy lifting for us.
In order to drive the point home, let’s look at an example between two different investors: one with 15 years until retirement, and one with 25, with identical salaries, investment returns and contributions.
Investor A makes $50,000 a year, invests $100 a month, and has 15 years until retirement.
Here’s how much his account would be worth after that 15 years at 10% interest:
These investing results are pretty good!
Let’s compare that to investor B, who also makes $50,000 a year, invests $100 monthly, but has 25 years until retirement.
Here’s how much his account would be worth after that 25 years at 10% interest:
Even with both investors making the same amount of money, and contributing the same amount to their investments, investor B has almost three times the amount of money as investor A after only 10 additional years of investing, and only $12,000 additional capital invested.
This is a perfect example of why time in the market is more important than almost any other factor.
Let’s say you’re like Investor A, with not much time until retirement.
Is it even possible for you to retire with enough savings?
The easiest way to determine if and when you can retire is to determine how much you’ll need in retirement, then divide that amount by the amount of years you have until you retire.
For example, let’s say you are 50 years old and expect to retire at 65 with $500,000. You have no money saved and you don’t have access to a 401K.
In order to determine how much you’ll have to save for retirement, we have to figure out how much we need to save per year.
$500,000 / 15 years = $33,333.33 a year, or $2,777.00 a month.
That is a lot of money, but depending on your income and expenses, it can be done.
But in order to do that, you need to start saving more.
If you’re trying to play catch-up, here are some small steps that can yield big results.
If you have an employee-sponsored 401k and you work for a company that will match your contribution up to a specific dollar amount, you need to take advantage of it.
Every dollar helps, and not taking a match is like throwing free money away.
Taking that match, whether it’s 2% or 5%, can have a drastic effect on your investment returns and timeline.
Let’s use an example.
Investor A makes $50,000 a year, has 25 years until retirement, contributes $125 a month to his retirement but gets no additional match from his company.
Investor B makes $50,000 a year, has 25 years until retirement, contributes $125 a month to his retirement and gets a match on his 401K contributions (an additional $125 a month, $250 total contribution).
Let’s take a look at the results:
While it’s not unsurprising that Investor B has more money at retirement, it is crazy to see how much more he has, just from an additional $1,500.00 being contributed to his account every year.
Obviously, if you’re getting any sort of match at all, you need to take it!
Another great way to beef up your retirement savings is to increase your contributions as often as possible.
Here’s an example.
Investor A contributes $125 a month to his retirement and does not contribute any extra over the course of his 25 years until retirement (and receives no company match for simplicity sake).
Here’s what he would be left with at the end of those 25 years if he started from $0 at a 10% interest rate (this is the same table from above):
Let’s contrast that to Investor B, who also contributes $125 a month to his investments, but who, every five years, increases his contribution rate by 2% (for the sake of this example, Investor B gets no company match either).
So at age 40 he’s contributing 3% ($1,500 per year), at age 45 he’s contributing 5% ($2,500 per year), at age 50 he’s contributing 7% ($3,500 a year), at age 55 he’s contributing 9% ($4,500 per year) and at age 60 he’s contributing 10.5% ($5,250).
*Because this information is harder to calculate by graph, I did it by hand.
Here are the results:
Investor B is left with almost $350,000 more dollars in retirement, just by gradually increasing their contribution rate over 25 years.
This is a perfect example of how contributing a little extra every month every few years will get you to financial independence much quicker than not raising your contributions at all.
You may not know, but if you’re over 50, you can actually contribute a little extra to your 401K and IRAs.
In 2019, the maximum contribution for a 401K is $19,000. If you’re over 50 though, you can contribute an extra $6,000 per year, for a total of $25,000 a year!
In 2019, the maximum you can contribute to an IRA (either Traditional or Roth) is $6,000, plus an additional $1,000, for a total of $7,000 a year.
This little extra contribution room can help bridge the gap between what you have currently saved, and what you might need.
If, and when, you get a raise, pretend you didn’t and take the extra to increase your contribution.
If, and when, you get a tax return, pretend you didn’t and take the extra to increase your contribution.
If, and when, you sell things around the house, pretend you didn’t and take the extra to up your contribution.
If you have a side-job and are earning some extra income, pretend you’re volunteering instead and channel those funds into an IRA and get the benefit of no tax when you withdrawal at the time of retirement.
For hourly employees, if and when you get overtime pay, pretend you didn’t and take the extra to increase your contribution.
If you ever receive an inheritance, pretend you didn’t and increase your contribution.
If you receive a settlement, take as much of those funds after you pay lawyers, and other bills to increase your contribution.
If you’re still trying to catch-up and have maxed out your 401k ($19,000 or $25,000 for employees 50 or over) and IRA ($6,000 or $7,000 for employees 50 or over), just remember that you can always contribute after-tax dollars to a brokerage account and purchase one of many low cost index funds.
It’s never too late to start investing and contributing to your financial future.
While it may be more difficult for you depending on your age, your income, and your access to benefits such as a 401K, with time, it can be done.
There’s a wonderful Chinese proverb that is relevant to starting to invest:
“The best time to plant a tree was 20 years ago. The second best time is now.”
So start contributing to your financial well-being today, and get on the way to financial freedom.
The future you is depending on it!