Little savings can really add up. So often we feel like we have to save large amounts of money at a time to make it worthwhile. That’s simply not true. By saving even small amounts like $5 a week (or $20/month) in an interest bearing account – and leaving it there, of course – we can accumulate a sizeable amount of savings over time.
Compounding interest (even if the rate is very small) will add more money on top of what you’ve already deposited. For instance, with an Annual Percent Yield (APY) interest rate of 1.05% (which I currently earn with one of my savings accounts), after a year you’d have an extra $260 or so if you left all of the money in the account. Even a small savings cushion like this could make the difference between trying to scrape up the money to cover an unexpected expense or paying it with ease. And after 5 years of saving $20 every month, you’d have about $1300!
To ensure that you build up your savings without interruption, I strongly recommend setting up monthly or bimonthly automatic deposits into your savings account. Set up recurring withdrawals and forget about it. Then watch your money grow. So, the next time you dismiss that coin jar and the value of tossing in your spare ‘chump’ change, think about how much money you could effortlessly save by the end of just one year!