The $5 Trick to Saving $5,000

I was speaking with an investment adviser the other day, and he let me in on this little tip to save $5,000. For lack of a better name, we’ll call it the $5 trick.

A woman recently walked into his office with $5,000 cash, and asked him for advice on putting it on the sharemarket. She explained that she was on welfare benefits, with two small children, and wanted a nest-egg that could eventually help her own her own business. My friend was impressed – it is difficult for many of us even on full-time incomes to raise $5,000 for investments. If she didn’t mind him asking – did she do it on welfare payments?

Easy, she said. Each time she was given a $5 note in change, she put it aside, in a special place she wouldn’t spend it. It wasn’t long before $5 became $100 (only 20 notes), then $500 (100 notes), and then $2,500. Before she thought it possible, she had raised the desired amount.

This trick worked firstly because she had a goal amount and a purpose for the money. Her plan also worked because we have to break larger bills every day, and chances are you will receive a $5 bill on most days. $5 is small enough that you won’t miss it – yet large enough to make a difference (if you are on a higher income, why not try this with a $10?). If you can do this most days of the year, you will have $1750, without breaking a sweat. Combined with other saving tips, like automatically reserving a section of your paycheck, that $5000 investment fund is looking closer by the minute.

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