Saving Change Is A Painless Way To Form A Good Habit
Posted on January 11, 2008
I’ve been a sav-a-holic most of my adult life. Saving loose change has been just one of my saving habits. I learned many years ago that always paying for purchases with bills and then saving the left over change could turn into a fun and rewarding habit. Each night as I get ready for bed, I take the loose change from my pockets and drop it in a cup I keep on the counter in my bathroom. When the cup gets full, I empty it into a large coffee can and keep doing that until it gets full. I never cease to be amazed by the amount of change one can accumulate in the course of a year.
Last weekend I sat down and counted my savings for 2007. Most years I accumulate an average of between $400 and $500, but 2007 was special. My stash of coins added up to $671.23. That’s an average of almost $1.84 per day. I thought that was really good until I read an Associated Press article about Paul Brant of Frankfort, Indiana. Just before Christmas, he purchased a new Dodge Ram half-ton pickup truck that cost more than $25,000 and paid for it with change he had saved over the past 13 years. That is an average of more than $1,900 per year in loose change. One interesting thing I found amusing in the article was the fact that he stored his change in coffee cans too.
Also, this wasn’t Paul’s first purchase using coins. He bought another truck 13 years earlier and paid for with change too. He considers himself a penny pincher and was quoted as saying he was raised to be thrifty. He said his father always paid for purchases with cash and would save up loose change to pay for family vacations. Aw shucks! I thought I had invented the idea of saving change! Just being facetious! Ha!
Although I have formed a number of saving habits, I found it interesting that by simply putting my loose change in a cup I had saved more than the average American saves in a year. In fact, the last couple of years American’s savings rate has actually been negative. It’s a shame that people can’t seem to understand that you improve your life with the money you invest, not the money you spend.
Just think, for many people that $671.23 in saved change could represent a financial cushion that could ease the stress of living from paycheck to paycheck. For others, it might mean being able to pay cash for a new computer or television that they would otherwise have to charge. As Paul Brant found out, a few years of saving loose change could mean paying cash for a new vehicle. The secret is having the discipline to keep at it long enough to accumulate a meaningful amount.
I’ve learned that children are prone to pick up habits from their parents just by observing. I chuckle when I see the coffee cans full of change that my sons now have in their rooms. That’s good, because saving loose change can be a painless way for young people to start developing saving habits that can lead to financial security. Imagine the impact it could have on society if our educational system placed as much emphasis on teaching young people to manage their money as they do on passing standardized tests that don’t even address the subject.
I wonder how young people would react if teachers had them calculate the effect of saving $500 per year starting at age 18 and investing it at an average 10 percent return until they retired. That’s something that they could do painlessly by simply paying with bills and saving the left over change. I’ll bet they would be very surprised to learn that at age 65 this saving could give them nearly $4,000 per month income for the rest of their lives without ever touching the principal. Here’s what that calculation might look like: $500 year one plus 10 percent interest equals $550, add another $500 the second year plus interest gives you $1,155, $500 more the third year, add interest and you have $1,820.50, then it’s $2,552.55 in year four, and $3,357.81 in year five, etc. etc. By age 65, it grows to almost a half million dollars. Not bad for chump change!
Here’s a tip! Whether you’re 18 or 80, try this for a month. Whenever you make a purchase, pay with a bill and take the loose change home and put it in a container. Do this every day for a month and see what happens. If you’re like most people, you’ll become fascinated with the way the change accumulates and even more surprised at the end of the month when you count it. Then imagine how much you would have if you continued this for a full year. Once counted, you can roll the coins and deposit them in your bank. Since you didn’t miss it when you were saving them, the coins could be converted to investments that you never have to touch except in a serious emergency.
Not only is saving loose change a good way to start saving, it’s also fun to look through the coins to see if one of them has more value than just the face amount of the coin. Last year I found a very rare 1909 penny in the change I had put in one of my coffee cans. I’ve found several coins worth much more than face value over the years. Get a book on coin values and let searching through your change become like a treasure hunt. It’s a lot of fun, a great way to save and it can easily become a habit you’ll keep your entire life.
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