Frugal Mania

Frugality isn’t really a leisurely pursuit; it’s more of an obsession.

When you see a penny laying there all lonely in a parking lot, do you pick it up or are you worried what the other shoppers might think? What if that shiny coin were actually a five dollar bill?

“See a penny, pick it up. All day long it brings good luck!”

My granny taught me that catchy little rhyme when I was still shorter than she was, and it was a lesson well learned. I’ve been picking up loose change anytime I see it ever since. And so should you.

I haven’t met many people who don’t have some half hazard method for wrangling their loose change. Some of them just take it out of their pockets and leave it wherever they happen to be at the time. Today we’re going to take the first step in making those cents make sense.

It all starts with a jar.

Find a jar, a cup, or some other sort of container that you don’t need and place it near the spot where you most commonly empty out your pockets. Every time you walk in the door, empty your loose change into your container and leave it alone.

For the next thirty days, you are declaring a moratorium on coin spending. If you break a dollar bill for ninety cents, the dime needs to go into your jar. If you find some spare change when you vacuum under the sofa, jar it. At the end of thirty days, count it. If you have a savings account, deposit it. If you don’t, you need to get one. This is found money, but it isn’t allowed to be spent just yet. We’re building to something here.

A large percentage of the people I meet don’t have a red cent in savings and at least ninety percent of those people are no more than two paychecks away from being destitute. By doing nothing more than saving your pennies for a rainy day, you are steps ahead of ensuring that such a downpour doesn’t wash you down the drain.

Washington Mutual offers a free online savings account that currently earns 3.30% APY (Annual Percentage Yield). Let’s take a look at how your pennies can add up over the course of a year:

For simplicity’s sake, let’s begin with $3.30. Every month you deposit $3.30 (that’s $.11 a day) into a savings account that compounds monthly with a rate of return of 3.30%. At the end of the first year you will have about $43.62 in your savings account. I know that doesn’t sound like much money, but remember we are talking about saving eleven cents a day in this example. What if you saved $1.00 a day? $5.00?

The point here is that you save something. Chances are really good that you are never going to miss the change that you rarely spend anyway and by keeping it all in one place you are making it much easier to save it for your future.

Curious about investing? Rick @ My Stock Winners offers some great inside tips to get you started!

Michael the Frugal Maniac