A penny saved is a penny earned and penny-pincher are two common terms that are used to describe someone that is most likely frugal. I would admit I am one of those individuals that aspires to both phrases – and it’s not out of accident.
I am one of those folks who will pick up a penny (heads or tails showing – no superstitions here) when walking down the street and put it in my pocket. That penny, nickel, or quarter (in rare cases a one-dollar bill or even higher) will usually make its way into my piggy bank or more likely one of my daughters’ porcelain pigs.
I pick up the loose change for one of two reasons:
- It’s literally free money. To not pick it up is asinine.
- Little amounts add up.
Think of it this way – a penny is 1% of a dollar. A dollar is 1% of a hundred dollars, and a hundred dollars is 1% of ten-thousand dollars. 1% seems small, but 1% added and then compounded grows exponentially.
When it comes to saving an extra 1% – it’s easy. If you make $50,000 a year, 1% of that is $500. Next year, save another 1% (for a total of 2%) and now you’re saving $1,000. And that’s annually. Broken down into monthly, that’s about $42 per month – or $10.50 a week – or $1.50 a day – or 6 pennies an hour.
If we look at the bigger chunks when it comes to savings – the amount can seem daunting, but when we break it down – in this case literally 1%, it becomes much more doable.
If you’re not saving now, commit to saving 1%. If you’re currently saving, save 1% more. It might not seem like much, but remember that avalanches are caused by many, many little snowflakes.An IRA Owner's Manual or if you'd prefer the Kindle version (and let's face it, ALL the cool kids do!), you can find that at this Kindle version link.