$5 savings challenge: Follow this simple plan to save thousands of dollars

$5 savings challenge: Follow this simple plan to save thousands of dollars

All year long, Clark.com’s Michael Timmermann is sharing quick and easy ways to save money as part of our Michael Saves series. Check in every Monday as he puts new and familiar savings strategies to the test. Sign up for our newsletter to have these stories delivered to your inbox! 

When I was growing up, I remember saving spare change in a giant crayon bank, which was basically a piggy bank shaped like a crayon rather than a pig.

And long after I moved out of the house, my parents have continued to use that bank to set aside money.

$5 savings challenge: Fun and easy way to save

My mom told me that one year she deposited $220 worth of coins into the crayon bank, but my stepfather has now taken it to the next level – saving dollar bills as well.

So I’ve decided to follow their lead with the $5 and Change Savings Challenge!

Unlike many of the other savings challenges floating around on social media, this one doesn’t require you to start on a specific date or save a particular amount each week.

All I’m suggesting that you do is to avoid spending the $5 bills that end up in your wallet.

Instead, whenever you come across a $5 bill, put it in your piggy bank along with the change that you’re already saving. I cut an opening in this old box to store my money.

$5 challenge success stories

I realize that this challenge isn’t new. Variations of it are already really popular with people who receive cash tips as part of their compensation – servers, housekeepers, cab drivers, etc.

In fact, I first heard about this simple trick when I was a 16-year-old college student waiting tables at a diner.

At the end of our shift, all of the servers would take their stacks of $1 and $5 bills to the manager to exchange them for $20s, but one waitress never joined us.

That server told me she set aside $1 and $5 bills for her savings and only spent the larger bills. Pretty smart, huh?

So how much can you really save using this method? Blogger Marie Franklin made a game out of saving every $5 bill about 13 years ago and says she’s socked away nearly $38,000 since then.

And look at the stack of bills Facebook user Marius Groover saved up in just five months!

Paying with cash has its perks!

You only need one $5 bill to get started, but to save a lot with this challenge you’re going to have to start managing your money the old-fashioned way: paying with cash.

Doing so may entitle you to a cash discount at some of the following businesses. Just ask!

  • Gas stations
  • Restaurants
  • Doctors and dentists
  • Small retailers

If you don’t carry cash, try this…

Not convinced about going cash-only? I’ve been thinking it over and came up with a way for credit and debit card users to still participate in this challenge!

Let me explain how it works. 

Every time you swipe your credit card, imagine that you’re paying with $20 bills and calculate the denomination of smaller bills the cashier would give you back.

For example, if you spent $4 on a coffee and paid with $20, you’d get one $10 bill, one $5 bill and one $1 bill.

Jot down a note of these imaginary $5 bills and periodically transfer the amount to a savings account. To keep things simple, it may be easier to leave coins out of the equation.

Customize the challenge

And really, that’s the great thing about this savings challenge. It’s totally customizable! If you don’t want to save $5 bills and change, try $1 bills instead.

And it’s your money, so think about all of the possibilities once you crack open the piggy bank:

  • Go on a vacation
  • Invest it
  • Prepay your mortgage
  • Give it to charity
  • Refresh your wardrobe
  • College fund
  • Car fund
  • Treat yourself to a nice dinner
  • Wedding expenses
  • Transfer to savings
  • Birthday celebrations

I’ve decided to wait until December to add up the money I’ve saved from the challenge so that I can use it to pay for Christmas presents. What’s your plan?

Check out more from our Michael Saves series:

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