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The $5 savings plan

By Christine Bilger, Zing!/Quicken Loans

The $5 Savings Plan -- have you heard about it? It's the savings revolution that's been making rounds in the blogosphere. I thought it was time to bring it to your attention because apparently, it works. I can't tell you the number of pins I've seen on Pinterest, so I finally found the time to satisfy my curiosity about it.

So what exactly is it?

It's pretty self-explanatory, but let me lay it out for you. Whenever a $5 bill comes into your possession, you sock it away in a special jar or envelope. Over time, the bills add up and, voila, you have a mega savings account without a ton of work. The more you use cash instead of credit when you spend, the more you will save up.

Now many of you probably already do something similar with your loose change. The beauty of this lies in the drastic growth of your savings account, and the fact that it forces you to save even more than you would with spare coins. How many times have you swung through the drive-thru or bought a little something extra, just because you had a $5 bill burning a hole in your pocket?

I personally haven't given this plan a try yet, but I decided to read some comments on other blogs and found some pretty positive feedback on it. While the $5 rule has worked for tons of people, I found some unique tweaks on the same basic idea that sounded pretty stellar.

One commenter said that she had started a "$10 Savings Plan" a few years back. She and her husband have saved every $10 bill that comes into their hands. The rules are that they can't specifically ask for tens in change, but when one happens to come their way, it goes in the save jar. She also said that every year they take one small vacation, and their bundles of tens pay for it every time!

Another commenter had a fun idea that I can realistically see myself doing: She and her co-workers started a game in which they save every $1 bill that has a serial number starting with B or D. She said that she couldn't believe how fast the money added up -- and that they have a lot of fun with the friendly competition too.

The flipside to this is that it's a pretty hard plan to get on board with if you're a super credit card swiper. The key to making it work is to leave the plastic at home and start becoming a cash spender. You might even find that you're more in control of your money if you're forced to fork over cash instead of some magical card every single time.

So if you're going to be hoarding $5 bills, what is all that money going to buy you? For some added motivation, here's an idea of your annual reward:

  • If you accumulate one $5 bill every week, you'll save $260 a year.
  • If you sock away a bill every other day, you'll have $910 to show for it at the end of the year.
  • If you're really diligent and collect one bill a day, that's $1,825!

I always think to myself that as a college student, I could never find an extra $2,000 in the budget for anything. With the $5 savings plan, I think I could make it happen. If I saved that kind of money, I could take my family on vacation (or I could go on a fancy girls trip without them!), buy everyone really nice Christmas presents, throw my son an extravagant birthday party, or put a down payment on my next car lease! Or if I was going to be super financially responsible, I could invest it for retirement.

The possibilities are endless and I'm going to give this a try. Have any of you heard of or tried the $5 savings plan? Let me know how it went for you!

Related articles:

When to avoid using a debit card

Credit card debt and the middle class

Lesser-known credit card perks

Advertiser Disclosure: Many of the savings offers appearing on this site are from advertisers from which this website receives compensation for being listed here. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). These offers do not represent all deposit accounts available.