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Loose Change: An Unexpected Path to Savings Success

February 23, 2016

AmericaSaves-MediumRectangle-300x250-static-rainydayForgotten Money Turns to Savings

Whether a jar, a tray or a drawer, we all have a place where our loose change accumulates. Just sitting in these forgotten places, our loose change grows, but it earns no compound interest and gets us no closer to reaching our goals. This forgotten money can easily be turned into a savings success.

Take the loose change you accumulate every day and put it aside. I use a small box. Then, every week or two put the loose change that you accumulate into a savings account. This practice has shown me great success.

Loose change started my ROTH IRA.

In order to grow the initial $1,000 I needed to start a ROTH IRA at a mutual fund, I used my loose-change technique during 13 months to get to my $1,000 initial purchase.  My loose change started me on my way to retirement savings.

Loose change funds my granddaughters’ future.

I now save my loose change and all $5 bills to put into my granddaughters’ savings accounts.  When their accounts reach $500, I buy a long term CD.

Get Creative: Another form of loose change.

My wife and I have created an emergency fund and savings buffer by saving “loose change” from deposits we make in our interest bearing checking account. The “loose change” comes from rounding up check register entries for checks and debit card entries, plus deposits.

In our accounting, we do write the exact amount next to the description of the entry, but in the column for debits and credits we round-off: debits are rounded up to the nearest dollar; credits are rounded down to the nearest dollar.  Every transaction then throws the loose change into the “buffer.”  It is sloppy accounting as there is always more money in the checking account compared to what is showing in our register.  We draw interest, we do not bounce checks as there is the “buffer” or “money-shock-absorber,” and we have a ready-made emergency account built into our checking account.

Guest Contributor: Jon Cook, AFC®


The "Catch All" Bowl

Last year, I pledged to take loose change (coins only) out of my pockets at end of each day and put them in a "catch all" bowl on my dresser. On payday morning (every other Friday) I emptied my bowl into a bank bag before leaving for work. Then at lunch I walked across the street to the credit union and deposited the coins into a savings account. At the end of a year I had saved a balance of over $120. While this may not seem like much by some standards, it is $120 more than I had a year ago. Not to mention, it made a few cents in interest, which was also above and beyond what I had a year ago. I plan to continue this process for another year.

This is not my only financial savings plan. I have an Emergency Fund of $1000 in an account in another local bank; an additional account with 3-months net income available as a fallback in case of a major unexpected event; and contribute 5% of my pay to a retirement plan.

My financial pledge for this year was to increase my retirement plan contribution by 1%. Despite a small pay raise because of higher insurance premiums I am taking home less money each paycheck than the previous year. However, despite this, I feel secure because I am proactively taking steps that will set me up for financial stability and a secure retirement.

Guest Contributor: Donald R Young, AFC® Candidate
Airman & Family Readiness Center

How do you use loose change to build savings?


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