How to Build Savings from Spare Change

“See a penny, pick it up. All day long you’ll have good luck.” This little poem is one that I remember from my youth. It was brought back to my attention as my son and I rolled coins from his allowance jar. As we rolled the pennies, he asked, “Is it worth it to keep pennies when you find them on the ground?”

I thought for a few seconds before replying, “Sure it is. It’s a penny you didn’t have before. And the small things eventually add up to something bigger.” I gestured to the three rolls of pennies sitting before us amongst rolls of quarters, dimes and nickels. “All of those pennies added up could by you two candy bars, or something at the next school book fair.”

Photo from Wikimedia Commons

Of course, saving up pennies isn’t going to pay for his college, and it would take him forever to save up enough for the video game he’s been wanting, but even small savings can add up to something later — even if that something is, itself, relatively small. But it’s something you didn’t have before.

Using Spare Change to Build Your Savings

The same lesson can be applied to using spare change to boost your savings. You can boost your savings account with help from the quarters, nickels, dimes — and even pennies — that you get back from your cash transactions. Keep these coins in a jar, and every so often roll them and take them to the bank. While the few dollars that you put in each month may not make a huge difference, it does add to what’s in your account, and can result in earning interest that you would not have earned before.

If you use cash, this can be relatively easy; come home and empty your pockets and purse into a special jar. If you are interested in boosting your spare change savings even more, you can add dollar bills, although that’s not exactly change. Any time you pay with cash, take the change and set it aside. You can even plan to use cash on some purchases so that you get the change back to set aside.

Spare Change for the Digital Age

Of course, cash is being used less and less. Inflation has eroded the purchasing power of our money, and the convenience of debit cards and credit cards is replacing cash. This means that your spare change may not add up as much as you would like it to. But that doesn’t mean that you can’t use similar principles.

With the help of personal finance software, you can create a system in which “change” is deposited into your short term savings account or your emergency fund. Every week or two, go through your transactions, and round them up to the nearest dollar. Then, add up all the differences (this can be made easier with a spreadsheet) and take the total and transfer it to your savings. Let’s say you have five transactions over the course of a couple of days, and you round them all up to the nearest dollar and take the “change” for a savings account:

  • $10.65, round up to $11.00, difference $0.35
  • $27.80, round up to $28.00, difference $0.20
  • $5.78, round up to $6.00, difference $0.22
  • $50.24, round up to $51.00, difference $0.76
  • $3.56, round up to $4.00, difference $0.44

Your total for those couple of days would be $1.97. Chances are that you make many more than five transactions in a month, so you could probably put an extra $30 to $50 aside each month, depending on how many transactions you make. This could amount to another $360 to $600 a year. (There are some debit cards that will automatically do this for you, but you should be careful to read the terms and conditions.)

In the end, using spare change to build your savings probably isn’t going to save your retirement. However, it can put a little more in your savings account. In an emergency fund, it might mean one or two more months of utilities, or the ability to make a car repair. In your short term vacation savings fund, it could mean a hotel upgrade, or enough to stay an extra day. If you make a plan, even the small things can add up enough to make something of a difference.

About the Author

By , on Oct 1, 2010
Miranda Marquit
Miranda is a professional personal finance journalist. She is a contributor for several personal finance web sites. Her work has been mentioned in and linked to from, USA Today, The Huffington Post, The San Francisco Chronicle, The New York Times, The Wall Street Journal, and other publications. She also has her own personal finance blog: Planting Money Seeds.

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Leave Your Comment (6 Comments)

  1. Blue Spyder says:

    Even a penny will earn compounding interest, so why not look for them?

  2. Bob says:

    Don’t get me wrong, I understand the value of thinking that every penny counts, but you can fall victim to the idea of thinking ‘penny wise and dollar stupid’ when you think of pennies in such a physical and tedious way. Your time might be better off spent thinking of creative ways to increase your dollars rather than ways to recover pennies.

  3. Brad says:

    At the end of each month I transfer 10% of what I have left in my cecking after all bills are paid. I’ll be using this articles method to add a few more cents to transfer.

  4. lewis.icon says:

    Spare change can build your savings probably isn’t going to save your retirement. However, it can put a little more in your savings account. In an emergency fund, or it might mean one or two more months of utilities, or the ability to make your car repair. In your short term vacation savings fund, it could mean a lot.

  5. KP says:

    Spare change can really add up. As Ben Franklin once said, “a penny saved is a penny earned.”

  6. nick says:

    I had a relative that had accumulated 1000 dollars in pennies. crazy.

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