Extra Income

What Could You Do With an Extra $100 in the Bank Each Week?

What would you do with an extra $100? Maybe you’d take your partner out to a nice dinner. Or buy a sharp new outfit. Or finally treat yourself to that mani-pedi you’ve been putting off.

All fine goals. But what if the smartest course of action was simply to do nothing—and then keep doing nothing, every week, for the foreseeable future?

Saving just $100 per week and investing that money in the market can radically alter the course of your life. Here’s what you can do with that money—and why you should think seriously about drawing up a weekly savings plan this weekend.

Build an Emergency Fund

As they say, life is what happens when you’re making other plans. That doesn’t mean you shouldn’t plan for the future—only that you need to be prepared to face whatever life throws your way. Kiplinger outlines nine common reasons to build an emergency fund, and you can probably think of a few more that apply to your unique financial situation.

As a very rough rule of thumb, your emergency fund should be sufficient to replace at least three months’ income. Six months is preferable; the more, the better.

Earn More Opportunities to Beat the Market

Novice investors understandably seek out conventional investing wisdom, sure that professional money managers know better than they do. However, as investing legend Ken Fisher notes in Beat the Crowd, investors who apply contrarian principles can actually come out ahead relative to the market (and their fellow investors). The more you save, the more opportunities you’ll have to hone your investing strategy—and the more risk-tolerant you’re likely to be.

Secure Your Children’s Future

Education isn’t getting any cheaper. If you want to send your kid to a competitive private university, you’re looking at a tuition bill north of $40,000 per year, maybe more. Out-of-state public university tuition typically runs $20,000 or more per year, depending on the institution. In-state tuition isn’t what it used to be either, thanks to widespread state funding cuts. In an increasingly competitive global economy, the single most important gift you can give your kids is the gift of a good education, so make sure you’re in a position to do so without taking on tens of thousands in high-interest debt.

Pay Yourself Back for All That Hard Work

Saving isn’t only about delayed payoff, though the bulk of your saving and investing activities should be done with an eye to the long term. By earmarking portions of your savings for “selfish” outlays like vacations, spa treatments, nice restaurant meals or whatever floats your boat, you make the rest of your financial planning a bit more bearable. It’s the least you can do to reward yourself for all that hard work.

Save According to Your Means

For many Americans, $100 per week is a lot of money. According to Esquire, more than half of all Americans live paycheck to paycheck, with less than $1,000 to their names. A busted transmission or emergency room visit is enough to wreak havoc on their finances and send their lives into a tailspin. Far too many working-class people face homelessness or worse after financial emergencies that manifest as mere annoyances for families of means.

On the other hand, millions of more fortunate Americans are capable of socking away more than $100 per week—in some cases, far more. If you can put away $200, $300 or $500 per week, it should be clear by now that you have every incentive to do so. As they say, a penny saved is a penny earned—except it’s more accurate to say that a penny saved today is a dollar earned tomorrow.

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