According to a survey by The Motley Fool Ascent, the typical American household has $1,200 in savings. Further, the Federal Reserve reports that only 34% of Americans feel as though their retirement savings are on track. Each of those numbers represents a whole lot of potential anxiety. We repeat these statistics not to worry you, but to offer a word of encouragement.
If your finances are a bit frayed at the moment, you may not feel as though you can't afford to build savings or plan for retirement, but that may not be true.
Here, we look at what would happen if you could manage to invest only $20 a week -- just $2.86 a day.
How much you could earn
Here are the steps we've taken to arrive at the figures in the table below.
- We multiplied your weekly investment by the number of weeks in the year: $20 x 52 = $1,040.
- We divided your annual contribution by the number of months in the year to come up with a total monthly contribution: $1,040 ÷ 12 = $86.66.
We assume that you will invest the $86.66 in an individual retirement account (IRA) or other brokerage account and earn an average annual return of 7%.
| After 5 years, you would have… | After 10 years, you would have… | After 15 years, you would have… | After 20 years, you would have… | After 25 years, you would have… | After 30 years, you would have… |
|---|
| $5,935 | $14,259 | $25,933 | $42,307 | $65,273 | $97,484 |
Data source: Author's calculations
As time passes and your budget stretches, you can add more to your investments. At first, it may only be $5 or $10 more, and that's okay. The idea is to keep moving in the right direction. Before you know it, you may be investing more than you imagined you could.
Less than $3 a day
If someone told you that you need to come up with more than $1,000 annually to invest, it could feel overwhelming, especially if you're living paycheck to paycheck. Fortunately, you can forget about coming up with more than $1,000 and simply focus on finding less than $3 a day.
Here are some ways to make it happen.
- Start a coin jar: Rather than allowing change to gather at the bottom of your purse or on top of your dresser, practice throwing spare change into a jar at the end of each day. It adds up surprisingly fast.
- Make some bill changes: If you haven't checked out area utilities recently, find out if your current utility carriers have any competition in town. If so, there's a chance you could knock a few dollars a month off your utility bills.
- Shop around for insurance: You can easily save hundreds of dollars a year by shopping around for new homeowners or auto insurance, especially if you bundle policies. Many insurers have made the process easy by offering online quotes. If you feel bad about leaving your current insurance company, don't. It's up to you to look out for your bottom line.
- Negotiate with creditors: If you're having a tough time paying your bills each month and fear your credit score has taken a hit, call your creditors to learn if there's help available. For example, if you're currently caught in a debt cycle due to high interest rate credit cards, ask if the credit card company will lower your rate as long as you continue to make regular payments.
- Sell stuff you don't need: Walk through your home and determine which items you no longer use. Once you know what you can do without, sell them at a garage sale or through an online marketplace.
- Save a few dollars a week on groceries: Use a price comparison app that shows you nearby stores where you can find the lowest prices on the things you need.
- Use cash back apps: Once you sign up, you'll earn money back on the things you buy anyway.
- Cancel subscription services: If you pay for five streaming services, decide which ones you can easily live without.
- Use your tax refund throughout the year: If you routinely receive a tax refund, adjust your tax withholding at work so more money reaches your checking account each month.
There are many ways to bring in small amounts of cash. However, it all begins with believing you can do it. Naturally, the earlier you begin to invest, the more time compound interest has to grow your money, but that doesn't mean you should give up just because you think you're too old. It's never too soon -- or too late -- to contribute to your future.
FAQs
We multiplied your weekly investment by the number of weeks in the year: $20 x 52 = $1,040.
How to invest $20 a week? ›
10 Best Ways to Invest $20
- Purchase Real Estate. It may seem crazy to invest in real estate with just 20 bucks. ...
- Auto Invest with a Robo-Advisor. ...
- Buy Stocks with Fractional Shares. ...
- Diversify Instantly with ETFs. ...
- Invest in Mutual Funds. ...
- Compound Your Earnings with DRIPS. ...
- Invest in Worthy Bonds. ...
- Open a High Yield Savings Account.
Stocks under $20 make investing more accessible than the most expensive stocks. With many stocks carrying price tags of four, five or even six digits per share, you might think stocks under $20 would be low quality. That isn't necessarily the case. These stocks can offer price appreciation and even pay dividends.
Is saving 20 dollars a week good? ›
Small amounts will add up over time and compounding interest will help your money grow. $20 per week may not seem like much, but it's more than $1,000 per year. Saving this much year after year can make a substantial difference as it can help keep your financial goal on your mind and keep you motivated.
How much is $20 a week? ›
If you make $20 per week, your Yearly salary would be $1,040. This result is obtained by multiplying your base salary by the amount of hours, week, and months you work in a year, assuming you work 40 hours a week.
How much is $20 a week for 10 years? ›
Year 10. By the end of year 10, you could have a pot of £12,842 after contributions. You will earn £192.63 of interest on a rate of 1.5%. This will then give you a pot of £13,034.63 at the end of the decade and all you had to do was save £20 per week.
Is it possible to invest with 20$? ›
In the past, you were out of luck if you did not have enough money to buy a share of stock. But nowadays, you can find brokerages that will let you buy fractional shares. So, investing $20 in stocks is possible even if you don't have enough money to buy a share.
Is investing $50 a week good? ›
If you invest $50 per week, that's the equivalent of $200 per month, or approximately $2,400 per year. Over a 30-year period, that would result in more than $72,000 in savings. It's a good chunk of savings, but it isn't a life-changing amount. This is where the power of compounding comes into play.
What is a good amount to invest weekly? ›
If investing 15% of your income sounds like more than your budget can handle, you can start with a set dollar amount and be consistent about it. Investing even a few dollars each month can sometimes be enough to see a return if you're using the right investment strategy.
Is investing actually worth it? ›
Investing provides the potential for (significantly) higher returns than saving. As your investments grow, they allow you to take advantage of compounding to accelerate gains. Investing offers many different access points and strategies, from individual stocks and bonds to mutual or exchange-traded funds.
Stocks trading under $10 can be attractive for investors looking to scoop up some cheap shares. Unfortunately, quality stocks trading for less than $10 are few and far between. Related: Sign up for stock news with our Invested newsletter.
Can I invest with little money? ›
A common myth about investing is that you need a big, fat bank account to get started. In reality, building a solid portfolio can begin with a few thousand—or even a few hundred—dollars. Starting small with your investments isn't a bad thing. The key is just starting, period, and investing your money wisely.
Is $20 dollars a week good allowance? ›
Most parents require their children to earn the allowance they receive. The mean amount for allowances is $19.39 per week, while 35% of parents pay in the $11 to $20 range. Most parents who give their children an allowance consider it a way to teach kids the value of working to earn money.
What can $20 do? ›
What Does $20 Buy You in Today's Economy?
- Kitchen Cookware. ...
- Fresh Fruit and Vegetables. ...
- Basic Food Staples. ...
- Reusable Shopping Bags. ...
- Mini Humidifier. ...
- Personal Fans. ...
- Charging Cables. ...
- Bedding Essentials.
Save $20 a week with this 52 Week Savings challenge will help you to meet all of your savings goals. Each week you tick of each amount in order to save the full 1040 in the amount of weeks in a year. Saving can be hard but with this you can make it a fun challenge. Safe enough a week to add to the savings pot.
How many months it will take to save $200 if you earn $20 a week? ›
Supposing that there are roughly 4 weeks in a month, you would divide the 10 weeks by 4, giving you an answer of 2.5 months. In conclusion, it will take you approximately 2.5 months to save up $200 if you are earning $20 per week.
How much should I save weekly to get to 5000 dollars? ›
For instance, if you're paid weekly, aim to save around $97 each week. If you're paid biweekly, aim for roughly $193 every paycheck. And if you're on a monthly pay schedule, try to save around $417 a month. Rather than focusing on saving $5,000 as a whole, you can focus on smaller milestones.
What if I save $20 dollars a day? ›
Saving 20 dollars a day adds up to about $600 a month or $7,300 each year! Save $7300 for 20 years compounded at 5% and you'll have $253,450—over a quarter of a million dollars!
How much will I have if I save $50 a week for a year? ›
If you invest $50 per week, that's the equivalent of $200 per month, or approximately $2,400 per year. Over a 30-year period, that would result in more than $72,000 in savings. It's a good chunk of savings, but it isn't a life-changing amount. This is where the power of compounding comes into play.
