Dollar Saver Tip #9
Setting up a direct deposit for just a few dollars a week could compound over time to be hundreds (or even thousands) of dollars.
This tip from Finder money expert Sarah Megginson is all about creating a savings habit.
It's not the amount of money that matters as much as the ritual behaviour, which is why I recommend starting with just $5 a week.
It's an amount so small, almost anyone can commit to it. Over 12 months, it adds up to $260. Over 10 years, it's a few thousand dollars. And over 50 years, it's $13,000 – but that's before compounding.
Did you know?
Savings accounts now deliver returns of 3.6% or more – a huge increase on the beginning of the year, where rates were below 1%.
Compound interest is how you can take your money and supercharge your returns over time.
Let's say you set up a direct transfer of just $5 per week in a high-interest savings account earning 4% p.a. After 10 years, you'd have $7,953 – a total of $5,200 plus $2,753 interest.
It may not be a life-changing amount of money, but when you consider you can conjure up almost $8,000 for simply squirreling away a few dollars a week, it's a profitable habit to start.
The more you save, the more interest you can earn.