Time to read : 3 Minutes
You might have seen the steady stream of Tik Tok videos of so-called financial experts spruiking what the benefits of saving or investing one dollar a day might be, or what happens if you paid one dollar a day extra on your mortgage.
When it comes to advice found online, applying some critical thinking is always recommended.
Not all of those people with a Tik Tok account have their numbers correct.
But … any amount of money that can be saved or invested has the potential to return more money.
What happens if you put $1 a day into your bank account?
The answer to that question depends on interest rates or rates of return.
With no interest involved, putting one dollar a day into a bank account (or a jar at home) will see you end up with $365 in a year.
Multiply that amount by 30 years and you’ll end up with $10,950.
Now let’s factor in an interest rate of just 1%.
If you deposited one dollar a day for 30 years, that $10,950 would earn interest of $1791 over 30 years, giving you a grand total of $12,593.
Bump that interest rate up to 3% and it makes a significant difference.
Over the same period of time, that one dollar a day will earn $6690 in interest over 30 years and you’ll end up with $17,492.
If you manage to secure a 5% interest rate, your 30 years of adding one dollar a day will earn you $14,186 in interest, with the end result tallying $24,989.
See, compound interest is your friend.
But with other ways to invest a dollar a day, your results can be even greater.
What happens if you invest $1 a day?
The Standard and Poor's 500 (known as the S&P 500) is a stock market index that tracks the stock performance of 500 of the largest companies listed on the United States stock exchange. It’s one of the world’s most commonly followed equity indices.
The history of the S&P 500 shows an average annualised return of almost 12% since it started decades ago. To simplify, let’s work with a 10% annual return on your one dollar a day over 30 years and you will end up with a whopping interest profit of $57,124 – and a grand total of $67,926.
The bottom line
Doing something with your money can make you more money. Even locking it away in a bank account out of reach at a low interest rate helps you save, because you don’t have it in your pocket to spend on that second cup of coffee you really don’t need.
And, yes, 30 years might seem like a long time away. But you will be 30 years older before you know it. When you eventually get there, life could be sweeter with some extra savings.
Even if you don’t think it will make much difference to your own retirement planning down the track, it can be a cute (and productive) way to set savings aside for your children or grandkids.
Go deeper:
How to save money with your spare change
A Guide to Buying Your First Home
Financial disclaimer
The information contained on this web page is of general nature only and has been prepared without taking into consideration your objectives, needs and financial situation. You should check with a financial professional before making any decisions. Any opinions expressed within an article are those of the author and do not specifically reflect the views of Compare Club Australia Pty Ltd.
FAQs
After 50 years of saving $1 a day for 365 days a year, you would have $18,250. Certainly, $18,250 is not enough to fund your entire retirement. But for someone whose mortgage is paid off, has low healthcare costs and lives a frugal life, that amount could be enough to cover one year in retirement.
What happens if you save $1 dollar a day? ›
The answer to that question depends on interest rates or rates of return. With no interest involved, putting one dollar a day into a bank account (or a jar at home) will see you end up with $365 in a year. Multiply that amount by 30 years and you'll end up with $10,950.
How much is $1 a day for 10 years? ›
How much is $1 a day doubled for 30 days? ›
This raises the question: how much does a dollar doubled every day for a month end up being? You start with $1 and then $2, $4, $8, $16…. By the end of the 30th day, you end up with $1,073,741,824! This is the power of compounding in action, and in this case, the rate is 100%, leading to staggering returns.
What is the 365 day money challenge? ›
If you want to start smaller, consider the 365-day penny challenge. For this challenge, you'll need a big jar and a whole lot of pennies. You'll put one penny in the jar on Day 1, two pennies on Day 2, and so on until you're putting 365 pennies on the last day of the year.
How does the $1 challenge work? ›
Match each week's savings amount with the number of the week in your challenge. In other words, you'll save $1 the first week, $2 the second week, $3 the third week, and so on until you put away $52 in week 52.
How much is $30 a day for 1 year? ›
$30 daily is how much per year? If you make $30 per day, your Yearly salary would be $7,800. 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 $5 a day for one year? ›
$5 per day for a year is $1,825 (assuming not a leap year). For this amount of money the best thing to invest in to avoid physical work is yourself. Get a certificate, learn a language, take scribe or phone classes, or any of a number of other skills to help enhance the value of your non-physical labor.
What is the 52-week rule? ›
There are no complicated rules to remember. Week 1, you save $1.00. Week 2 you save $2.00, and it continues through the year, adding one more dollar to each week's savings goal. By Week 52, you'll set aside $52.00, which will bring the year's total savings to $1,378!
How to turn 100k into 1 million? ›
There are two approaches you could take. The first is increasing the amount you invest monthly. Bumping up your monthly contributions to $200 would put you over the $1 million mark. The other option would be to try to exceed a 7% annual return with your investments.
$3 daily is how much per year? If you make $3 per day, your Yearly salary would be $780.
How to turn 200k into a million? ›
Here are the five steps you can do:
- Evaluate Your Starting Point. Putting together $200,000 to invest is no small feat. ...
- Estimate Your Risk Tolerance. Your risk tolerance will determine what investments you're comfortable making. ...
- Calculate Necessary Returns. ...
- Allocate Investments Wisely. ...
- Minimize Taxes and Fees.
There are 86,400 seconds in a day. So, in a day, you'd have $86,400. In a year, that's about $31.5 million.
How much is 1 penny doubled for 30 days? ›
After one month, the penny doubling every day earns more than $5 million. Yet, notice how the bulk of the wealth was built during the final week. With compounding, as the base amount of money grows, it's easier and easier to earn magnificent sums.
How many people survive on $1 dollar a day? ›
Surprisingly, over 1.1 billion people (15–20% of the world) live on less than one USD per day.
How many people make $1 dollar a day? ›
There are around 1 billion people in the world who live with less than 1 dollar per day. More than half of the world population lives with less than 10 dollars a day. And some people live with more than 100 dollars per day. There are huge differences in income between the richest and the poorest.
What if I save $5 dollars a day? ›
By consistently saving $5 a day, you'll have $1,825 in a year. With an average 7% annual return and the magic of compound interest, this amount could grow to over $2,500 in five years and more than $4,600 in a decade. This small daily saving habit can have a big impact on your financial future.
How many people live under $1 dollar a day? ›
Currently, 1 billion people worldwide live on less than one dollar a day, the threshold defined by the international community as constituting extreme poverty.
