The Power of Saving $1,000October 16, 2015
While I was in college, I managed to snag my first “grown-up” job working as an IT intern making $12/hour at an accounting firm. It was a fantastic job. I typically worked around 20 hours a week in between college classes, and it offered up some amazing challenges that helped shape my career into what it is today. One of the more formative experiences that came out of that job was when I received my first paycheck — the largest I’d ever gotten (I don’t remember the exact amount, but I believe it was somewhere around $700). It was pretty exhilarating seeing that amount of money being deposited directly into my bank account. Sadly, that money was quickly flushed down the toilet as I started buying up video games and eating expensive restaurant meals with friends.
In the following months, I mishandled my money in various ways, and while I had good intentions, I never seemed to get anywhere with my savings or budgeting. I always seemed to be one step behind. In the search for financial progress, I returned to one of my original money influencers, Dave Ramsey. I’m no longer a big fan of Dave’s methods, but he had a pretty profound effect on my financial decisions early into my money-making years. My first goal was to make the initial baby step — a $1,000 emergency fund. I felt a bit overwhelmed. That was more than I typically made in a month. Could I do it?
With this goal in mind, I set off pursuing the magical $1,000, and within a few months, I had finally reached my milestone. I promptly deposited the lump sum into my savings account where it began growing with a miserable 0.01% interest rate (apparently I had no idea how interest worked).
Something surprising came from hitting this goal.
Becoming a saver
I learned the art of saving money. While we all possess the ability to save money to buy something we want, we rarely save money that then goes untouched. Saving that $1,000 emergency fund taught me that yes, I can save money, and I can save a lot of it. No, $1,000 isn’t an enormous amount of money to have stashed away, but if you’re living paycheck to paycheck or dealing with debt, you’d probably love to see it sitting in your account. To my college self, $1,000 was a fortune. While the amount has fluctuated over the years with emergencies and windfalls here and there, it’s remained an integral part of my finances.
There’s a good reason that this $1,000 emergency fund is on the top of almost all personal finance gurus’ to-do lists. Saving this amount of money is hard, but it’s not hard enough to be impossible for anyone. Before you can ever hope to make a positive change in your finances, you must first learn how to hold on to your money. What better way to do this than by building up a fund that’s “just for emergencies”? Whether that’s its eventual use or not, every day you go without spending this money is a victory for your finances and your willpower. If you can responsibly hang on to $1,000, you can do the same with $100,000.
If you’re living in the U.S. and have a steady job, you can save $1,000. It might take several months, but this is where your financial journey truly begins.
Take the money and run
After you save your first $1k, you have the means to build some serious wealth. You’re now a saver, and you can now save another $1k. And another. At some point in this journey, you will have bought yourself some sweet, sweet time. From there, you know what’s even better than stuffing your cash into a savings account? Investing that shit. You see, if you were to invest $1k, it won’t stay $1k forever. That money may actually start making more money on its own. It’s an amazing phenomenon. You may even see a hefty net worth begin to build.
With each $1k saved, a new goal is achieved, and a new journey begins. Again, saving $1k is difficult, but you’ll feel like a champ each time you do. While an amount like $100 is nothing to scoff at, it’s simply not as compelling. You might feel pretty good about yourself if you’re able to leave $100 untouched, but it will not change your bad money habits. It won’t get you out of debt. It won’t allow you to retire. For some people, $1,000 provides food and shelter for a month. For others, it’s several months-worth of expenses in a foreign country. As you continue saving, you continue building on your financial life, and you can look back and know, like me, that it all started with the very first time you saved $1,000.