If you can save $1,000 over the next 3 months, you have the ability to become insanely wealthy. $1,000 over 3 months is about $83 a week. I know if you are reading this while working a part time job for minimum wage you’re thinking I might as well have said save $100,000 in the next 3 months because saving a grand just isn’t possible. You’re wrong. In fact for someone earning minimum wage on a part time job it is perhaps much easier to save $1,000 because there is a lot of room to improve things.
Why Save $1,000?
For starters $1,000 is a big round number and psychologically that is really important. It’s also important because $1,000 is a great starter buffer between you and life. When you have no savings EVERYTHING is an emergency. $1,000 in the bank can allow you to weather all kinds of storms. A bad week at work with fewer hours, a broken appliance, a car repair, an unplanned medical expense, all of these can be switched from an emergency to an inconvenience once you have $1,000 in the bank. Having $1,000 in savings also allows you to buy in bulk when things are on sale, to get discounts on insurance for paying in full, and to feel a lot more comfortable.
The key is not to stop once you have saved $1,000; keep repeating the same behaviors that allowed you to save up a grand in the first place. Once you’ve learned to save $1,000 you can do it again. Winning in personal finance is no difference than winning in business or baseball. Repetition is the key. If you can save $1,000 in 90 days I bet you will learn a lot along the way and over the next 90 days will be able to save $1,200, then $1,500, then $2,000, etc. All along the way that money is piling up. 2/3 of Americans can’t pay for a $1,000 emergency, put yourself in the position to not be one of them.
Okay, You Get Why $1,000 Is Important, But How?
For me to get motivated I like to see some movement early on. The absolutely first thing I suggest doing is selling everything you can live without that you own on Craigslist, Facebook, eBay, or a yard sale. Mrs C. and I just made $300 with our yard sale and we didn’t have a lot of nice stuff and we aren’t in a high traffic area.
Now lets look at work. Minimum wage is around $8 per hour. To earn $1,000 you would need to work an additional 125 hours. Over 3 months that works out to about 10 hours per week. If you can’t get an extra 10 hours at your current employer look for a part time job you can get to earn that little bit extra. I’m constantly seeing advertisements for flexible hours at fast food restaurants, serving positions, hotels, and commercial cleaning services. If finding a part time job isn’t working, make your own. There are oil changes to be done, kids to be babysat, lawns to be mowed, and thousands of other odd jobs you can do on the side. 10 hours per week isn’t a lot, especially if you are already working 40 hours or less per week. Check out my article 30 30 minute actions to win with money for more ideas. We all get 168 hours each week, make the most out of it.
What Does Saving $1,000 Every 3 Months Really Do?
$1,000 every 3 months is $4,000 per year. $4,000 per year invested in a total stock market index fund averaging 8% will turn into $117,000 in 15 years. In 20 years it will be $200,000 and in 30 years it will be right around $500,000!
Okay, a half million in 30 years seems amazing, but the most amazing part of this has nothing to do with the money you will be able to use in retirement. Your friends, relatives and neighbors will see you working more hours, they will see you winning. They will want to do what you are doing. Your kids will see your hustle. They will see you going to work, they will see you driving a modest vehicle. They will see your side hustle. They will have HOPE. You will be an example to everyone around you that it is possible to WIN. A lack of hope traps people. Our welfare system traps people, our mentality and our media traps people. The only way to get above it is to change our mentality, change what we do, and save a thousand dollars (and repeat; always repeat.)
The First $1,000 I Saved:
When I was 17 I got my first real job as a cook at KFC earning $5.60 an hour. I worked there for 3 years. For the first year I had the job I was living at my parents house and averaging full time hours and taking a full load of classes each semester at my local community college, including during the summer semester. During that year I saved $6,000, I put $3,000 into my IRA and kept $3,000 in cash. After 1 year of working I moved into an apartment with my girlfriend who had a child who was almost 2. Our rent was $500 a month, and our paychecks barely covered our bills.
Yes I was able to save $6,000 on a minimum wage job precisely because I had no real expenses and lived with my parents. All I spent money on was putting gas in my car. I saved about 90% of my paychecks. That privilege helped me out more that I ever truly gave it credit for. Not only was I able to have $3,000 in my bank account, I learned that it was possible to put $3,000 into my bank account. Right after moving out I got a second job for a while and took on more hours at KFC. We spent money on nothing. I also worked my first nuclear plant outage about a year after moving out. Within 18 months of being on our own, Mrs. C and I bought our first house, writing a check for just over $10,000 to move into our $48,000 home with a 20% down payment. Once you develop savings muscles, the way your brain works changes and you find ways to save more and more. It’s no different that a physical muscle in your body. You might only be able to do 2 or 3 pull ups today, but if you push yourself every day for 90 days, you’ll be knocking out 20 without breaking a sweat.
What actions are you going to take over the next 90 days to save $1,000?