What Could You Do With $5 A Day?

Back in 1913, the assembly line workers at the Ford Model-T plant in Detroit were paid the princely sum of $5 a day.

Henry Ford wanted reliable workers, but he also assumed they would want to buy the Model-T themselves, rather than taking the streetcar to work.

It would still take some serious saving to buy the automobile, even at the cost of $300.

Many people often drop small sums of money on regular purchases they don’t really care about without even thinking about it.  They buy out of habit – weekly lottery tickets; out of boredom – a pop and a bag of chips from the vending machine; and to be part of the group – drinks after work.

Related: What are you saving for, anyway?

What would you get if you saved $5 a day?

In one month you would have $150

Instead of mediocre fast food lunches, why not brown bag it and use the money for a great romantic dinner once a month?

Some other things you could do:

  • Book a spa date
  • Buy a new outfit – or a great purse or pair of shoes
  • Take a course in a subject you’ve always been interested in
  • Buy a single cup coffee maker so you don’t have to wait in line at Tim’s every morning
  • Take the family to an interesting attraction in your city, or a few kilometers away

In 6 months you would have $900

You could:

  • Start an emergency fund
  • Buy new tires for your car
  • Buy a Samsung 55-inch HDTV
  • Rent a luxury beach front mansion in Costa Rica for one day
  • Take a professional chef cooking course

In one year you would have saved $1825

With this amount of money you could do the following:

  • Pay your credit card
  • Take a fun trip that will give you memories for a lifetime
  • Buy your girlfriend an engagement ring

What if you invested it?

The above scenarios involve spending your money on things you would value, but what if you invested it for the long term instead?

If you invested $1,825 every year at a rate of 4% compounded annually, in 35 years you would have around $140,000 (depending on the calculator you use).

With this amount of extra money you could:

  • Pay off all your debts, including your mortgage
  • Quit working 5 – 10 years sooner
  • Start a business
  • Take your spouse on a luxury trip


The message here is that little amounts of money do add up.  Why are you moaning about not having the money to do, or buy, something fabulous?  Where are you throwing money around indiscriminately?

Related: What’s busting your budget?

Think about what your money can do for you, even as little as $5 a day.

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  1. debT debS on April 2, 2014 at 5:04 am

    I don’t lose $5 / day anymore. That’s what I now consider unnecessary spending on coffees, take-out food, dollar store purchases. Thanks for the reminder of what $5 can do for you.

    • Boomer on April 2, 2014 at 3:16 pm

      @debT debS: It’s smart to consider how your spending practices can affect you. Lots of people waste money mindlessly on things they don’t even care about.

      I used to subscribe to a couple of magazines that I liked and automatically renewed them every year. Then I noticed that when the new issue came I just flipped through the pages and set it aside. I realized I could do that in the grocery check out line. Subscriptions cancelled.

  2. Money Saving on April 2, 2014 at 7:01 am

    It’s funny how compounding interest can take so little and turn it into so much over time. It’s amazing what the power of just $5 a day can do!

    • Boomer on April 2, 2014 at 3:19 pm

      @Money Saving: I seem to be in the minority to believe that retirement savings should be started early. As you say, given time, even a small regular amount can add up, especially if that amount would have just been absorbed into your budget otherwise.

  3. Amy on April 2, 2014 at 7:39 am

    As I always told people, we could save $ 30 (or $31 if there’s 31 days on that month), if we keep $1 aside.
    Or, I would transfer 5-10% of what I paid on my paycheque to one of my bank accounts, ‘automatically’ on a monthly basis; and this have to be done ‘automatically’. Otherwise, we will make excuse and keep spending on that and no way to save even just a penny.

    • Boomer on April 2, 2014 at 3:22 pm

      @Amy: When you have your bank transfer an amount automatically, especially right after your pay deposit, you don’t even miss it. If it’s there, you will spend.

  4. Wes on April 2, 2014 at 10:02 am

    Great reminder. I read Dr. Chuck Chakrapani’s book ‘Financial Freedom on $5 a Day (1997). When the company I worked for instituted Share Purchase Plan at a discount,I enrolled. Payment was made through Payroll Deduction Plan in which we were only allowed to purchase a maximum of 2% of salary. In those days 2% of salary for me worked out to be around $150 a month, enough to purchase a few shares. Thanks to the SPP, Dividend reinvestment plan when I left the company 15 years later, I was able to transfer over 100K directly to my Self Directed RSP. Thanks to Time, Compounding and self discipline, the strategy can be done to achieve whatever your goals are.
    Great article as always.

    • Boomer on April 2, 2014 at 3:29 pm

      @Wes: I don’t know that book, but your situation is similar to mine.

      My employer had an Employee Savings Plan where we could put in up to 3% of salary. They matched it at .50 cents for every $1 we put in but in stock – sort of like a SSP/DRIP. After the vesting period (3 years) we received the share certificates. Many of my coworkers cashed them in immediately but I saved them all. After reinvesting the dividends and four or five stock splits this has become a large part of my retirement savings – especially since I don’t have a company sponsored pension.

      • Wes on April 3, 2014 at 9:58 pm

        @Boomer: Dr. Chakrapani was Chairman of the Investors Association of Canada and Editor of Money Digest. He was one of the contributing Editors of Canadian MoneySaver. He authored several books on investing and finance. ‘Financial Freedom on $5 a Day’-A step-by-step strategy for small investors got me started on my way to be a DIY and DG investor. It’s an old book first published in 1983 but the concepts are very much applicable in today’s investing world. Wow, I should get a few pennies for pushing it, eh?

  5. Dan @ Our Big Fat Wallet on April 3, 2014 at 8:17 am

    This is an important reminder that saving can be done by anyone at any income level. Everyone has to start somewhere and the large amounts wont come until the small amounts are saved. $5 a day should be doable for most and could be as simple as cutting out an expensive latte – and we all know how quickly that can add up!

    • Wes on April 3, 2014 at 12:18 pm

      Well said Dan. Yes this strategy can be done by anyone regardless of his/her income situation. It doesn’t have to be $5. Any amount will do and in the long run it will add up to something substantial. The idea is to believe that you have to look out for yourself financially. Nobody else will really help you. Save for a rainy day, always!

  6. Vic Reeves on April 3, 2014 at 3:16 pm

    Excellent post! I think that reminding ourselves how people used to live in the past is great for putting things in perspective. Great ideas, I found this very inspirational, thanks for posting!

    • Boomer on April 4, 2014 at 10:36 am

      @Vic Reeves: Thank you Vic for your kind support.

  7. A little can truly go along way. This is all about the latte effect. You have to start somewhere. If you’re on a diet, skipping your morning donut one day may not make a big difference, but if you eat an apple instead, you could drop a few pounds over time.

  8. Mark Thomas on April 8, 2014 at 1:31 pm

    Seeing the numbers really puts into perspective how much money you’re really throwing away with the ‘little’ things you buy out of habit. I know some people who spend much more when they don’t have to — they come into work every morning with a Starbucks coffee (I’m glad I never developed a coffee addiction since that seems to be another money-suck, even with the cheaper brands) and go out for lunch every day! They’re probably spending $15+, 5 days a week. That’s a lot of lost savings. It’s even more crazy because I’m fortunate enough to work at a place that provides a weekly replenished full kitchen of food and drinks at no cost to employees. Because of that, I’ve drastically cut down on my spending and I’m actually eating a lot healthier too — something that will hopefully save me TONS down the road!

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