Many of us are working hard to meet goals that will help us improve our finances. For many people, saving for the future is an important personal finance goal.
If you have limited extra funds left in your checking account at the end of the month, saving or putting extra money toward your goals may feel impossible. But even a small amount of money can make a difference and add up over time.
Do you have an extra $100 each month to put to good use? It's never too late to improve your finances. Let's look at three ways you can improve your finances with $100 a month.
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1. Earn interest while you build an emergency fund
If you have an extra $100 per month and are looking for what to do with it, one option is to stash it in a bank account that earns interest. Some of the best high-yield savings accounts offer annual percentage yields (APYs) of 4.5% or more.
A bank account's APY is the amount you can expect to earn by keeping your cash in the bank for a year. The longer you keep your savings in the bank, the more you'll earn.
If you save $100 monthly for an entire year, you'll have $1,200 in the bank. But if you keep your savings in a savings account, you'll also earn interest. After one year of keeping $1,200 in a high-yield savings account with a 4.5% APY, you'll earn $54 in interest.
The nice thing about this type of bank account is that you can quickly access your money without penalties, so you'll be prepared for an emergency. This option could be a great place to start for those without an emergency fund.
2. Prioritize paying down high-interest debt
If you have debt, especially high-interest debt, don't ignore it. High-interest debt, like credit card debt, can quickly grow out of control and become a much bigger issue. If you can afford to put an extra $100 monthly toward your debt, it could help you get out of debt faster.
First, you'll need to decide whether the debt snowball versus debt avalanche debt payoff strategy is best for you. But if you have a loan or credit card with a high interest rate, you may want to follow the debt avalanche method to get rid of your debt with the most costly interest rate first.
Then, set and follow a debt payoff plan. If you need help, check out the best debt payoff apps. As long as you have some emergency savings, it's likely best to prioritize using your extra cash to get out of debt rather than throwing it all towards your saving or investing goals.
3. Invest your money for long-term growth
Investing your extra money during your working years is another way to put $100 per month toward bettering your finances. Investing involves risk, and there are ups and downs. But investing can be an excellent way to set yourself up financially for your non-working years.
The key is to remember that investing is a long-term strategy. You'll earn compound interest. The longer your money is invested, the more your money will grow. When you invest, there's no guaranteed rate of return. But over the last thirty years, the stock market has had an average annual return of around 10%, as measured by the S&P 500.
Curious how much your money can grow? Let's imagine you decide to invest $100 per month for the next 30 years. Here's a breakdown of the potential account growth after 10, 20, and 30 years with an 8.5% rate of return using the compound interest calculator from Investor.gov.
| Time invested | Total money invested | Estimated total balance |
|---|
| 10 years | $12,000 | $17,802.12 |
|---|
| 20 years | $24,000 | $58,052.42 |
|---|
| 30 years | $36,000 | $149,057.67 |
|---|
Data source: Writer's calculations
If you're focused on long-term growth, investing $100 each month could be a good move for you. Many people invest through an IRA account. Check out our list of the best IRA accounts to learn more about how these investment accounts function.
Don't put off taking action because you have minimal extra cash
Life is expensive. The cost of housing, groceries, and everyday essentials is much more than it was a couple of years ago. Many people are struggling to save money due to having limited extra funds. But don't let your current financial situation get you down.
Setting aside a small amount of money each month can get you much closer to your goals. Being able to set aside $100 each month is a fantastic accomplishment. Whether you can save $25, $50, or $100 monthly, don't delay thinking about your financial future.
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FAQs
You can improve your finances even if you only have $100 extra at the end of the month. You can put $100 monthly toward improving your finances by building an emergency fund while earning interest. Consider prioritizing paying down high-interest debt or investing your money for long-term growth.
How can I save $100 a month? ›
- Reduce your food waste - saving up to £90 month.
- Switching from having three baths to five showers every week could see households make savings of up to £20 a month.
- Take a reusable coffee cup and water bottle out every time - savings from £15 - £45 per person per month.
Your Retirement Savings If You Save $100 a Month in a 401(k)
If you're age 25 and have 40 years to save until retirement, depositing $100 a month into a savings account earning the current average U.S. interest rate of 0.42% APY would get you to just $52,367 in retirement savings — not great.
How much is $100 a month for 10 years? ›
How $100 a month can help make you wealthy
| If you invest $100 a month for this many years... | ...this is how much you'll end up with. |
|---|
| 10 | $21,037.40 |
| 15 | $41,939.68 |
| 20 | $75,603.00 |
| 25 | $129,818.12 |
2 more rowsOct 1, 2023
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- Focus on small changes in various budget categories.
- Automate your savings into a high-yield savings account.
- Earn interest on your checking account.
- Use those three-payday months to save more.
- Keep a budget.
- Shop around for insurance rates.
- Refinance your mortgage.
- Find a way to save on rent.
How To Live on $1,000 Per Month
- Review Your Current Spending. ...
- Minimize Housing Costs. ...
- Don't Drive a Car. ...
- Meal Plan on the Cheap. ...
- Avoid Subscriptions at All Costs. ...
- Negotiate Your Bills. ...
- Take Advantage of Government Programs. ...
- Side Hustle for More Income.
The 50-30-20 rule recommends putting 50% of your money toward needs, 30% toward wants, and 20% toward savings.
How much is $1 dollar a day for a year? ›
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%.
Can I save $1000 in a month? ›
To accept the $1,000-savings-in-30-days challenge, you'll need to save $250 a week—just over $35 per day. You can funnel the funds into a high yield savings account for safekeeping. Then, set up an automatic savings plan of $250 on a designated day of the week.
Is $100 a month in savings good? ›
Investing $100 per month, with an average return rate of 10%, will yield $200,000 after 30 years. Due to compound interest, your investment will yield $535,000 after 40 years. These numbers can grow exponentially with an extra $100. If you make a monthly investment of $200, your 30-year yield will be close to $400,000.
The classic approach of doubling your money by investing in a diversified portfolio of stocks and bonds is probably the one that applies to most investors. Investing to double your money can be done safely over several years, but for those who are impatient, there's more of a risk of losing most or all of their money.
What happens if you save $100 dollars a month for a year? ›
If you save $100 monthly for an entire year, you'll have $1,200 in the bank. But if you keep your savings in a savings account, you'll also earn interest. After one year of keeping $1,200 in a high-yield savings account with a 4.5% APY, you'll earn $54 in interest.
Is saving $200 a month good? ›
A solid emergency fund can save the day when you must cover an unexpected cost. If you don't yet have an emergency fund, it's never too late to start building one. By contributing $200 each month, your fund will add up throughout the year -- $2,400 is a solid amount of cash.
What is the envelope savings method? ›
The concept is simple: Take a few envelopes, write a specific expense category on each one — like groceries, rent or student loans — and then put the money you plan to spend on those things into the envelopes. Traditionally, people have used the envelope system on a monthly basis, using actual cash and envelopes.
How can I save $100 in 30 days? ›
The goal of the Challenge is simple: save $100 in a 30-day time period through a series of gradually increasing deposits. November has 30 days so every day is a savings day. As shown in the picture below, daily savings deposits start at $1 a day for five days followed by $2, $3, and $4 each for five days.
How much does average person save a month? ›
Who is saving money on a regular basis? Source: NerdWallet survey conducted online March 30-April 3, 2023, by The Harris Poll among 2,035 U.S. adults. Savers say they typically set aside $985, on average, in a normal month, according to the survey. The median amount reported is $250.
How much savings should I have at 40? ›
By the time you reach your 40s, you'll want to have around three times your annual salary saved for retirement. By age 50, you'll want to have around six times your salary saved. If you're behind on saving in your 40s and 50s, aim to pay down your debt to free up funds each month.
What's the 30 day rule? ›
The 30 day savings rule is simple: the next time you find yourself considering an impulse buy, stop yourself and think about it for 30 days. If you still want to make that purchase after those 30 days, go for it.
