Even Your Spare Change Matters in Wealth Creation

Over the weekend, I was cleaning around my house and noticed that I had small stashes of coins in various places around my home and inside my car. I wondered how much money that it would add up to and of course decided to count to find out for sure. All told, it ended up being around $50, I had just lying around doing nothing. I think that most people probably have more change than this around in their home but I don’t really use cash all that often, so this haul seemed significant. Significant? What good is $50 in change? Well, this post is going to discuss why even your loose change matters in creating wealth.

It’s losing Value to Inflation

Money that’s not being put towards some kind of economic gain in the form of dividends, profits, or interest payments is being subject to inflation. That’s right each year that change sits there it is losing real value over time. Even if one were to collect that change and put it into a savings account, that yield would still be losing ground to inflation currently, though not as much.

Sucks, right? Not only is change taking up space in your house but it’s not even producing anything of value for you. It’s actually losing some of the value it has.

Change can be put towards debt

If you have some sort of debt, whether that be of the credit card or student loan variety, even this pile of change you have can go at least some of the way towards paying it down. That $50 of change that I collect around my house represents 5% of a $1,000 debt. Considering that I have a credit card with a balance of under $1,000 that I am pushing to finish paying off for good, it goes even further in my case. Every penny counts towards paying off debts because interest accrues on the balance, making it take even longer to pay off the amount of money you borrowed.

Change can be invested

$50 can be invested and indeed be turned into something significant. For instance, had one invested in American Express stock 5-6 years ago, it could have been had for roughly $10 a share. It has since then, reached a high of over $96 a share. If one were to have reinvested the dividends paid on those 5 shares of AXP stock, it would have reached about $500 in value. Not a bad return, eh? This could have been done using a broker like Sharebuilder.com which has no minimum to open an account and by using a promo code for a free automatic investment credit or real time trade. Thus, avoiding fees and putting that small bit of money to work for you.

Now, of course to see that kind of return in such a short period of time, one would have had to pick the right stock. Still, even in an index fund would represent a return better than inflation and would compound over time. Here is a Return of Investment Calculator to see some of the results.

It can be invested in your education

Even $50 can go a long way towards increasing one’s base of knowledge. For example, if you have one particular field of study that interests you, that small amount of money can be used for books on the topic. Many used books on Amazon, total about $5 with shipping, so feasibly up to 10 books on a topic can be had, just for collecting loose change!

For non-readers, it is hard to explain the benefits and dividends you receive from reading books. No, 10 books will not make you an expert. However, let’s say you bought books on personal finance and investing with you spare change. Would that information not save you a ton of money over time by teaching you to budget money, how to invest money, how to structure you taxes, etc. This small investment could yield thousands of dollars in benefits over time.

I’m not proclaiming loose change to necessarily be life changing BUT it is much more useful than people give it credit for. Coins can be used in a variety of ways to your benefit and so many people just have them lying around the house collecting dust and losing value. It can also be used to fund the start of an online business.

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