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 much money will I have if I save $100 a 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.
What should I do with 100 a month? ›
Find out how you can start building wealth by investing just £100 a month along with some of the best ways to invest.
- Invest in index funds or ETFs.
- Robo-advisor platforms.
- Dividend-paying stocks.
- Multi-asset funds.
- Pick a portfolio of shares.
- Invest with a tax-efficient account.
- Investment tracker.
How much is $100 a month for 30 years? ›
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.
How to save $500 a month challenge? ›
Save $500 in 30 days
One key to success is breaking down that $500 goal and setting a weekly or daily savings amount. For instance, you can save just $17 or $18 per day or $125 per week to meet your $500 savings goal. By breaking it down, the number feels manageable.
How to only spend $1,000 a month? ›
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.
What is the 50 30 20 rule? ›
Those will become part of your budget. The 50-30-20 rule recommends putting 50% of your money toward needs, 30% toward wants, and 20% toward savings. The savings category also includes money you will need to realize your future goals.
Can I retire at 70 with 300k? ›
If you've managed to save $300k successfully, there's a good chance you'll be able to retire comfortably, though you will have to make some compromises and consider your plans carefully if you want to make that your final figure.
How much is $1 dollar a day for a year? ›
The answer to that question depends on interest rates or rates of return. 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.
Is 3000 a month enough to live on? ›
You can retire comfortably on $3,000 a month in retirement income by choosing to retire in a place with a cost of living that matches your financial resources. Housing cost is the key factor since it's both the largest component of retiree budgets and the household cost that varies most according to geography.
But when it comes to what they need to be saving, it depends. So, if we're starting with a 30-year-old, they should be probably saving close to $580, $600, at least, a month. And that's if they're going to earn a high rate of return. So it depends on how aggressive and risky that they're looking to be.
What is a good amount to save each month? ›
How much should you save each month? For many people, the 50/30/20 rule is a great way to split up monthly income. This budgeting rule states that you should allocate 50 percent of your monthly income for essentials (such as housing, groceries and gas), 30 percent for wants and 20 percent for savings.
Is $100 a month in savings good? ›
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.
What is the average life of a $100? ›
What happens if you save $100 dollars 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
How to make $100 extra a month? ›
How to Make an Extra $100 a Month
- Give Your Electronics New Life.
- Resell Your Textbooks.
- Rent Out Anything (or Everything)
- Offer Your Expertise.
- Participate in Market Research.
- Run Some Errands.
- Multi-task at Home.
- Put Your Purchases to Work.
How to save $1,000 dollars in 30 days? ›
11 Easy Ways to Save $1,000 in 30 Days
- Create a Budget. ...
- Automate Your Savings. ...
- Create a Savings Bingo Sheet. ...
- Negotiate Your Bills. ...
- Separate Wants From Needs. ...
- Plan Your Meals. ...
- Buy Generic Brands. ...
- Cancel Unnecessary Subscriptions.
What if I save $1,000 a month for 5 years? ›
In fact, at the end of the five years, if you invest $1,000 per month you would have $83,156.62 in your investment account, according to the SIP calculator (assuming a yearly rate of return of 11.97% and quarterly compounding).
Is $500 extra a month good? ›
If you're like many people, learning how to earn an extra $500 a month can make a significant difference in your life. It can make the difference between a paycheck-to-paycheck life and having money to spare. Or, perhaps it's extra money you can save for something big, such as a down payment on a house or a vacation.