Many of us have heard of the term “snowballing” and may visualize a gigantic snowball tumbling down a hill, gathering more snow as it rolls. The same metaphor can be used to describe our finances. We know what the debt snowball is –the continuous revolving mass that accrues fees and interest and may seem impossible to pay off… But what about a savings snowball?

We can apply the same snowball concept to the act of building our emergency fund and other savings accounts. For most students, the biggest obstacle to saving is getting started. Students typically work part time hours, making it hard to earn enough money to pay for rent, utilities, food, textbooks, etc. They may feel there is absolutely no room for savings in their budget. We are going to prove that false by showing you how contributing as little as $1.00-$50.00/week can quickly grow into a decent nesting egg.

You’ve heard it before –the recommended savings amount is to have 3 – 6 months worth of your monthly expenses saved up in an emergency fund. As for the students out there, let’s start with a more realistic goal. Let's shoot for having $1,000 – $1,500 saved up total. This is an excellent number to start with, as that money could be set aside to help cover a potential car repair, a last minute textbook, or laptop fix.

Everyone can start a savings plan, even if it means initially putting away a small amount at a time. Yes, it is possible to save up $1,000 in a years time, even while working on a tight budget! First, start by saving $1.00 a week for your first week. (Yep, that’s it! Just one measly buck.) Then, increase your contribution to $2.00 the following week, then $3.00 in the third week and so on. Repeat this pattern every week for an entire year, and you will end up with $1,378! How? This snowball method is illustrated in the graph below. However, towards the end of the year, you'll be putting away about $50/week, so feel free to pull the reigns if that is stretching your budget too much. Depending how many jobs you work, or if you work more hours during the week than some throughout the year, this could still be a realistic goal. 

Week  Deposit Amount Account Balance Week Deposit Amount Account Balance Week Deposit Amount Account Balance    
1 $1.00 $1.00 10 $10.00 $55.00 19 $19.00 $190.00  
2 $2.00 $3.00 11 $11.00 $66.00 20 $20.00 $210.00  
3 $3.00 $6.00 12 $12.00 $78.00 21 $21.00 $231.00  
4 $4.00 $10.00 13 $13.00 $91.00 22 $22.00 $253.00  
5 $5.00 $15.00 14 $14.00 $105.00 23 $23.00 $276.00  
6 $6.00 $21.00 15 $15.00 $120.00 24 $24.00 $300.00  
7 $7.00 $28.00 16 $16.00 $136.00 25 $25.00 $325.00  
8 $8.00 $36.00 17 $17.00 $153.00 26 $26.00 $351.00  
9 $9.00 $45.00 18 $18.00 $171.00 27 $27.00 $378.00  
Week Deposit Amount Account Balance  Week Deposit Amount Account Balance Week Deposit Amount Account Balance  
28  $28.00  $406.00 37  $37.00  $703.00 46  $46.00  $1,081.00  
29 $29.00   $435.00 38 $38.00  $741.00  47 $47.00   $1,128.00  
30 $30.00  $465.00  39 $39.00  $780.00  48 $48.00   $1,176.00  
31 $31.00  $496.00  40 $40.00  $820.00  49 $49.00   $1,225.00  
32 $32.00  $528.00  41 $41.00  $861.00  50 $50.00  $1,275.00   
33 $33.00  $561.00  42  $42.00 $903.00  51 $51.00  $1,326.00   
34 $34.00  $595.00  43 $43.00  $946.00  52  $52.00 $1,378.00   
35 $35.00  $630.00  44  $44.00 $990.00         
36 $36.00  $666.00  45  $45.00 $1,035.00         

It’s up to you where you decide to stash the cash. Traditionally, if you are saving cold, hard dollar bills, you’ll want to purchase a small safe, or keep the money in an old Folgers coffee tin. While the coffee tin idea may be the most cost efficient option, it is probably not the most secure option –especially in the event of theft or fire! In addition, the more accessible you make the money, the more tempting it will be to spend it. It’s a good idea to keep the money in the bank. Students can look into setting up an auto-deposit option with their current bank, too. This is the most secure and preferred method from our standpoint.

Happy ‘Snowballing’ and enjoy these first few months of summer!