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How You Can Create a Snowball of Savings

Updated on May 14, 2009

Saving money can be hard sometimes, especially when it seems all our money is spoken for as soon as we get a paycheck.  If you can carve out any money for savings at all, you can use it to invest in items that will allow you to save more money each year.  Frequently people think they can't do things themselves because of the start up cost.  You want to give your boys a buzz cut at home instead of paying a barber every few weeks, but clippers cost money.  You want to change your own oil, but the tools cost money.  It is true that you have to invest money in the beginning sometimes in order to save money down the line.  Let me show you how it can work.

Let's say you took a hard look at your budget and determined that you can set aside $20 a month into savings.  After two months you will have $40 and can buy a decent pair of clippers in order to cut your boy's and husband's hair.  If you have two boys, then it probably costs $30 or more to get three haircuts every six weeks.  So you saved two months and spent all the money on clippers.  But by the end of the third month you saved another $20 plus the $30 from not having to pay for haircuts.  You now have $50 and it is time for an oil change in both vehicles.

If you were to run down to the local oil change store it would set you back about $40 a car.  If you spend your savings to get tools and supplies to change the oil in both cars you can generate lots of future savings.  So in the fourth month you spent your $50 in savings to buy things for the oil changes.  But you saved $80 by not paying someone to change the oil for you plus the original $20 you are able to set aside each month and you now have $100 in savings. 

Because of these two money saving investments you have the potential to save $240 a year on haircuts and $320 (minus oil and filters) on oil changes each year.  To make this simple you can now save around $500 a year on top of your $20 a month.  Suddenly instead of only saving $240 a month (what you deemed affordable out of your budget) you are able to save $740 a year.  That is a big difference.

With $740 a year you can do lots of other things to save money.  You could invest in an extra freezer allowing you to stock up when things are on sale, saving you $50 or so a month in grocery savings.  Suddenly you are able to save $70 a month on top of your $500 a year savings from above.  Or maybe you have the ability to teach piano out of your home, but no piano.  Within a year you have enough money to buy a used piano and can start earning extra money each month, on top of what you are saving.  You could pay your 6 month car insurance premium all at once, instead of monthly and save $30 each time.  That is an extra $60 a year right there.

There are many more examples I could use, the possibilities are really endless.  If you can just carve out a little bit each month, it can quickly add up to something that can make a big difference in your budget.  Take a hard at look at your finances and try to come up with something you can do with your savings that will help it grow each month.


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    • ugina profile image


      9 years ago from Bhutan

      Hey great tips. It got me thinking a lot and am wondering how to start saving...

    • izzytellsall profile image


      9 years ago

      The snowball method was how my wife and I got ourselves out of $10,000 of debt (in the early 80s following a severe illness), and it's also how we managed to save enough to buy our dream home with 50% down--it's really amazing how saving small amounts adds up!

    • Dolores Monet profile image

      Dolores Monet 

      9 years ago from East Coast, United States

      Jennifer, you are right, those little saving do add up. Your budget juggling makes sense, just make sure you study up on hair cutting so you don't sent the kids out looking like you cut their hair with a hedge trimmer.

    • prasetio30 profile image


      9 years ago from malang-indonesia

      Saving money is important thing we have to do.WE must need something cash someday. So, when we saving earlier we get more benefit in the future. for the first time maybe it dificult but later is just flow.

    • profile image


      9 years ago

      this post has really made me realize that EVERY penny helps. now i'm going to do my best to learn how to change my own oil. i don't know much about cars AT ALL, so i have usually just paid someone to do my car maintenance so that i wouldn't be bothered. once you think about it, it's a real waste of money!!! the supplies are SO inexpensive and once you get the hang of doing things yourself, things should be a snap.


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