Setting Up an Under-$5 Fund

One time I was staying with a high school friend in his college dorm room and I noticed that there were coins scattered all over the floor. When I asked him why his carpet was covered with change, he replied nonchalantly, "The trash can was full."

This attitude is not recommended for life after college (or any stage of life), though I do understand the frustration with the relative worthlessness of American coinage, particularly when compared to England, where you could be holding a coin worth nearly $5.

Anyway, let me get to my point: instead of tossing your coins around the house willy-nilly, grab a bowl, a plastic cup, or any sort of reasonably sized receptacle and place it by the front door. This is your under-$5 fund, which you will use for any habitual purchases under $5. For most people, that means morning coffee, but it could mean bagels, or the newspaper you bizarrely like to buy only three days a week, or anything else. The rule is that you can buy these things whenever you want as long as you draw the money from the under-$5 fund. If you forget to grab the $3.26 for your latte or there's no change left, then you're out of luck.

I know we often talk about making smart budgeting decisions, like only drinking coffee that's free at work, or reading all your news online. But I also know that even the smallest guilty pleasure can go a long way in getting you through the day, and there might be some things that you're just not willing to give up. If so, the under-$5 fund is a great compromise. By subscribing to the principle that "every little bit counts" and using the pennies/nickels/dimes that might otherwise be banished to couch, you can afford to reward yourself a bit more.

Keeping an enormous water cooler jug of change for one massive trip to the bank seems like a good idea, but banks will generally make you count all those coins out and put them in paper sleeves before cashing in (which sucks), and more often than not you'll end up moving to a new apartment before you do anything with it and realize that it's a ridiculous thing to lug around. (If this happens, at least give it to a local homeless person.) Also, while some people pull it off, rolling around with a "change purse" is not that cool and will probably end up being less efficient.

The purpose of the under-$5 is to take the exact amount of change you know you're going to need with you when you leave the house, drop it on the counter (which feels amazing), and collect your prize.

When I do this, I feel like I am literally getting things for free. But that might just be me.