Vincent Teo · Follow
4 min read · Feb 9, 2020
--
Instead of yearly resolutions, I’ve started looking at yearly experiments; little things that I test out and refine to see if it leads to some form of positive behaviour change or at the minimum, allow me to learn something interesting.
The 5 dollar challenge has been around for a while and the basic premise is to build some form of habitual saving routine by stashing away every $5 bill you get as change. As a concept, it was intriguing to me because it doesn’t require much thought and is easy to follow. I was curious to see just how much I could save in a year. So here are the parameters, exceptions and outcomes:
- Save every 5 dollar bill that I get for the whole of 2019.
The beauty of this to me was also that at no point in the year can I say I’ll spend this $5 and then replace it later with another one because I have to save EVERY $5 bill. - There were 2 exceptions through the year.
The first was when an auntie at the foodcourt saw that I had a $5 note in my wallet as I was handing her a $50 and insisted rather forcefully that I give her the $5 instead as she had no change. The second was when I had a small emergency and realised that I didn’t have any cash on me save for a $5 bill. In both cases, given I couldn’t replace the $5 (since I had to save every $5 bill I came across), I used a $10 bill instead. - Getting $5 back in change happens more often than you think
Initially I had thought that the $5 bill wouldn’t be as common as your $2 or $10 bill. Which I think is still true but I found that in the case of getting change back, anytime you pay for something less than $5 with a $10 or $50 bill, you are almost guaranteed (8.7 out of 10 times) to get back a $5 bill in your change. For $6 in change, stores would almost always (94%) choose to give a $5 note + $1 coin rather than 3 x $2 notes in change. - This challenge only applies to cash transactions.
Which is interesting to me because when this challenge first came out a few years back, we were a more cash-based society. Now, not so. In the full year, I saved 138 x $5 dollar bills and 2 x $10 bills (from the exception cases). That’s a total of $710 dollars for 2019 and an average of saving almost $2 per day or $13.65 every week. - Cash vs Cash-less
On a average daily basis less than 20% of my transactions in 2019 were cash based. Which meant only $2 of every $10 spent was in cash. And I almost only use cash when there is no alternative such as food courts, hawker centres and merchants that don’t have other payment options (like Barcook bakery and Stuff’d). If there’s Nets, I almost always choose cash (9 out of 10 times) because having to take out my card and key in the pin is just too cumbersome. - Frictionless payments rule
Almost everything else (about 63%) was done using payWave / Apple Pay which I consolidate around one credit card to try to maximise cash-back and bonus interest rates (card is linked to a multiplier type savings account). So by default, this will cover transportation (bus/MRT/Grab), grocery runs, food (mostly restaurant, chain stores and foodcourts that allow payWave) and shopping — both online (64%) and in-store (36%).
There would be days where I may not even touch cash especially during the weekends (my longest streak was 5 days; from a Friday till the following Tuesday). It just too easy to tap a card or my phone to pay; frictionless payment methods are quickly going to displace cash. - “Other” payment options
Obviously this doesn’t include bill payment type scenarios (which is via GIRO/standing instruction (12%) using the same card for stuff like mobile/cable bills and insurance). The other option which I’ve started using is Paylah/Paynow (5%) for merchants (3%) and P2P type transactions (2%) like Carousell deals. - In Conclusion
To be honest, as a savings mechanism, the 5 dollar challenge is rather underwhelming (I expected to save much more than $710 a year). In this age of frictionless digital payments, you almost have to use the “pay yourself first” method to ensure that you save the required quantum that you set out. However, by taking on this challenge, I’ve learnt some pretty interesting things about myself and at the same time, I find that because I’ve built a habit (way past 21 days on this), I’ve unconsciously continued to save every $5 bill I’ve come across from the start of 2020 as well. Let’s see how long this streak lasts.
