Ever find yourself wondering if that daily coffee splurge could be put to better use? You’re not alone. The idea behind “latteperday” is simple—many small purchases, like a $5 coffee, can add up big over time. So the question is: should that $5 go into a savings account, or should you invest it?
Both options have their benefits, and choosing between them depends on your goals and situation.
Let’s start with saving. Putting your $5 in a savings account is safe and easy. You can get to it quickly in case something unexpected happens, like a car repair or a last-minute bill. Savings accounts are good for short-term goals or emergencies. But here’s the downside—your money doesn’t grow much. Most savings accounts don’t pay much interest, so over time, your $5 isn’t working very hard for you.
Now let’s look at investing. Investing means buying things like stocks or mutual funds with the hope that over time, they’ll be worth more. That same $5 could grow a lot more than in a savings account, especially if you keep adding more regularly. And if you start early, even small amounts can grow into something meaningful thanks to compounding—where your earnings also earn money over time.
But investing comes with risks. Unlike savings, there’s no guarantee you won’t lose some of your money along the way, especially in the short term. That’s why it’s usually better for long-term goals—like retirement or buying a home a few years down the line.
So where should that $5 go?
If you don’t have an emergency fund yet, start by saving. Build a small cushion—maybe three to six months’ worth of expenses—just in case life throws you a curveball.
Once your savings are in a good spot, think about investing. Even if it’s just $5 a week, it adds up. The earlier you start, the more time that money has to grow.
In the end, it’s not about choosing one over the other. It’s about figuring out what you need now, and what you want later. Both saving and investing can help you get there—one step (or dollar) at a time.