How to always carry the right amount of change



Pay for everything with cash

I pay with cash instead of plastic because I use Dave Ramsey's envelope system in my budgeting. I could probably do without because I'm pretty good at controlling my spending even when it comes to credit cards, but I am a sucker for simplicity. The envelope method is as simple as it gets when it comes to finances and budgeting. The idea is to withdraw your monthly budgetary spendings from the bank and separate them into envelopes. For example, you might have envelopes for gas, groceries, dining out, and tithes. You can read more about the method on Dave Ramsey's website.

Saving spare change costs you money

Using cash instead of plastic has one major downside; all the spare change. That stuff adds up, and if you let it sit around for any length of time before spending or investing it, you are actually losing money. Click here to see why.

After starting the envelope system, I found myself with piles of change. After a couple months, I would sometimes have $20 to $30 in spare change.

Many banks stopped offering free coin counting

I thought, "no problem, I'll take this to the bank, they'll toss it in their coin counter machine, and voila." I lugged my heavy zip lock bag of spare change into the bank, and the teller told me they no longer use coin counting machines because they were too inaccurate (another teller gave me different reasoning, so I'm not sure if they are really inaccurate or not). My only other option to deposit all the coins was to fill up those little paper coin sleeves.

I was not up for spending an afternoon rolling up coins, so I used a Coinstar machine instead. The downside of Coinstar is that they charge an additional fee for their service, and it can be pretty steep. I hate losing money, so I vowed to stop letting my change pile up. That was when I came up with the method I am about to explain.

How to stop change from piling up

I decided the best way to stop change from piling up was to spend it every chance I could. Now, I successfully keep my change pile under three dollars at any given time. I do so by following two simple steps.

First, I remove change from my apartment as soon as possible. I have no need for it there. Instead, I keep it in a cup holder in my car. That way, it is always readily available when I am going to a store.

Second, I try to carry enough change to cover any amount needed into the store. This was tricky until I came up with a trick. I wondered, "what is the minimum number of coins I need to carry if I want to be able to cover any amount of change." I found that our coinage is designed pretty nicely. Ten coins will cover every possible amount of change from one cent to ninety-nine cents.

The trick to carrying the exact amount of change

The trick to always pulling the right amount - not too much, not too little - out of my cup holder (unless I am short on change which is a better problem to have anyway) is to grab one less coin than is needed to add up to the next coin increment. So, I grab 4 pennies (1 less than it takes to make a nickel), 1 nickel (1 less than it takes to make a dime), 2 dimes (1 less than it takes to make a quarter), and 3 quarters (1 less than it takes to make a dollar).

It is easier when you look at it that way because you don't have to remember the exact amount of each coin to grab, you just have to grab one less coin than it takes to make the next increment of money.

The system is not always perfect. Sometimes I don't have enough pennies or quarters, but if things get too out of hand (i.e. a couple dollars worth of change) I just tack it on the end when I pre-pay for gas or deposit it at the bank. Other times I forget to bring the change with me when I go into the store, but that is more of a beginners problem. Now that I am in the habit of grabbing the change out of the cupholder before I get out of my car, I rarely forget.

Maintaining a minimum of spare change is a good little skill. It is fun and thrifty, and all that change counting is a good way to keep the mind sharp. I invite you to give my method a try. First, get rid of all that change you have piled up because it does no good in a pile. Then, keep your change under control by carrying the exact amount need with you at all times.