Long-term financial stability heavily depends on investing. It helps you build wealth, diversify your income, prepare for retirement, and possibly leave a significant amount for your loved ones. Unfortunately, many people delay or ignore investing because they think it’s beyond their financial reach.
I understand this mindset. When I was struggling financially, investing wasn’t even a consideration. Even when my salary improved, my main focus was paying off debts, which isn’t a bad goal. But the key to successful investing is starting early so your money has time to grow through compound interest. That’s why, even with debt and a tight budget, I started investing.
Think investing is financially impossible? Here are some tips for finding money to invest, even on a tight budget.
REALIZE THAT SMALL INVESTMENTS CAN HAVE A BIG IMPACT
A common misconception is that you need a lot of money to start investing, but that’s not true. I know it can be scary to put money into the market if you fear losing it. I started with just $100. There are risks, but many find index funds appealing due to their diversification and lower fees, which help retain returns.
ETFs (Exchange Traded Funds) are also a smart choice for beginners because they offer a mix of stocks and are easy to buy and sell. Platforms like Betterment can help new investors by allowing you to set goals and guide you in distributing funds into ETFs based on your portfolio’s allocation in stocks, bonds, or both.
Investing in your retirement is always wise. If your employer offers a 401(k) plan, even a small contribution is beneficial. You can also open an IRA, even if you can’t fully maximize your contributions right away.
In short, you don’t need a huge amount to start investing. You can start with as little as $100 in index funds and ETFs.
REDUCE UNNECESSARY SPENDING
Recognize that even small amounts can be invested successfully, then look at your budget to find more funds for investing. Review your expenses regularly and identify areas to cut back or eliminate.
Prioritize investing over non-essential expenses like dining out, shopping, or cable TV. You don’t have to eliminate these completely, but reducing them can free up significant funds. Also, ensure you’re not overpaying for services – shop around for better deals.
In essence, you “can’t afford NOT to start investing.”
CONSIDER A HIGHER PAYING JOB
If your budget is tight, consider looking for a higher-paying job to increase your ability to invest. This might not be an immediate solution, but it’s worth exploring. A pay raise or a career change to a better-paying field could be beneficial.
If your current income isn’t meeting your needs or goals, focusing on earning more is crucial. Even a 10% pay increase can make a big difference, allowing you to invest while maintaining your lifestyle.
TAKE UP A SIDE JOB
Another way to boost your income is to take on a side hustle. Think about your skills and interests. Opportunities range from a second job to freelancing, babysitting, dog walking, lawn mowing, and online surveys.
For me, freelance writing was the perfect side hustle, eventually becoming my full-time job. In a few months, I was making over $1,000 per month. If you find a side hustle that brings in an extra $1,000 monthly, that’s an additional $12,000 per year for investing.
SELL UNUSED ITEMS
Increasing your income isn’t limited to your job. Selling unused items online can also generate extra money. I used eBay to sell jewelry I no longer needed and was pleasantly surprised by the financial gains.
Selling items like clothes, shoes, bags, books, toys, and films online or at resale shops can also bring in cash. Look around your home for items you don’t use anymore. Selling these can generate extra money for investing and help declutter your space.
CONCLUSION
There are many reasons to start investing today, two major ones being keeping up with inflation and growing your money exponentially. If finding money to invest while maintaining a comfortable lifestyle is tough, try combining the strategies mentioned above. “You can’t afford NOT to start investing!”
Have you started investing? If not, what’s holding you back? Do you have a plan to overcome it?