Finding long-term financial stability often hinges on investing. It’s a way to build your wealth, diversify your income, get ready for retirement, and possibly leave a substantial amount for loved ones. Yet, many people put off investing, thinking they can’t afford it.
I can relate. When I was struggling financially, investing seemed impossible. Even when my salary improved, I focused on paying off debts, which is important. However, starting to invest early is crucial because it allows your money to grow over time through compound interest. So, even while managing my debt, I began investing on a tight budget.
If you feel like investing isn’t financially viable for you, here are some tips for finding money to invest, even if you’re on a shoestring budget.
### Understand That Small Investments Matter
A common misconception is that you need a lot of money to start investing. That’s not true. It’s natural to be intimidated by the idea of putting money into the market, especially if you’re worried about potential losses.
I began investing with just $100. While there are risks, many people opt for options like index funds because of their diversification and lower fees, which means you keep more of your returns.
For beginners, investing in ETFs (Exchange Traded Funds) is a smart move. They offer a diversified mix and are easy to trade like stocks.
Platforms like Betterment can help new investors by allowing them to set goals, like contributing to an Individual Retirement Account (IRA). They also help you distribute your funds into ETFs, whether for stocks, bonds, or a mix of both.
Investing for retirement is always a good starting point. If your employer offers a 401(k) plan, you can start contributing even modestly. You can also open an IRA even if you can’t max out your contributions immediately (currently $5,550 for those under 50 and $6,500 for those over 50).
The key takeaway is that you don’t need large sums of money to invest. You can start with just $100, focusing on index funds and ETFs.
### Trim Unnecessary Spending
Once you realize that even small amounts can grow, look into trimming your budget to free up more money for investing. This might mean regularly reviewing your expenses since they can change over time.
To create an investment-friendly budget, examine your expenses closely. Identify areas where you can cut costs or eliminate them altogether.
Prioritizing investment over non-essential expenses like dining out, shopping, or cable TV can boost your investing potential. You don’t need to give up everything, but even small reductions can free up significant funds. Ensure you’re not overpaying for services—shop around for better deals if necessary.
### Consider a Higher-Paying Job
If your budget is already tight, think about finding a job that pays more. While it may not be an immediate change, it’s worth exploring. A pay raise or a career shift to a higher-paying field could help.
If your current income doesn’t meet your financial goals or basic needs, focusing on earning more is essential.
Even a 10% pay raise or switching to a job with a higher salary can make a big difference, allowing you to maintain your lifestyle while investing the extra income.
### Take Up a Side Job
Another way to boost your income is by picking up a side hustle. Think about your skills and interests and what kind of work you might enjoy. Options include a second job, freelancing, babysitting, dog walking, lawn mowing, or doing online surveys.
For me, freelance writing was the best side hustle, and it eventually turned into a 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 each month, that’s an additional $12,000 a year for investing.
### Sell Unused Items
You can also increase your income by selling items you no longer need. I used eBay to sell unwanted jewelry and was pleasantly surprised by how much I made.
Selling items like clothes, shoes, bags, books, toys, and films, either online or to resale shops, can also generate extra cash.
Look around your home. You probably have things you haven’t used in a while that could be sold for money. This approach not only brings in extra money for investing but also helps declutter your space.
### Conclusion
There are plenty of good reasons to start investing today. Two major ones are keeping up with inflation and the potential for substantial financial growth.
If balancing your lifestyle while finding money to invest is tough, consider combining the strategies outlined above.
Have you started investing? If not, what’s holding you back? Do you have a plan to overcome it?