Do you want to start investing but don’t know how? Then you might be surprised to learn that there are some very simple ways to save money and they can all help you on your way.
Most people don’t know where to start when it comes to investing, which is probably why they don’t do it. After all, if you throw your money into the market with no knowledge or experience then you are likely setting yourself up for failure. However, there are some very simple things that you can do to begin saving money for the future, which will help you line up some funds. Here are just a few of them:
1. Cut out unneeded expenses
Start by cutting out any unneeded expenses in your life, such as cable TV or junk food. It’s tough at first but with time it’ll become routine and you’ll be able to save a lot of money.
Take your bank statement and simply add up all your monthly bills once a month (electricity, cable TV, gas, internet service, student loans/car/mortgage payments, etc.). Once you have this number, divide it by the number of months you have left in the year.
Every month, start putting this amount aside for savings instead. Before long, you’ll notice that your bank balance is growing and you’ll be able to put more money away.
2. Use the cookie jar approach
This is a great way to start saving money if you have trouble putting away more than $100 at once. The idea behind the cookie jar approach is that you put your spare change into a container every day or week. Over time, you will notice that it adds up. That’s easy investing. This is not only easy but with some online tools such as Financessful, it is easy to track your money. Once you have the extra cash, use it for investing.
3. Open an IRA account
An Individual Retirement Account (IRA) is a type of investment plan which provides tax advantages for retirement savings. This can be used as a last resort if you cannot afford to purchase stocks, mutual funds, or bonds.
Opening an IRA is pretty simple. You just have to fill out some forms and select the financial institution where you want your money deposited. It’s that easy. If you are not sure about which bank or financial company to go with, ask some of your family members for recommendations on where they invest their own money.
If you are not sure about how much to deposit into your IRA, try checking online to find out the average amount that people invest in their IRA.
4. Set savings goals
Setting savings goals is the first step to start saving money. Setting savings goals is a great way to make sure you are working towards your financial independence, while also making sure that it’s something achievable and realizable. Set short, mid, and long-term goals for yourself. This way if anything happens – like losing your job or getting into an accident – you already have a plan to get back on your feet.
Saving money not only helps with improving your own finances, it also helps in developing your family’s financial health. Saving money for emergencies is so important, because if an emergency happens and you don’t have savings to rely on – you could end up getting into serious debt.
The sooner you start saving money, the more time compound interest has to work in your favor. Compound interest is when the interest earned from an investment, gets added back into the investment, and then that money (the new interest) earns its own interest as well.
5. Consider low-initial-investment mutual funds
If you are just starting out, you might want to consider mutual funds that have low initial investment minimums. Each offers its own benefits and drawbacks, so be sure to weigh your options before choosing one.
Although you will not make a huge return without investing a lot of money, either in the long- or short-term, mutual funds provide an easy way to build your investment portfolio over time.
6. Start investing in a stock market
Investing in the stock market is one of the best ways to start saving money. You can save with little effort or without even noticing it. Start investing in a stock market by reading up on what companies are worth your money and how to invest wisely. Visit the library for financial books that will help you understand how to invest in stocks. Keep up with current events and new developments, so you can learn more about your investments over time.
Saving money is easy with easy investing. The more you save, the faster you will see results. Remember to start small and work your way up as you gain more experience as an investor.
If you follow these simple steps, investing will be easy for you as well. If anything should happen, such as losing your job or getting into an accident, you will already have a plan to get back on your feet.