How to Save and Invest Money

When we decided that we were going to start investing more in 2013, I didn't know where we would find the money in our budget. My personality embraces risk… as long as all our other savings goals are met and our bills are paid. So, because I wanted to have fun investing (and not lose sleep at night), I knew I could not cut our retirement contributions or our savings deposits. What I hoped was that I would find “invisible” money in our budget; money that we spent mindlessly that would now have an investing job.

Our spending record showed me the money

I have recorded our spending for brief periods of time, especially when money was very tight, but I had never done it for a year. I knew it was a good thing to do, but it's a pain. In 2012, however, I created a spreadsheet and faithfully entered every dollar that we made or were given. I tallied every purchase made by check, debit or credit card and most of the ones made with cash.

I'll spare you most of the gory details, but we weren't as smart with our money as we thought we were. Granted, there were things out of our control: Our septic system needed to be replaced, and we had some unexpected medical bills. Most things, though, were in our control, including the ridiculous $36.75 I spent at the vending machine. Even though that's not a lot of money, it's more than I thought I spent on Wild Cherry Pepsi.

The numbers didn't lie. When I said, “We don't eat out much,” it said, Oh yeah? Well, why don't you take a look at this little category called “food”? Trim a little from this category and you might trim a lot from your waistline AND have leftovers to invest.

Every minute staring at that spreadsheet was worth it. Just by spending consciously, I can afford to invest $50 each month. I do have some invisible money. So that's my first tip to you. Keep a record of all the money coming in and all the money going out.

Cut expenses

I still have a landline. Actually, while I'm confessing, I may as well tell you that I still have a rotary phone with something called a cord. It doubles as entertainment for the kids who visit. Can anyone tell me why I am still paying for a phone I don't answer? Yeah, I don't know either. Canceling that service leaves me $30 a month to invest. And that's my second tip. Stop spending money on something that isn't necessary or isn't important to you.

Extra money

When I tried to find extra money to invest, I didn't want to tap my income from my two side gigs, my husband's side gigs, or either one of our day jobs. We may be able to use those income sources in the future, but 2013 is bringing big changes to our family income and expenses. I'm waiting to see what happens there before we make any investing decisions with that money.

Because that income was safe from this new investing venture, I focused on other income. It was easy to find because, as I said, I kept track of every dime that came into our house. Our random bits of income included things like:

  • monetary gifts (my Grandparents give us money as our Christmas present)
  • cash back credit card rewards
  • cash back rewards from Ebates
  • mileage reimbursement from work
  • rebate checks
  • proceeds from selling stuff
  • a bonus for opening a new ING checking account
  • interest on our savings accounts

I never considered the significance of this source of income, because I assumed it was so small.

And each check or deposit was small. But when I added them up at the end of the year, the sum felt greater than its parts. The $10 rebate check, the $45 from Ebates and all the other little checks added up to over $1,200. If you dedicate the tiny income streams in your budget to investing, you'll probably find more money than you expected, too.

Using money we already have

Our accounts, both our savings and our mortgage, were the last place I looked. Did I have extra money sitting somewhere, money that was not fulfilling a purpose?

Each month, I round up and pay an extra $82 on our mortgage. Given our low interest rate and that we're ahead on our payments, I could make our minimum payment and invest the $82 instead. I'm still thinking about that.

As you know, my dislike of car loans inspires a $300 monthly contribution to our replacement car savings account. Many of you supported financing a car, because the rates are low and it frees up cash. Stopping that contribution would free up another $300 a month to invest. I'm not ready for this, either. Not yet.

But I am ready to invest money from another account. I opened a Sharebuilder account almost three years ago when I did a little bit of mindless investing which didn't work out so well. I still wanted to invest, but – unsure how to do it – I set up an automatic $25 contribution to the account. And the money sat there. By now, the account balance is $800. Nothing huge, but it illustrates the effects of small change + time = more money than you imagined. And that's my last tip. Even if you can't save/invest as much as you think you should, still do something.

By trimming our budget, practicing conscious spending and keeping track of the little bits of income, I can access $205 a month for investing. I could increase that because it doesn't even include the $82 extra mortgage payment per month. Or the $800 currently in the Sharebuilder account. Or our regular income and side jobs. At the minimum, it's about $175 more than I expected.

Even though it is more than I expected, the amount is – no question – small. I am limited with my investment options.

But this exercise had indirect benefits, too. I used to practice conscious spending, but after we paid off our non-mortgage debt, I got a little lazy. Now I have a focus. I could spend this money on x. Or I could invest it. I may find, depending on how this goes, that I have even more to invest.

What do you do with random bits of income? How do you find money to invest?

More about...Budgeting, Investing

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James @ Free in Ten Years
James @ Free in Ten Years
7 years ago

I put aside money to save and invest first, so that I’m not scrabbling around at the end of the month looking for the money I need. I always pay myself first and then adjust my spending in any given month accordingly.

My income goes to the following, in order:
-Retirement investment
-Investment
-Savings
-Mortgage
-Regular expenses
-Spending

Even then, I try to never spend all of the money I have left over. Any unexpected income goes into my investments. Boring, but it works!

Jane Savers @ The Money Puzzle
Jane Savers @ The Money Puzzle
7 years ago

I pay the bills, then the debt then myself split unequally between retirement saving, emergency saving and my investment account.

Reduction of my massive HELOC debt is the focus of any extra penny that I find on the street or squeeze out of my already lean budget.

Sophie
Sophie
7 years ago

I love this article because it’s addressing the stage I’m at right now – okay, I’ve figured out how to control my spending pretty well, I don’t have any bad debt, now what? I’d pretty much come to the same conclusion as the author – it’s time to trim the budget further and use that cash as the seed money for investments. I’d love to see more on investing for beginners. I suspect there are a lot of us who need to get started with investing but it seems like a lot of the resources out there are pitched for… Read more »

Juli
Juli
7 years ago
Reply to  Lisa Aberle

Lisa, I can’t wait to read your articles. I am very much a beginner in investment stuff, but I am interested in learning some of the basics. And I am jealous that you have Wild Cherry Pepsi in your vending machine 🙂 (though it is probably a good thing it isn’t in the vending machine at my office!)

Elizabeth
Elizabeth
7 years ago

The thing I love about this post is how it breaks down finding extra money into baby steps that many people could emulate.

I’ve read a few articles about the debate over investing versus paying off the mortgage and both sides are certainly worth considering. It’s not like it has to be a life-long decision. Lisa could invest the extra money for a few years while her kids are young and their finances are tighter. She can change her mind at any time, but an investing habit is hard to break — and that’s a good thing 🙂

John
John
7 years ago

I have been investing into an IRA for 30 or so years. For the first 15 years I was spotty at best in my regular feeding of the investments. About 15 years ago I read a book by Dave Ramsey. One of his edicts is “Pay yourself first”. I started doing just that and my savings skyrocketed. So that would be my advice for saving. PAY YOURSELF FIRST! No matter what happens, no matter how the money falls, put aside AT LEAST 10% for yourself. The rest of the bills can sort themselves out.

Alison Wiley @ Diamond-Cut Life
Alison Wiley @ Diamond-Cut Life
7 years ago

Good post! Definitely with you on no car loans (my husband and I share a single car that is paid for). I recently reviewed our spending and saw we’re spending at least $100 more per month on groceries than we need to- I mean, in order to still eat well. So, we’re going to cook from scratch more. I just posted on my homemade pinto bean soup, and how I take it with me on overnight road trips to ‘earn’ extra income from my cooking (my employer pays me the same per diem regardless of where or what I eat).… Read more »

Babs
Babs
7 years ago

Good post Lisa! I am looking forward to reading more.

A-L
A-L
7 years ago

I was just doing this last night. In trying to find a way to save more for retirement, I went through our budget program to see what we have budgeted for this month that we could eliminate starting next month to save some more money. Even though I thought we were being pretty frugal already, there was $350 that could be cut. It wasn’t as much as I was praying would miraculously appear, but that’s still more money we can be putting aside to invest in our future. At the same time, though, I feel the pendulum in the other… Read more »

Elizabeth
Elizabeth
7 years ago

I use monetary gifts to get a start on investing now, but with 40000 in student loans and saving for a downpayment I am doing a search for money in my budget for those 😉 We too need to cut out the eating out. Still searching it for others. On investing, it doesn’t need to be a lot to do peer2peer lending…which I personally do – Id rather risk my money on a person than on a company. Prosper has a $25 minimum on notes and you can reinvest the payments when they reach $25.

Nicole
Nicole
7 years ago

When we were starting out we just didn’t spend any money beyond very basic needs until I felt comfortable with our emergency fund and retirement savings. I guess we save first and spend second, though most of our adult life we’ve had savings leftover after our spending.

Eventually we find something worthwhile to spend it on (usually time). (So no worries that we save too much.)

Jason @ WSL
Jason @ WSL
7 years ago

A lot of the money we’ve been investing has come from extra income. I make a decent amount of money from my site and my wife works a 2nd job every 3rd weekend. Between the two, we get an extra $2k-3k/month to stash away!

Phoebe @ www.allyouneedisenough.com
Phoebe @ www.allyouneedisenough.com
7 years ago

2012 was also the first year that we tracked every single dollar spent. Just knowing where your money goes gives you so much power, and we too had some eye opening realizations around where we were spending too much.

Great job Lisa!

Peach
Peach
7 years ago

Great post. What I liked most is that this info could apply to anyone whatever their income level–if they can free up a few dollars a month by tracking their spending, they can save. If they can free up maybe $50 a month, they can think about investing. Tracking where the money goes can open new doors, and that gives hope now that the economy is (slowly) picking up.

Wendee
Wendee
7 years ago

This is one of my favorite posts I’ve seen on GRS. It was very applicable, clear, and made me want to do the same thing. Thanks, Lisa!

Jonathan
Jonathan
7 years ago

We are blessed to have much higher income than we need to live on. We have found a happy (read: stress-free) medium in terms of spending vs. saving/investing. Neither of us are spenders, other than on vacations and getaways, and as a result it is not hard for us to save a high percentage of our income. Because of this, we basically ignore most of our discretionary spending. If we were to scour our spending we could probably cut out a few hundred dollars a month in non-essentials, but this would only amount to single-digit percentage increases in our monthly… Read more »

Mike @Personal Finance Beat
Mike @Personal Finance Beat
7 years ago

I know this is practically taboo amongst PF bloggers, but I’m comfortable taking a chunk of my cash set aside for my e-fund and investing it into the market. On the risk/reward scale, I would rather have it in dividend-paying stocks than sitting in a savings account earning practically nothing. Yes, it could lose value — that’s part of the risk. Other than that, I just make sure to “pay myself first” each month, and that includes $400 for my brokerage account. If I need access to that cash for emergency purposes, it is only a day or two away… Read more »

Mike @Personal Finance Beat
Mike @Personal Finance Beat
7 years ago
Reply to  Lisa Aberle

You raise some important factors, Lisa. No, I’m currently single (though getting married in the fall) with no kids and no mortgage (I rent in NYC). I work for a big company that does do occasional layoffs, but I consider my position pretty safe. That obviously mitigates a lot of the risk factor. I probably wouldn’t have the same approach if I had children. I mean, I don’t have *everything* in the market. I do have about a month’s worth of cash to act as a cushion in an ING savings account. But for everything else, I feel like there’s… Read more »

Mike @Personal Finance Beat
Mike @Personal Finance Beat
7 years ago
Reply to  Lisa Aberle

Also — I would love to do a guest-post expanding my thoughts and arguing why I don’t feel that an e-fund is necessarily a must-have. 🙂

Lisa Aberle
Lisa Aberle
7 years ago

Mike, please do!

Neophyte
Neophyte
7 years ago

I’d read it. We’re in the same spot right now – the emergency fund cash pile is big enough that it seems like a waste to leave it all in the ING account. My goal is a year of expenses with zero income, so on the conservative side. We’re at 7 1/2 months currently, which is about 2 1/2 years of replacement income for my salary (all saved anyway!). That’s not counting the targeted savings (new car, new roof, vacation) or general house savings cash that would all become fair game if something big hit.

Jacq
Jacq
7 years ago

I don’t have an e-fund either. Traditional emergency fund advice a la Suze Orman or Dave Ramsey is really geared towards people with a low (or negative) net worth excluding the home. Years ago before I had much money saved or invested, I felt a certain level of mental comfort having $10k saved up in a savings account. After having never used it for about 3 or 4 years, I realized it was a foolish waste of money. My emergency method now that my financial house is in order would be (in order): – credit card – LOC – sell… Read more »

Jacq
Jacq
7 years ago
Reply to  Lisa Aberle

I heard a Suze Orman segment the other day where she reviewed someone’s finances (who wanted to retire early at 55) who had a net worth of $1.4M. This person had an emergency fund of $23k and Suze wanted her to bump it up to (IIRC) 8 months expenses – in her case $48k. If I – or any sensible person – had an “emergency” – esp. job loss, I would hope their first line of defense would be cutting down their monthly spend (in her case $6k for herself and a 17 y.o. child). With a mortgage balance of… Read more »

Jerome
Jerome
7 years ago
Reply to  Jacq

I have exactly the same feelings as you have. We have our finance house in order, no debts, no mortgage and some dividend paying stocks, and I had 30k, about 1 year of living frugally with our 5 kids, sitting in an emergency fund for years. Doing nothing but earning around 2%. I have now reduced it to 6k. To give myself some feeling of security I started with cash-flow management at the same time. I now predict for the next 3 years our monthly expenses. There is no need for this to be absolutely accurate, I just need to… Read more »

Kelly@Financial-Lessons
7 years ago

I feel like people who don’t make an effort to find those small sources of outside money don’t realize how much investing a small amount could do. Or, if they do recognize those small outside sources, they think of them as extra/entertainment money rather than something they should make use out of. Even an extra $100 a month to invest could mean much more money over time.

MizLoo
MizLoo
7 years ago

I – foolishly – looked at “money that came in the mail” from consulting, writing and any other effort that wasn’t my day job as windfall, and chose to spend it, mostly on impulse purchases. Then a work-related injury forced me to take early retirement, scuppering my long-term financial plans, and eliminating the projected last 7 years of contributions to my retirement fund.

I won’t go short of a hot meal, but I also won’t be able to do the traveling I was looking forward to in retirement. I deeply regret that choice.

Cat
Cat
7 years ago

Putting aside a little bit of money is better than nothing. I seriously have a $10 automatic savings plan every month. Sounds pathetic, but it adds up when I’m not thinking about it!

ImJuniperNow
ImJuniperNow
7 years ago
Reply to  Cat

Back in 1997, I wanted to start investing. I spoke with a financial planner and admitted to him I was hesitant and would commit $50 a month to start.

He laughed at me. $600 a year will get you nowhere!

Humiliated, I backed off until I read about a low-cost, tax-free fund that took $50/month minimums. I signed up, and today that account is worth 5 figures.

It also ignited a fire in me to do more investing, and I am very glad it did.

I also wonder how much commission that guy missed out on by not encouraging me?

Cat
Cat
7 years ago
Reply to  ImJuniperNow

Thanks for that information! This really is my year for exploring investments. I did invest $150 at the start of the year (and my value instantly went down! Now my portfolio is at $133) and I want to keep exploring it further. I know that investing is tricky, and it is a long term game. I bought 3 stocks for 3 companies that I enjoy shopping at or I feel strongly about, so I think I’m OK loosing a little money to figure out the system a bit. What I’d really like to do is save at least $1,000 (which… Read more »

ImJuniperNow
ImJuniperNow
7 years ago
Reply to  Cat

Cat:

Please don’t let the loss of value upset you! Think of it as an opportunity to buy more shares at lower cost.

CDs are paying 1% or less. Safe, yes, but you won’t make anymore than if you put the money under your mattress.

I don’t want to push products on you, but go to websites of, say, Vanguard or Franklin Funds and read about their bond funds that are tax-free for your State. Just a suggestion – no guarantees!

tas
tas
7 years ago
Reply to  ImJuniperNow

I had the exact same experience! I put my $50/month into a sharebuilder account and every three months bought a new stock. The first stock I bought? Apple. Those $50/month investments will now pay 1/2 a downpayment on my house. Cat, I wld avoid CDs right now — the rate is super low and can only go up. But won’t until the market does. If I trust the company I’m purchasing (and I generally do), I like to think of stock prices declining as a “x%” off sale. It’s dangerous if you take that outlook too far, but it’s a… Read more »

Cat
Cat
7 years ago
Reply to  tas

@tas thanks for the advice! I’ll definitely be shopping around. I have my small beginning and I just need to know where to put it.

@Jason Pric – I know what you’re saying about how the longer it is in your account, the higher chance you have of spending it!

Cat
Cat
7 years ago
Reply to  ImJuniperNow

@tas Thank You THank You Thank You!

Reading everyone’s comments about their humble starts is relieving. I don’t know how much money I’ll have to invest in the near future seeing as I just quit my job with no plan and bought a one way ticket to Hawaii (blaming the quarter life crisis) but I will certainly have lost of time to figure it out.

🙂

Rebecca
Rebecca
7 years ago

I’m surprised by the number of people who don’t consider what they invest for retirement to be “investing”. I have both taxable and tax sheltered investments and I plan with them as an entire whole. I use the same investing principles for both and they are part of one portfolio.

Jon
Jon
7 years ago

Great article! I was just thinking and writing about this very topic this weekend! I just got so ‘sloppy’ over the last year or two and 2013 was a time to come back to my senses on spending, eating and living. My wife and I also faithfully write down every dollar we spend and earn so we can track where everything is going. Until you see the concrete evidence you can fool yourself into thinking you’re really not spending that much on food, etc. We’ve set out some big goals for ourselves for the rest of the year and it… Read more »

Debbie
Debbie
7 years ago

Great article! I’ve been scouring our budget for extra income since my husband became disabled last April. In 1993, I became disabled and with two young sons, and working 12 hour days, my husband racked up a lot of credit card debt. Several years ago I decided I didn’t want to see that happen again and began saving 60% of our small income from his work as restaraunt manager. We had paid off all of our debt except the mortgage. By May, I had paid off the house and traded in both cars for a “newer” one. Right now, we’re… Read more »

Mom of five
Mom of five
7 years ago

I have been thinking about where we could cut back to increase both our savings and our investments. Some stuff was easy, like eating out. But then the land line phone? I don’t know. Sure we don’t actually use our housephone – except to give it to anybody who asks – CVS, the grocery store, the cable guy, etc. But doing this has allowed us to keep our cell phones sacred. We don’t get phone calls on our cells except from people we really want to talk to. Can somebody without a landline tell me what it’s like? Does Rachel… Read more »

Edward
Edward
7 years ago
Reply to  Mom of five

I ditched my landline a few years ago. The thought at first is weird and slightly scary because we’re so used to them–swimming the first time without a life preserver. However, my European friends used to look at me like I was crazy when I told them I had a landline. “Why would you have this, Ed? It makes no sense.” Knowing we usually follow them culturally and technologically (it just takes North Americans longer to get onboard), I took the step and had my landline number transferred to my cell. Yes, I still Lisa from card services, but I… Read more »

Lucille
Lucille
7 years ago
Reply to  Mom of five

I hate talking on a cellphone for any extended period of time. I can’t imagine giving up the landline. It just has a better consistent connection. Could I save money if I got rid of it? I would imagine, but I don’t think it would be worth it for the aggravation. Plus I’ve run out of battery and/or misplaced my cell and when you do that, you’re unreachable. My mom (senior) only has a cell and it’s unbearable to not be able to reach her because she forgot she shut off the ringer, or because she left the phone in… Read more »

Jane Savers @ The Money Puzzle
Jane Savers @ The Money Puzzle
7 years ago
Reply to  Lisa Aberle

I moved to a phone from my cable supplier and the price dropped by a two thirds. That alone is enough for some extra investing.

Juli
Juli
7 years ago
Reply to  Mom of five

We don’t have a landline, just cells. I am not a big talker (we have 700 shared anytime minutes per month, and I generally use maybe 100-200 of them). I don’t ever get telemarketers calling, or calls in the middle of the night, or any of that. I think it really depends on how much you put your number out there. I really don’t give my number out to anyone unless they are a friend/family member. Anytime a cashier asks for my phone number, I just say I would rather not give it — I have never had any store… Read more »

Edward
Edward
7 years ago

I nixed the office lottery pool today. I’ve been tracking my expenses to the dollar since mid-2011 and trimmed almost everywhere I can. All the resulting excess has gone into savings and investments. Huge difference in my net worth as a result!

Sure the lottery pool was only $2/week. But using the x 752 calculation to compound over 10 years that’s $1504. Not huge money, but hey–it’s a trip to the Caribbean! 🙂

Good article, Lisa!

Jennifer Gwennifer
Jennifer Gwennifer
7 years ago

Side note having nothing to do with investing:
Having grown up in a rural area where we lost power on occasion, sometimes for a few days at a time, I would never be without my landline and corded phone. Having the security of a working phone no matter what is a must for me. That being said, I spend a little less on other things every month to pay for it.

Jonathan
Jonathan
7 years ago

I’m not sure if your concern extends beyond power to cell reception, but if it’s just a power issue there are lots of cheaper options than maintaining a landline (unless your landline is very cheap). First two that come to mind are (1) you could charge your phone in your car, and (2) you could buy a small generator (used on Craigslist if you want it cheap) and keep that on hand. You could use it for more than just keeping a phone charged, too (light, refrigeration, etc.)

Jen
Jen
7 years ago

Yup, my in-laws in Manhattan insisted on a wired landline when they bought a place. In the recent superstorm, they didn’t have power (which meant no water either) for 5 days, but they saved their going out to find a place to charge for their laptops, because the landline worked fine.

Kathleen, Frugal Portland
Kathleen, Frugal Portland
7 years ago

I’d like to invest more than my IRA. I’m excited that my next step will be asking what to do with the money I’m not spending!

Crystal
Crystal
7 years ago

Thanks for the inspiration to really look at what we’re spending. I keep very detailed records on what we spend, but haven’t looked them over to make cuts for about a year…time to tackle that again…

Diana
Diana
7 years ago

I just started learning about trading options and you don’t need very much money to do well. The average return would be about 18% per year. I am taking this whole year to learn about options through paper trading and next year I plan to start investing real money. I’m learning through tastytrade.com and I’m really enjoying it. You need to either pay a monthly fee or open an account to see the pre-recorded shows. Otherwise you can watch it free live, or watch their free beginner show “Where Do I Start”.

Jake
Jake
7 years ago

Great post! My wife and I have been keeping a budget religiously for around 2 years now and it is amazing what you find out by doing this. So many people don’t think that the little expenses or income add up, but they totally do. I think it’s crazy to think that those “extra income” areas added up to over $1,000. If you invest that every year you’d have over $23,000 in just 10 years (if invested). I’m looking forward to hearing how you end up investing this extra money you found. Thanks for the great article!

Jason Pric
Jason Pric
7 years ago

Tracking your spending to the penny is revealing. I’ve been doing this for years with personal finance software and now track as I spend with my iPhone. It only takes me a few minutes a day, so it’s hardly a pain. I think another way to save (or find money) is to just take it off the top at the beginning of the month. As long as you can meet the essential expenses to survive and pay bills, you’re forced into budgeting and spending wisely with the rest (assuming you don’t make up the difference with a credit card). As… Read more »

Kirby @ TheSimpleMoneyBlog
Kirby @ TheSimpleMoneyBlog
7 years ago

Thanks for sharing. When you practice “conscious spending” like you mentioned, you would be amazed what you can find. Even if you are on a tight budget and think you manage it well, if you don’t go through the exercise to check for all your income sources and expense items and really dig into the numbers, then you could be leaving money on the table. By getting a little creative, even the best of the best at saving can find better ways to set money aside for their goals. The longer you track the information, the better and better you… Read more »

My Financial Independence Journey
My Financial Independence Journey
7 years ago

You’re on the right track to building an investment portfolio. The greater you can make your savings rate, the better position you’ll be in when you reach retirement. At this point you need to continue to refine your budget. Once you start tracking your expenses, the next goal is to start ruthlessly cutting down the expenses that don’t provide you with much value. The other thing that you should do is begin to study investing. If you’re new to the game, you can’t go wrong with a low fee index fund. If you’d like to kick up the sophistication a… Read more »

rosarugosa
rosarugosa
7 years ago

Thanks for the good article! I’m looking at the too big tax refund we’re getting this year and realizing that money could translate to extra cash flow every month for some type of investing, even if it’s just used to increase my 401k contribution.

Vinish Parikh
Vinish Parikh
7 years ago

Great post, As far as i am concerned i treat even my investments as expense because money is going out of my pocket for current year, though it will give me benefits in future. This type of mentality helps in a way because i am one of those who forget that he has done investment because one get returns over a period of time only when one forgets about the investment be it real estate, mutual fund or stocks.

Elena @ Valentine's Day Gift Ideas
Elena @ Valentine's Day Gift Ideas
7 years ago

There is always money to invest – we just need to find it. Cutting charges on cell phone bill for useless stuff or eating out or buying things without planning and putting it on a credit card. How about 300 cable channels that you never have time to watch? Even when you make only $20,000-$30,000 a year, you can invest a few hundred dollars/month if you budget right. Leaving below means is the key to successful investing.

shawmutt
shawmutt
7 years ago

It’s already been said in the comments, but I’ll repeat it. I just started investing, and after research and playing a couple fake portfolios I decided to just go with an index fund. I have an amount automatically taken out of my checking once a month and used to purchase automatically. All I do is check the transaction on Quicken, which takes a couple minutes.

Russel James
Russel James
7 years ago

Cutting the landline was a smart decision. After all, who uses that anymore? I recently even cut the cable TV. I realised that I don’t have time to watch TV when I get back from work. I usually watch what I want online and go to sleep. So there is no point paying for something I’m not using. That saved me $50 a month.

Ted Jenkin
Ted Jenkin
7 years ago

As the old saying goes, “inspect what you expect”. The key to this process is to inspect everything that is happening which raises awareness and allows you to quickly identify the gaps in your budget. It’s amazing how you can really free up cash flow if you try!

Jon @ MoneySmartGuides
Jon @ MoneySmartGuides
7 years ago

I do just what you do. I opened up a separate savings account and deposit any cash back from credit cards and Ebates in there, plus any income from selling stuff on ebay and Craigslist. I consistently average over $1,000 year. I was blown away the first year I did it. It got me so excited, I tried to improve on that number the next year. It doesn’t seem like much at the time, $10 here, $50 there, but over the course of a year, it certainly adds up!

William @ Drop Dead Money
William @ Drop Dead Money
7 years ago

Great article! My approach was a little different, but it came down to the same thing. My wife and I opened another savings account (we already had an emergency fund). The new savings account was conceived to be as close to a nest egg as possible: we knew it wouldn’t hatch for a while, but we wanted something to pour all our extra money into. Sometimes, instead of giving each other birthday or Christmas gifts, we’d put that into the next egg. Any money that came in unexpectedly was immediately put into the nest egg fund. Here’s the psychology we… Read more »

@pfinMario
@pfinMario
7 years ago

I guess for me, most of the things you mention are already worked into prior decisions. Cash back from credit card? But I already worked that discount into the effective price when I decided to buy. Cash back from Ebates? I worked that in too; it probably even swayed my decision from one seller to another depending on who had more cash back. Bonus for new checking accounts? I calculated that as an investment on its own, where the bonus was like a high interest payment from ING. For me, none of these are “extra” money

Justin
Justin
7 years ago

Good post, thanks. When it comes to creating wealth and investing there are so many options. I follow a simple exercise that focuses me on what I want to get financially, and in 3 days I’m able to tap into unknown financial resources to get what I planned. It’s a pretty great process – some may think it “corny” or “worthless” but it works, and it works well. I wrote a blog post detailing it all – it’s too much to put here – feel free to check it out.

MoneyStreetSmart
MoneyStreetSmart
7 years ago

Lisa-

I love the $300/month for replacement car savings- way to thin ahead. I’m sure the money would be nice every month but I am sure you will be thanking yourself when you do need another vehicle!

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