Saving and investing money is a habit that can be learned at any age. However, while most people know they should save and invest their earnings, not everyone knows how to make it happen.
Here are Six Simple Saving and Investing Tips for Getting You on Track at Any Age
Use Automatic Distribution
The less you physically have to do to save money, the better. One of the main benefits of having the technology we do is adding automation to simple tasks. In this case, adding automation can help you save money without thinking about it.
Set up an automatic recurring draft on your regular payday to move money out of your checking account and into savings. You can also use this feature to set aside the money you need for bills as the month goes on. By using automatic distribution, you remove the risk of human error and guarantee that you have enough for your basic needs.
Use a Tracking Journal or App
One of the downsides of our advanced banking technology is that money is no longer tangible. Before credit cards and digital banking was so readily accessible, you either had cash for something, or you didn’t. Each time you spent money, you felt that lightness in your wallet. Now, that tangible feeling isn’t there.
Using a tracking app like Mint can help you become more aware of how you’re spending your money. Categorizing your expenses can be illuminating when you start the road to financial freedom. You may find that by cutting one visit to a restaurant each month, you can save up $1000 by the end of the year. However, if you don’t see the numbers in front of you, you’ll never truly comprehend your spending habits.
Try the 2% Rule
The 2% rule is a debt-payment method developed by The Thrifty Couple, which they used to pay off $100,000 in consumer debt. This method can also be used to start saving and investing.
With the 2% rule, you look at your average monthly expenses and aim to cut back by 2% in the coming month. Meanwhile, you also look at increasing your income by 2% in the coming month. That leftover money is then applied to your debt or put into a savings or investing account.
Eventually, you’ll reach your threshold when cutting expenses, but this is an effective method for starting a nest egg.
Work with a Financial Advisor
It’s natural to be hesitant when starting something new, especially when it comes to money. Rather than letting that hesitation limit your earning potential, reach out to a financial advisor. Find the best financial advisory firm in your area to help you put together an investing plan that fits your lifestyle and goals.
Use Separate Savings Accounts
There are lots of reasons to save and invest money. Get clear about your goals and use separate accounts to guide the process.
For example, if you’re creating an emergency savings fund in the event of unexpected employment or a broken vehicle, keep it separate from your vacation fund. By using separate accounts, you can also take advantage of different access levels and interest rates.
When it comes to saving and investing, getting into a routine is the hardest part. Don’t let feelings of inadequacy stop you from saving. Even putting away $20 a month will add up over time. This is especially important when investing, as the compound interest from $20 a month now will help your account grow at an exponential rate over time.
If you currently have a lot of debt, it makes sense to focus on paying that down. However, it’s still worth investing and saving a small amount to start building that foundational habit.
Use these tips and tricks to set yourself up for financial success at any age.