Investing is crucial to your financial health long term. Investing can help you build wealth, diversify your income, retire, and leave a nest egg for your family. Yet, so many people put off investing or don’t believe they can afford to invest.
I’ll admit, investing my money was low on the priority list when I was struggling to make ends meet. Even when I landed a decent-paying job, I focused on prioritizing debt payoff and there’s nothing wrong with that.
However, with investing, it’s always better to get started early and allow your money enough time to grow via compound interest. Now, I’m definitely a fan of investing while paying off debt even if you’re on a limited budget.
Think you can’t afford to invest your money? Here are a few ways to help you find money to invest when you’re on a low budget.
Realize You Don’t Need Much to Start Investing
A big misconception about investing is that you need a lot of money to get started when in reality, you don’t. I understand how the thought of investing a lot of money into the market and losing some of it can make some people feel hesitant.
I started investing with only $100 and while naturally, there are some risks involved many investors like index funds because they provide diversity and low fees which means you can keep more of your returns.
ETFs which stands for exchange trade funds, are also great to get started with because they provide some diversity as well and they are easy to buy and sell since they trade like stocks.
I’d recommend Betterment for beginning investors because it allows you to create investment goals like opening and contributing to an IRA. Betterment distributes your funds for you into ETFs based on your portfolio allocation whether it’s stocks, bonds, or both.
If anything, you should start by investing in your retirement. If your employer offers a 401(k) if won’t cost you much to contribute to it even if you can’t contribute much at first. You can also open an IRA (Individual Retirement Account) even if you can’t contribute the maximum amount each year (which is $5,550 if you’re under 50 and $6,500 if you’re over 50) just yet.
Just realize that investing doesn’t always involve buying and selling thousands of dollars of stocks. If you have just $100, you can start investing and start off small with index funds and ETFs.
Eliminate Excess From Your Budget
Once you change your mindset to realize that you can start investing with just small amount of money, you can start to eliminate excess expenses from your budget so you can free up more money to invest.
If you follow as budget, you probably know that it changes all the time since your expenses and lifestyle are bound to change regularly.
When you’re trying to invest on a low budget, it never hurts to run through your budget line-by-line. This can help you see if there are any expenses you can cut or eliminate altogether.
Start prioritizing investing over non-necessity expenses like dining out, shopping, cable TV etc. You don’t have to cut these expenses out altogether, but you can reduce them to free up more money.
Also, if you feel like you’re overpaying for something, shop around and see if you can get a better deal.Remember, you can’t afford not to start investing – not the other way around. Click To Tweet
Get a Better Paying Job
If your budget is already super tight, you can also consider getting a better-paying job that will allow you to start investing more. I know this is easier said than done, but you can always ask if you can get a raise or start looking online for other opportunities in your field.
If your current income isn’t allowing you to meet your needs and financial goals, it’s best to focus on earning more money.
If you secure a higher annual salary either from a raise or by switching your job, you can maintain your current living standards and use the extra money you earn to invest. Even a 10% pay increase can make a huge difference.
Get a Side Hustle
Another way you can earn more money is by getting a side hustle. Focus on what your skills are and what type of work you’d like to do. You can get a second job, freelance, babysit, walk dogs, mow lawns, take surveys online etc.
My favorite site hustle is freelance writing because it’s flexible and easy to earn lots of money. I loved freelancing so much that I made it my full-time job last year. But before that, it only took a few months of experience to allow me to earn $1,000+ per month.
If you can find a side hustle that will allow you to earn $1,000+ per month, that would give you at least a $12,000 annual raise that you can use to start investing.
Start Selling Things
Increasing your income so you can start investing doesn’t just stop at your job. You can also sell unwanted items online to earn extra money if you’re on a low budget but still want to invest.
I recently sold some unwanted jewelry on eBay. It was literally money sitting in my home so it made its way to my bank account. All I did was take a couple of pictures of the jewelry and list it on eBay. Someone made an offer. I sold it and shipped it.
I also sell items like clothing, shoes, bags, books, toys, and movies online and at resale shops that buy from sellers.
Most of you probably have things lying around your home that you don’t use anymore that have some value. Why not sell it to clear up space and give yourself a little financial wiggle room?
You can start by taking an inventory of all the items you own and then keep note of when you used the item last. If you haven’t been using it, consider selling it. This is a great way to make extra money to invest while decluttering your home.
There are plenty of good reasons to start investing today. Two important reasons are that you’ll keep up with inflation by investing. Plus, you’ll also give your money a chance to grow exponentially.
If you’re having a hard time rounding up the money to invest and live comfortably, try doing a combination of the four ideas mentioned above.
Remember, you can’t afford not to start investing – not the other way around.
Have you started investing yet? Do you have a retirement account? If not, what’s holding you back and do you have a plan to overcome this obstacle?