10 Tricks to Find Money So You Can Start Investing
Investment advice is all well and good if you have plenty left over at the end of a pay period, but that’s asking a lot in this economy. A research series performed by LendingClub bank in 2021 found 54% of us live paycheck to paycheck and 40% of people making more than $100,000 annually are in this situation.
If you’re tight on cash, you may be tempted to wait until later to start putting something toward the future. That’s one way to handle financial stress, but it’s not the best way.
Instead, you find small amounts of money each month. Use micro-investing opportunities, or save that money until you have a more significant sum to invest. Either way, you’ll start each pay period just a little better off than you were before. In time, you’ll be able to save and invest meaningful amounts of money.
Below are 10 of our favorite sources for those starting funds.
10 Ways Beginning Investors Can Find Money
1. Eliminate Unnecessary SubscriptionsYour bank and credit card statements likely contain recurring payments. Some of those are necessary and non-negotiable, like your life insurance and car payment. Others you can cut back on or get rid of entirely.
You can reduce your utilities by more intentional use or your cell phone bill with a lower-level plan. Maybe you can choose just one streaming service or cut back from three subscription boxes to your favorite.Keep an eye out for any subscriptions you haven’t used in months, like membership to a gym you never go to or a fee for an app you forgot you had.
If you find $50 a month's worth of subscriptions to reduce or eliminate, that’s $600 a year to invest.
2. Cut Out Impulse PurchasesWe all know we should do this, but it can be hard to put it into practice. One way to make it happen is to create a “shopping board” somewhere in your house.
It works like this: Designate a piece of paper on the fridge, a whiteboard, or something similar in your house as the shopping board. Whenever you see something you want to buy but don’t need, write it down on the shopping board.
At the end of each pay period, after you’ve put some money aside for investing, you can spend what’s left on your favorite things listed on the shopping board. If there’s no money left after investing, those items will have to wait.
3. Examine Your HabitsWe all have at least one habit that costs us money.
For some, it’s an addiction, like cigarettes or that morning cup of fancy coffee. Quitting those not only saves money directly each week but also cuts down on our health care costs in the long run.
For others, it’s things we do without thinking, like ordering a second drink at dinner or buying books on Amazon as soon as you hear about them. They’re not bad for you, but if you stop and consider if it’s a mindful choice or just a habit, you can save money.
Other habits might involve money management, ranging from not communicating about money with your spouse to spending too much on credit.
If you break one or more of these habits, you will find it easy to save $1,000 or more for investing each year.
4. Save Spare ChangeThe 20th-century version of this was: You would come home from a day in the world and deposit your change in some container. A couple of times each year, that change would go in the bank for bonus money.
The concept still works today, but with more and more purchases happening electronically, fewer and fewer coins are finding their way home each day.
Enter: modern-day round-up apps such as Acorns, Chime, and Qapital.
If you spend $13.35, the app will round up to $14 and put $0.65 into a savings or investment account. Some banks and most credit unions also offer this service with their debit cards, automatically depositing the difference in a savings account at the same institution.
5. Find a Side HustleMost of the advice on this list is about spending less money, but you can also find funds to invest with by increasing your monthly income with a side hustle.
A side hustle is a self-started part-time gig you work outside your regular job. The difference between these and a second job is that you set the hours and take responsibility for your income.Some of the most well-known examples of lucrative side hustles include:
- Driving for Uber or Lyft
- Delivering food through Postmates or DoorDash
- Online or in-person tutoring
- Teaching English online
- Online freelance writing
- Setting up a craft store on Etsy
- Buying low and selling high on eBay
- House sitting
- Dog walking
- Teaching lessons in one of your hobbies
6. Clean Your HouseCleaning your house doesn’t just make it more pleasant. It can also save you money in surprising ways.
A disorganized garage or home office often means you can’t find things when you need them. You end up running to the store for a specific tool, then finding the old one a day later.
A cluttered kitchen results in more wasted food because you don’t spot things. Old food goes bad, then into the trash, and you buy supplies you didn’t need because you can’t find what you have in the pantry.
If you have a lot of clutter, you’ll eventually need a storage unit. That rental fee is money you could use to invest every month.
Taking a weekend to clean and organize your home can solve these problems, especially if you combine it with the next tip.
7. Sell Your Old StuffAlmost every household has a few cubic feet of things they don’t use anymore. We’re not talking about old letters or your mom’s wedding dress, which bring you joy whenever you think about them. We’re talking about stuff you used to like, or never liked, that is taking up space when it could be making you money.
Here are a few of the most common examples:
Used books you’ll never re-read, which you could sell at a local bookstore or on Powell’s.
Sporting goods and home workout equipment you don’t use. There’s a brisk market for them on Craigslist and Facebook Marketplace.
Musical instruments you no longer play, which you can sell outright or rent to beginning musicians.
Clothes you no longer wear, which can sell at a thrift store or vintage clothing shop.
Collections you used to love but don’t need. EBay can fetch surprisingly high offers for these if you find the right buyer.
This can also be an excellent solution for well-intended gifts you didn’t like. You don’t want them but feel duty-bound to keep them around. Selling these to somebody who would love them means they make somebody else happy while netting you some extra cash.
8. Use Your Retirement BenefitsTaking advantage of a tax-sheltered retirement plan like an IRA or 401(k) means the money you would have paid the government instead goes into your investment accounts. Up to an annual cap, every dollar you put into these is deducted from your taxable income.
Many employers offer access to a company retirement benefit. They deduct money from your paycheck every month, so it’s invested before you’re tempted to spend it. Taking advantage of these offers is wise in most circumstances and an absolute must if your employer offers any kind of fund-matching.
9. Pay Off Credit Card DebtCredit card debt costs you investment money in two ways. First is the interest — money you’re paying to a lender for no immediate value. Second is your principal payments, which you could put into an investment account of your choice.
Since the average American spends about $100 a month on credit card interest, this is a significant opportunity for you to find investment money. That’s $1,200 a year right there, not counting the payments on principal.
Whether or not you invest, one of the best things you can do for your financial security is making whatever sacrifices you must to eliminate credit card debt. Get aggressive and goal-oriented and make this change as quickly as possible.
10. Maximize Cash-Back RewardsCash-back rewards from your credit cards, debit card checking account, or various rebate apps like Ibotta and Checkout51 all offer slight variations on the same thing. They give a small percentage of purchases you make back to you as a cash-back reward.
Redeem your cash rewards and put that money in your investment account. Credit card rewards make it easy to apply the credit to your balance, then transfer the money to your savings account. The process varies for each rewards program but can add up to real money over a year.
Warning: It can be easy to spend too much when you start thinking about the rewards you’ll earn. That’s one of the reasons companies offer these programs. This plan only works if you keep your spending low, especially on credit cards.
Final ThoughtAlthough it’s tempting to wait until a better time to invest, it’s important to remember the bootstrapping effect.
If you start investing today, that money will start working for you. The money it produces will be small at first but will provide another income stream you can re-invest right away. That extra investment income means you have more money working for you than you would have otherwise, which produces more revenue, which allows you to invest even more.
This can continue until your investment income alone exceeds what you initially saved. But that happens only if you take the first steps.
Phillip Smith is a freelance writer in Detroit who covers financial services and personal investing.