The idea of investing is naturally appealing to many people; you put in a bit of money, choose the companies or assets you think will succeed, and ultimately make more money using nothing but your existing capital. The problem is, without that initial capital, it’s impossible to get started. And with 78% of Americans living paycheck to paycheck, getting that initial capital can be tough.
Getting Started
Fortunately, you don’t need to be a millionaire to start investing. While some brokerage apps may require a minimum account value of $2,500, others have no minimum whatsoever. After opening an account, you only have to worry about finding assets within your budget; most stocks range in price from around $10 to $100 per share (though there are exceptions). That means for as little as $10 (plus commission fees), you could own a piece of a major company.
Of course, if you want to make a measurable impact, you’ll want to have at least a few hundred dollars to start, with regular contributions over a period of many years. So how can you drum up that extra cash?
There are two types of tactics you can use: saving strategies, which help you spend less money each month, and earning strategies, which help you make more money.
Saving strategies
These strategies will put more money in your pockets by reducing your budget and total expenditures:
- Slash your insurance rates. There are tons of insurance companies out there, so chances are, there’s at least one that can offer you a lower rate. Since you likely have policies for your home, car, life and health, even a few dollars of savings on each of your premiums can ultimately add up to significant savings over the course of a few months.
- Downsize your home. For most consumers, home expenses are the costliest budget item; it’s generally recommended that your home not cost more than 30% of your total budget, or preferably, 25%. If you want to get serious about saving money, consider moving to an area where your total cost can be 20% (or even less). If you make $30,000 a year and save just 5%, you’ll have an extra $1,500 a year to invest with.
- Cut your subscriptions. Subscriptions never seem significant — a $10 monthly cost here or there seems inconsequential. But eventually, all those $10 fees add up, and soon you’re paying $100 or more on things like streaming services that you never use. Take the time to review your bank statement and make a list of all the subscriptions you’re using. Then commit to cutting at least a few of them permanently.
- Renegotiate your debt. If you’re making regular credit card payments, you know how much debt can take over your budget. What you may not know is that you can renegotiate the terms of that debt; consolidating debt, or negotiating your interest rate can lower your monthly payments while helping you pay off your debt faster. It’s a simple step that could save you thousands of dollars in the long run.
- Reduce your entertainment budget. Entertainment spending can get out of hand fast. A few drinks out with your friends or opting for takeout instead of cooking at home may seem like negligible choices but over the course of a month, they can occupy a big swath of your budget. Commit to reducing your total expenditure here.
Earning strategies
These strategies will help you by increasing your total revenue stream:
- Ask for a raise. If you’ve been in your job for a while, consider asking for a raise. Around 44% of people who ask for a raise get the amount they ask for, with 75% of people asking for a raise getting some kind of raise or bonus. Sometimes, a simple request is all it takes to boost your income.
- Pick up a side gig. You can make money with one of the dozens of side gigs that are available to you. You might drive a car for a ridesharing service on the weekends, walk dogs for your neighbors or seek part-time work at another company.
- Sell some of your old things. You can also raise money quickly by selling some of your old things. For example, you might get rid of your old electronics or some furniture that’s just collecting dust in the attic.
If you can put all these strategies to use, you should have a lump of capital you can use to start investing after just a month or two. Even a handful of strategies may be enough to help you save an extra hundred dollars a month. Try them out — even if you’re not ready to start investing, they can help you get your personal finances in order.
Disclosure: I do not own any of the stocks mentioned in this article.
