How to Invest Your Money When You Have None
Does anyone else remember staring at the piggy bank on the shelf when they were a kid? Mainly how it was slowly collect dust from week to week?
Sure, maybe you had an allowance of 25 cents a week like I did (no, this wasn’t the 1940’s), but I learned the hard way that when you’re obsessed with comic books and ice cream then those earnings go out the door as quickly as they come in.
Well, as an adult, not much has changed, except cool things like ice cream and 5 cent candies have been replaced by vehicle and credit card payments. It all still goes out as quickly as it comes in.
So how do we build a savings plan into our lives when everything is accounted for?
Treat Your Savings Like a Bill
When we work on exit strategies with our clients, we help them set up payment plans so everything is structured and scheduled. Want to save money on your own? Commit to the plan. Whether you’re investing in mutual funds or your RSP, set up a recurring payment plan and stick to it.
The real benefit of paying into your investments like they’re bills is pretty soon you’ll forget you’re actually holding on to money that’s not spoken for. When it comes to bills like utilities and vehicles, you’re generally not getting that money back.
With investments, however, you will eventually.
We talk a lot at One Stop about the impact unforeseen circumstances have on the lives of families all over the world. You can’t plan for illness or injury or sudden costly situations.
When it comes to emergencies, there are two ways we benefit from stashing away cash for a rainy day.
1. It’s unspoken for: let’s say the unthinkable happens. You’ve got an account with a little bit extra sitting there, and sure, it’s tough to dip into it, but at least you can pay off the emergency or at least put a dent in it.
2. The payments are unnoticed: again, let’s imagine something sudden requires immediate cash support. If you’ve been committed to your savings plan, maybe you can pay off the emergency using only your piggy bank. This is all bonus savings, after all.
As with so many things in life, but particularly financial matters, the best way to start is to start – and start small. Commit to small regular payments, maybe a hundred dollars a month, two hundred – something small enough that you’ll feel good about your contributions without impacting the rest of your day to day expenses too much.
So, when you don’t have much to begin with, it is still possible to start a small fund on your own.
And once you start, the only way to grow is up.