How to Save & Invest on a Small Budget

Ways to Start Saving Money

If you’ve been thinking that investment is only for those who make big bucks, you’re wrong! The fact is, you don’t need a fat bank balance or giant paycheck to invest. It may certainly be easier when you have a lot of expendable cash. But when you don’t, it requires commitment and planning. No doubt saving and investing is not easy when you’re wriggling through a shoestring budget. But it’s not impossible either. There are several ways to start investing a little bit of money at a time, even when you’re on a tight budget. All you need to do is identify smart ways to save and invest without denting your finances. 

5 Easy Ways to Start Saving & Investing on a Budget

  • Set aside & save regularly. This is the primary rule of investment. Saving is crucial in order to invest. And taking small steps makes this attainable. Commit to set aside a certain amount every week. Start by putting away as little as $10 each week. Then increase the amount gradually as you get comfortable with the process. And before you know it, you will have enough savings to invest as you like. 
  • Consider an automatic savings plan. Using this type of plan,  you contribute a fixed amount of funds from your bank account to an investment account every two weeks. When you receive your paycheck, the amount you designated is automatically transferred towards your investment. This allows you to save regularly and reap rewards in the long run. 
  • Save every penny. Many banks offer beneficial savings programs that don’t require much work on your end. For instance, Bank of America’s ‘Keep the Change’ program allows you to save money just by routine banking. How? The bank rounds off every purchase you make with your debit card to the nearest dollar and deposits the change into your savings account for free. Although this may seem very small, you can save a significant amount in the long run.
  • Take advantage of your 401(k). One of the most important reasons to invest is to have enough money saved for a comfortable retirement. So make the most of your 401(k) plan and try to invest as much as you can, within your limited budget. Even if your employer doesn’t offer any match on your contribution, making investments in this plan is still completely worthwhile because it contributes towards your peaceful retirement. 
  • Invest your bonuses and tax refunds. Whether it’s the bonuses you receive throughout the year or your tax refunds, you may be tempted to splurge when you have the chance. But if you can overrule this temptation and invest the money into your future, you’re sure to be rewarded down the line. Since this money is not part of your monthly budget, you won’t feel the pinch when you put it away in your savings. So why not make use of this painless way to save and invest?

Above all, the most fundamental requirement to save and invest, other than money, is discipline. So put your income, expenses, and budget down on paper, and prioritize what you spend. This can help you determine how much you can afford to set aside for savings and investments every month. Investing is hard only when you start off. But remember, the sooner you start, the better your returns will be.