Finding Money to Invest

Many people complain that they just don’t have any extra money to invest or save.  Personally, when someone tells me this, I find it very difficult to believe.  I come from a background of very modest means and since my first job as a paperboy in my pre-teens making $10 a week, I have been able to save and invest some portion of my money.  Quite frankly, the vast majority of people who have no savings or investments make this choice (maybe unconsciously), but it is no less a choice and they shouldn’t view themselves as a victim of circumstance.  Now I know there are some rare exceptions, where someone may have had a brush with bad luck and were wiped financially by some unfortunate event, but I’m taking about the general population at large.  So how do I find money to invest?  Well, it’s really no secret, I treat savings as an expense just like any other expense you may have — a tax, mortgage or utility bill, something must pay.  Before every pay period, I routinely set aside a set amount for my savings and investments and siphon it off to a separate account and never touch it, and I mean never.  When I formed this habit at a relatively young age, it forced me to live within the remaining income.  As I began to see my savings and investment accounts begin to grow over the years, the habit became even more addicting and I continue to increase my savings “expense” anytime I receive a raise or bonus.  Having done this for over 20 years the results have been pretty astounding.  In a future post this year, I hope to tell you how just how astounding it has been.

Therefore, the first step in any successful financial planning is to determine where to find the money to save and ultimately invest, which most likely is already under your nose.  As I mentioned above, what works for me is every paycheck I receive I create a savings “expense” and pay it off just like I would any other bill – and never, ever, touch the money.  But you say, if I did this, then I wouldn’t be able to pay this bill or debt, which then begs the question, “Are you living beyond your means?”  I’ll address this question in a future post.

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3 Responses to Finding Money to Invest

  1. Very interesting, I can’t wait to hear more on how to invest. Just curious when you add or remove the funds from your pay for savings, do you just place the money into a bank account or do you actually invest the money into the stock market or something else?

    • Jared, every two weeks a couple days before my pay shows up in my bank account, I set-up a automatic transfer into my brokerage account. My brokerage account has a savings account built into it, and the cash sits in a money market earning peanuts, until I find an investment I like. Since I set-up my brokerage account (maybe 16 years ago now), I have never taken money out of it. Every year I decide exactly what amount my savings “expense” will be every two weeks and without fail, I pay this bill first. For example, if my biweekly net pay will be $1,000, I would take $200 and transfer it directly to my brokerage account and live on the remaining $800. If you never get used to an income, you never miss it. If I happen to get a raise or bonus, I take a portion of that and increase my savings “expense”. For whatever reason, maybe because I came from lower middle class family that I saw struggle with money when growing up, I formed this habit at a relatively young age and it has definitely made money a much less worrisome matter in my life.

  2. Pingback: Living Within Your Means – Minimizing or Avoiding Debt | Running Inspired Blog

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