One of the hardest things about investing is finding ways to save money to invest in the first place. Even with the economy looking better and unemployment near historic lows, many workers still live paycheck to paycheck, and that makes saving a huge challenge.
Sometimes, the best way to save money is to find a way to trick yourself into doing it. If more straightforward ways of gathering savings to invest haven't worked, then take a look at the four tips below to see if they'll stand a better chance of getting you moving in the right direction.
1. Never let yourself see your money in the first place
The idea of paying yourself first has become a cliche in the financial-planning world, but that doesn't make it any less of a smart move. The best way to save is never to let yourself be consciously aware that you ever had the money to spend.
There are several ways to accomplish this goal. If you have access at work to an employer-sponsored retirement plan like a 401(k), then you can arrange to have money withheld from your paycheck and deposited directly into your retirement account. Many companies will even match your contributions with additional cash, boosting the positive impact. Even if you don't have a 401(k) available, financial providers can set up automatic withdrawals from your bank account that match up with your paydays, ensuring that the desired amount of money goes in and out of your account almost simultaneously.
2. Stop wasting money on things you don't use
Investors know that some of the most successful businesses these days rely on customers having subscriptions and regularly paying money in exchange for their services. That works especially well in businesses where customers don't necessarily use the product or service as much as they arguably should.
From the personal perspective, paying expensive monthly fees for things you don't use is silly. Whether it's a membership to a gym or fitness center you never visit or an outsized cable TV or mobile service subscription plan that's bigger than you need, scaling back or eliminating unnecessary expenses can free up substantial amounts of cash for investment.
3. Take advantage of bonus opportunities
If you're just getting into investing, you'll discover that the market among financial providers is particularly competitive right now. Some companies even will give you cash incentives to open accounts or otherwise start a business relationship, and there's no reason to leave that money on the table.
You can find a wide range of bank accounts, brokerage accounts, and credit cards that offer an upfront bonus just for becoming a customer. Some deals have requirements for a minimum balance or spending amount in order to qualify for the bonus, and it's important not to overextend yourself or change your behavior just to meet the qualification requirements. However, if those requirements fit with what you want to do anyway, you might as well take the free money.
4. Let credit cards help you build up savings
Along the same lines, there are many credit cards that offer a range of rewards for spending. Cash, travel, hotel rooms, and other perks are available, with cardholders either getting rewarded directly or earning points they can use to receive cash or other incentives.
The best rewards credit cards to use are those that have high-percentage rewards in categories where you already spend money. For instance, if you regularly buy groceries, some cards offer ample rewards for grocery-store purchases. Other cards target those who eat out by offering cash back or other rewards for purchases at restaurants.
Again, the key here is not to change your behavior just to earn a reward of a few percentage points. By focusing on making the most of your existing spending, though, you can unlock some free money that can go toward investing.
Be smart with your money
Saving isn't easy, but it's also not impossible. By staying aware of the many ways you can trick yourself into saving more, you'll be in the best position you can to make more progress on your savings ambitions.