How to Invest Small Amounts of Money

It’s easy to say “put away $1.00 a day since you spend more than that frivolously on coffee, magazines, etc.” But the truth of it is, you will most likely continue to spend that $1.00 a day on coffee and you will not physically take $1.00 out of your wallet and put it in a savings envelope. However, using today’s technology makes it easy to save small amounts of money. There are just 3 simple steps.

1. If you don’t already have a checking account, open one, preferably one that offers interest.

2. Open a savings account with a high interest rate.

3. Set up an AUTOMATIC transfer for $30 each month from your checking account to your savings account.

Bonus Step:

4. When your savings reach a set amount, such as $200.00, transfer that set amount into a high end CD. The caveat: be certain that you will not need that money until the CD has matured, otherwise you may face an early withdrawal penalty or lose part of the valuable interest you would have earned. After the CD has matured, roll it into another high interest CD.

If you are unable to set aside $30 per month, do the maximum you can afford. This means even $5.00 if that is all you have. You may find yourself with a little more than extra pocket change at the end of a year.

Extra Funds:
Monthly savings in the above fashion are also a good way to create birthday or holiday gift funds. Set up a separate account and automatically contribute $5.00 or $10.00 per month to that account. When it’s time to come up with gift giving money, you will already have it!

The Smart Consumer:

Other ways of saving money include NOT using coupons. That’s right; many people spend more money using coupons than not making coupon purchases at all. Only use coupons for items you truly intend to purchase, coupon or not. Otherwise that $.50 you saved on those cookies may really end up costing you $3.29. Make a detailed grocery list and stick to it!

Are you always using your cell phone? If you never use your landline, you may want to consider canceling it or at least downgrading it to the least expensive option. And on that cell phone, are you using the minutes in your package? Are you paying for options you don’t use? Shop around for the plan that best suits your needs.

Pay off your credit cards in full every month! If you are unable to do so, create a budget that will help you achieve this goal. NEVER pay just the minimum or you will never pay off your purchases. Think about it. That $30.00 sweater you so proudly bought on sale for $24.00 is going to cost you $50.00!

Track your expenses for a month and find out exactly where your money is getting spent. For every expense you deem unnecessary (be honest with yourself!), eliminate it and add that money to your automatic savings account.

Saving money doesn’t have to be hard work, but it is a job. Take it seriously. Have fun. Do the best you can and then keep improving. And best of all, enjoy your new found savings!