Think You Can’t Afford to Invest? These 5 Steps Will Get You on Track

Investing is how you prepare for your future. But how can you do that when you’re barely surviving your present, financially? Rent, utilities, gas and the everyday bills of life dwindle your paycheck down.

But if you could find a little extra money each month, would you invest it? Hint: Say yes!

Maybe right now you can’t spare any money for investments, but with a few smart moves, you can find extra money in your budget to invest. We’re going to show you how to fix your finances and help you get started investing with just a few smart moves.

1. Do You Have More Debt Than Your Friends?

TPH photographer, Tina Russell, in various scenes showing credit card debt, consolidation and bankruptcy on August 14, 2018.

The first step to discovering how you can afford to invest is to see how you measure up, financially. Are there spots in your monthly expenses that could use improvement?

If other people your age and in your income bracket are doing a lot better, that means you could be doing some things better. An app called Status Money can help you create a plan to take your status from average to superstar.

Status is an app that allows you to anonymously compare your financial situation with your peers’ without asking those awkward, prying questions. Link an account to tap into this database, and you’ll be able to compare your income, debt, interest rates, credit score, spending… you name it.

By reviewing the information you provide, Status can help you find ways to reduce your interest rates for credit cards or loans. These and other financial tips can help you improve your finances and start saving money — fast.

By seeing how you stack up to others, you can see what you need to work on — why keep up with the Joneses when you can leave them in the dust?

2. Pay Your Credit Cards Less and Yourself More

TPH photographer, Tina Russell, in various scenes showing credit card debt, consolidation and bankruptcy on August 14, 2018.

You probably have some credit card debt that’s holding you back. Finding a lower interest rate and staying on top of your payments can help you get out from under it faster.

That’s where Tally comes in. It’s a simple app that lets you store and manage your credit card payments in one place, optimizing the amounts and times.

Simply download the iOS app, scan in your credit cards, and if you qualify (with a minimum credit score of around 675), Tally will give you a line of credit with an interest rate between 7.9% and 19.9%* and use the lower interest rate to make managing your payments easy.

No more missed payments. Lower interest rates. All in one place. And don’t worry, Tally uses bank-level security, so your information is safe.

The result is that when you pay less interest, you can lower your monthly payments and still make great progress toward your debt. This frees up other funds in your budget to be used elsewhere — like, I don’t know, investing?

Tally is available in Arkansas, California, Colorado, Florida, Illinois, Massachusetts, Michigan, Minnesota, New Jersey, New York, Ohio, Texas, Utah, Washington and Wisconsin.

*Your APR (which is the same as your interest rate) will depend on your credit history and varies with the market based on Prime Rate. Accurate as of July 2018.

3. Let This App Do the Saving for You

Robin White is seen around downtown Atlanta. Atlanta GA, on July 3rd, 2018.

We know — saving money is tough. So what if you could do it in a way where you wouldn’t even notice? Once it’s out of your checking account, you can’t spend it on a frappucino you really don’t need, right?

Digit makes that possible.

This innovative app automates saving for you. Simply link it to your checking account, and its algorithms will determine small (and safe!) amounts of money to withdraw into a separate, FDIC-insured savings account.

You’ll be surprised to see how fast your savings add up, and once you’ve stockpiled a little bit, you can start thinking about how to make that money work for you and your future.

Bonus: Penny Hoarders will get an extra $5 just for signing up! Additionally, savers will receive a 1% bonus every three months.

Digit is free to use for the first 30 days, then it’s $2.99 per month afterward.

4. Invest Your Spare Change

TPH photo editor Alexa Vincent in various scenes with money on August 30, 2018.

If you want to invest, but you can’t drop thousands of dollars right off the bat, consider starting a microinvesting account through Acorns.

With Acorns, you can start small. And by small, we mean pretty much nothing: The app rounds up your purchases and invests your digital change.

It might seem unsubstantial, but those little investments add up. As your finances get better, you can always increase your investments later.

The app is $1 a month for balances under $1 million, and Penny Hoarders get a $5 bonus when you sign up.

5. Follow This User-Friendly Budget

Dana Sitar with partner Stefan Davis spend some time reviewing credit sesame both on their phone and on personal laptop.

To make some wiggle room, keep your finances healthy with a smart budget.

For most of us, budgets are scary. Seriously scary. But they don’t have to be.

We’re big fans of the 50/20/30 budget. It’s a plan that helps you get your finances into better shape — and still lets you splurge a little.

Here’s how it works:

  • First, you budget 50% of your monthly income for essential bills like rent or mortgage, groceries, utilities, gas and other must-haves.

Hint: If you can’t do this because your rent or mortgage is too high, you’re living beyond your means. You may want to downsize for awhile.

  • Second, earmark 20% of your monthly income for your financial goals. Things like paying down your debt, building an emergency fund and investing fall into this category. You know you can do this!
  • Third — and this is the best one — you get to tag 30% of your income for personal spending. This is where you get to spend on things including dining out, happy hour and clothes shopping. Beware: Your vacations and entertainment like Netflix and Hulu go here, too, so be smart about it.

Tyler Omoth is a senior writer at The Penny Hoarder who loves soaking up the sun and finding creative ways to help others. Catch him on Twitter at @Tyomoth.

This was originally published on The Penny Hoarder, which helps millions of readers worldwide earn and save money by sharing unique job opportunities, personal stories, freebies and more. The Inc. 5000 ranked The Penny Hoarder as the fastest-growing private media company in the U.S. in 2017.

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Think You Can’t Afford to Invest? These 5 Steps Will Get You on Track