How To Save Money Fast and Invest It Wisely

How to Save Money Fast and Invest It Wisely [Free Investor Guide]

Summary: In this article, you will learn 25 tips for how to save money fast, along with 10 investment options and how much cash you’ll need for each. Following these money-saving tips can help you get on the fast-track to building your savings, securing your retirement future and growing your wealth through smart investing.

Introduction

A recent report by the Federal Reserve found that around 40% of Americans would have a hard time covering a $400 emergency. How does that 40% sleep at night with less than $400 in their savings account! This statistic is the very reason we want to discuss how to save money fast and invest it wisely.

Chances are, we could all be better at saving money. We are human, after all, and have a tendency to make spontaneous and often emotional purchases. The following tips will help keep your savings goals at the front of your mind, avoid emotional buying, and give you some easy ways to cut down on unnecessary expenses.

Part 1: 25 Tips for Saving Money Fast

25 Tips for Saving Money Fast [Free Investor Guide]

1- Build an Emergency Fund

The very first thing you should do when saving money is to set up an emergency fund. I remember being in college and having less than $2 in my bank account. I stopped at a gas station in between classes to buy a can of Diet Coke for 50 cents. I got up to the register and there was a $3 minimum purchase with any debit or credit card. I froze. As I shuffled around, embarrassed and unsure what to do, the man in line behind me stepped in and paid for my 50 cent Diet Coke. More than 10 years later I still remember how I felt in that moment. Thankfully, a kind stranger swooped in to help me out.

Now imagine if the stakes were much higher than something unnecessary like a Diet Coke. Imagine not being able to afford to fix your broken down car and it was your only way to get to work. Or if you or a family member needed medical care, but couldn’t pay for it. This is how important an emergency fund can be.

Families who make a lower income, but have at least $500 saved in an emergency are financially better off than higher-income families with little or no money saved for emergencies.

Saving at least $500 or three to six months worth of expenses should be your number one goal starting out. Not only does this provide a safety net in the event of an emergency, giving you peace of mind, it also will keep you from get financially wiped out. Don’t find yourself in a situation where you can’t afford to pay for an emergency.


2- Establish Your Budget

After you’ve set up your emergency fund, the next step to saving money fast is to figure  out exactly how much money is coming in and how much money is going out every month.

Start by breaking down all of your necessary expenses, like food, housing, basic clothing, and transportation, you’ll see exactly how much money you have leftover.

Next on your list should be saving, then giving, and continue adding necessary items to your budget. I just downloaded a free budgeting app to my phone, because updating an excel spreadsheet just wasn’t working for me. The app is called EveryDollar and is super easy to set up and update from anywhere.

Establishing your monthly budget down to the penny will make is easier to create a savings plan and stick to it, which leads us to our next money saving tip…

3- Make a Savings Plan

Did you know that people with a savings plan are twice as likely to save successfully?

To get started, take a look back at your budget spreadsheet or app – how much have you been spending each month?. Take note of all the non-essential purchases, like driving through your local coffee shop on the way to work.

Let’s say you stop to buy coffee on average, three times a week, and each time it costs $4. That’s $12 per week and $48 per month on coffee. Now look at how many times a week you bought lunch instead of bringing one from home. If you went out to lunch twice a week and spent around $8 each time, you’re spending $64 per month. Combine the two and you’re looking at $112 per month. That’s $112 you could be putting toward your savings.

Once you sit down with a list of your actual purchases, it will be glaringly obvious where all your money is going. You’ll also have a better idea about how you can change your habits to save more money, faster. See where you can cut unnecessary purchases and save that money. Don’t just spend less, put your money into investment accounts that are working toward your future goals, retirement, emergencies or college expenses.


4- Start with Short-Term Savings Goals

Whether you consider yourself to be a good saver or not, you’ll likely be more  successful by starting with short-term savings goals. Maybe start by saving $25 to $50  per week. While this isn’t a huge amount of money, it’ll help you begin creating better spending habits and build momentum toward your ultimate savings goals.

Also, saving and watching your money grow month after month, can actually be really motivating. Think about it like this – saving just $50 a week can make you $2,600 by the end of the year. That’s enough for an emergency fund AND maybe a trip to Europe (or whatever foreign country is calling you). Unless you have long-term goals for that money (buying a house, retirement, your kids college fund) or you have credit card debt to pay off first.


5- Get Out of Debt – Especially High Interest Credit Card Debt

If you’ve ever been in debt, especially high-interest debt, you know how quickly monthly payments eat up your paycheck. It’s like you’re constantly swimming upstream, sometimes making little or no headway, but just barely staying afloat.

Debt makes saving so much harder to do. If you’re currently trying to pay down your debt so you can start saving some real money, all of these money-saving tips still apply. In fact, they’re even more important to follow. A great option to get out of debt quicker is to consolidate your loans into one lump payment. Consolidating your loans can even get you a lower interest rate. Don’t get discouraged and know it is possible to become debt-free!


6- Save Automatically

The easiest and most effective way to stay consistent in your saving is to set up automatic deductions. Ask your employer to deposit a set amount of money into your saving and retirement accounts every pay period. Your HR representative can assist you with the set up soon you won’t even miss the money going into these accounts.

Your bank can also set up an automatic transfer of money into selected accounts.

You’ll train yourself to live on the money deposited into your checking account each month. Saving automatically, will keep money out of sight and out of mind, propelling you on the path to reach your savings goals.


7- Start Saving for Retirement Now

Saving for retirement should be a big part of your savings plan. If your employer offers a 401(k) match, make sure you’re taking advantage of that and contributing at least that amount to your retirement account. Why give up free money?

Even if your employer doesn’t match any of your 401(k) contributions, chances are they offer free retirement accounts to all employees. If you work for yourself or are an independent contractor, there are still many options out there to open retirement accounts, for a very small management fee. If you don’t currently have a retirement account set up, do it today.


8- Save Windfalls – Aka Unexpected Money

Anytime you receive unexpected money, like bonuses, tax refunds, inheritance, etc., our natural inclination might be to spend it on a new pair of skis or a weekend getaway or that trip to Europe you’ve always wanted to go on. If your goal is to save, you’ve got to stick to that savings plan, even when you encounter excess cash. Especially if you encounter unexpected cash. Don’t let emotions overpower the savings goals you set out to accomplish.

Instead of getting excited about spending the money on something fun, get excited when you look at your savings and see that you are $2000 closer to your goal!


9- Follow the 24 Hour Rule

Humans are emotional. If you find yourself walking toward the cash register with a brand new pair of shoes under your arm, because they were on sale, stop right there. Instead of buying something unnecessary on a whim, follow the 24 hour rule. Put those shoes back on the shelf and think it over for at least 24 hours.

This is also really easy to do when you’re shopping online, because you can add items to your cart and when you come back a day or two later, they’ll still be there. (Even better, some online retailers will email you coupons when you leave items in your cart. Why buy it now when (a) you may not even want it in 24 hours and (b) if you still really do want it you might get 10 or 20% off when you actually buy.)


10- Match Your Spending with Saving

After at least 24 hours, if you are still thinking about that pair of shoes, you can always revisit your budget. If you are able to match the cost of the shoes and put that amount into your savings, then go right ahead and buy the shoes! If you can’t match that amount, you probably can’t afford to buy the shoes and stick to your savings plan.


11- Calculate Purchases by Hours Worked, Not Cost

Before deciding to spend money on anything, think about how long it took to earn that money, rather than how much it costs. If you make $25 an hour and want to go out to eat at your favorite seafood restaurant, consider if 4 hours of work is worth one dinner. Thinking about cost in this way will help you keep your goals in perspective. It’ll also naturally change the way you spend money.


12- Save Your Loose Change

This may sound like a dumb idea, but it’s not! Give it a try and see how much money you can accumulate in the jar on your dresser over the course of six months or a year. Make a rule that any money you find in your pocket at the end of the day goes straight into that jar. You’ll be pleasantly surprised how much money you can save, with no effort at all.


13- Designate a Weekly “No Spend Day”

While a “no spend day” may seem like a really difficult habit to make, it’s surprisingly not. Think of your “no spend day” like this: babies and children are much more likely to do something they don’t want to, without throwing a fit, if the parent talks about it often and sets an expectation beforehand (stick with me here.) This is why some parents can be so adamant about setting a schedule and sticking to it.

Establishing an expectation like: this is when we wake up, this is when we take a bath, this is when we eat lunch, this is when we take a nap, this is when we go to bed. Sticking to a schedule, especially with multiple kids, makes your life as a parent much more enjoyable. If you don’t believe me, ask my sister who is busy raising two year old, twin boys.

Adults operate similarly. Talk about your “no spend day” frequently and mentally prepare for it before that day arrives. If you know that Tuesday is your designated “no spend day”, you won’t make dinner or movie plans, you won’t go out for drinks with friends on a whim. If your best friends birthday happens to fall on a Tuesday this year, anticipate that and choose another day that week. Unlike kids, you are in charge of your schedule. But make sure you hold yourself accountable, because your parents probably won’t put you in time out if you lie about your “no spend day”.


14- Avoid Dining Out

Everyone is busy these days and convenience is king. We live in a day-in-age were we want everything now. We have vast amounts of information, literally at our fingertips. We can order lunch and have it delivered to our office for a small fee. We can order and have dinner delivered without getting off the couch.

When I was teaching health to high school students, during our nutrition unit,  I’d hear, without fail, “It costs just as much money or even less to go through a drive through for lunch than it does to buy food at the grocery store.” The sad part is that they probably adopted this opinion from their parents and they are just perpetuating this perception. While my intention as a health teacher was more about the importance of eating healthy and less about saving money, the same concept applies.

You will be amazed at the amount of money you can save if you dine out half as much. Dining and buying drinks out is often the single biggest unnecessary expense on a budget. Don’t be afraid of leftovers. Double your recipe for dinner and take leftovers for lunch the next day. You’ll be saving money AND likely eating healthier food (coming from a former health teacher).   

Hate leftovers? Here are a few creative ways to transform leftover food into new meals.


15- Take Advantage of Rewards and Loyalty Programs

I know leftovers and peanut butter and jelly sandwiches can get boring real quick, so eating out is sometimes a necessary evil. If you do decide to eat out, take advantage of deals, rewards and loyalty programs.

Order the half-off special offered on Tuesday’s. Get a free coffee with a frequent customer card. Open a new savings account when a bank offers a $200 sign up bonus. The possibilities are endless. Don’t miss out on easy savings.


16- Use Money-Saving Apps

You can earn coupons or cash back by downloading apps like RetailMeNot or Honey. Find the cheapest prices on gas in town using GasBuddy. Get rewards through the app at your favorite stores and restaurants.


17- Cancel Unused Subscriptions and Memberships

Still have that gym membership you signed up for on January 1st, but you haven’t worked out there in months? While we may have every intention to get ourselves back to the gym and in shape, you’re still paying for something you don’t use.

If you still aren’t ready to let go of that future six-pack, most gyms let you put your membership on hold for several months. So when you do decide to start working out again, you can always activate your membership.

You should know exactly what is being automatically taken out of your checking account for monthly subscriptions and memberships. If you aren’t using them, cancel.


18- Sell Stuff You Don’t Use

Just this month, I looked at all my stuff and saw at least five, somewhat valuable items, in great condition that I no longer used. I’m talking, I hadn’t used many of them in a year or more. Right then, I laid all the stuff out, took pictures and posted them for sale online. I made an extra $250 by selling just two items I wasn’t using. I couldn’t believe I hadn’t made a habit out of spending a few extra minutes to make easy money.


19- Buy Used

There’s obviously some things you shouldn’t buy used. But just like I was able to sell some of my slightly used items, I sold them for a very discounted price. There are tons of online platforms where you can locally buy and sell used items. Think of it as online shopping with massive discounts.


20- Plan Gift-Giving in Advance

Sticking to a savings plan doesn’t mean you can’t buy your mom a gift for Mother’s Day. You just have to plan for it in advance and decide where that money is coming from, or if money needs to be moved around in your budget.


21- Use the Library

This may sound archaic to millennial-readers, like myself, but the library is actually an incredible money-saving resource. Many libraries are now offering ebooks to rent for free. You can download books straight to your Kindle, iPad or phone with just a (free) library card.


22- Buy Generic

Have you ever done a blind taste-test with one of your Pepsi-loving friends where they choose between Pepsi and Coke? In my experience, which is  by no means is this scientific, half the time people can’t tell the difference.

If you’re a brand name consumer, try the blind taste-test method and see if you can taste the difference. Buying generic instead of brand name products could save you a ton of money.


23- Free or Cheap Entertainment

With warmer weather approaching (at least for the US), I know that there are free concerts on Friday nights and weekend afternoons all over the country. Where I live in Salt Lake City, there is actually a $5 concert series, with some very famous musicians, every Thursday night from June through September. In the winter, there are $10 lift tickets (normally $100) to a great ski resort every Wednesday during the month of December if you bring an item to donate. There are free or cheap entertainment options everywhere, you just have to do a little research to find them!


24- Get Outside!

Instead of taking your family to the movies, go to the park and kick a soccer ball around. Go on a hike, bike ride, or jog. Play yard games and BBQ with friends.


25- Stick to Water

It’s standard practice for restaurants to mark up the cost of alcohol and soft drinks three to five times. When you do go out, stick to water and enjoy your preferred beverage at home before or after.


Part 2: 10 Money Saving Investment Options & How Much Money You’ll Need for Each

10 Money Saving Investment Options [Free Investor Guide]

1- Mutual Funds & Exchange-Traded Funds (ETFs)

Mutual funds and ETFs are a professionally managed investment where your money is pooled with other investors to buy a broad mix of stocks and bonds. If you are just starting out, mutual funds and ETFs are great because you are not trading individual stocks and bonds, but rather buying funds with broad portfolios of stocks and bonds in one transaction. These are also safer investments because you’re diversifying your portfolio.

How Much Money You’ll Need to Invest

Some mutual funds require a minimum initial investment of $3,000 or more. However, there are several reputable mutual fund companies (T.Rowe Price, Vanguard) that offer low minimums anywhere from $100, $500 or $1,000.

The minimum investment for ETFs is the price of one share plus commission and fees. On average, this type of fund comes with a 0.44% expense ratio – which means for every $1,000 you invest, the fund will cost $4.40 in annual fees. Vanguard ETFs don’t require any minimum investment.


2- Bonds

There are different types of bonds including, corporate, municipal and treasury. Bonds are a debt security that raises capital for new companies, local municipalities, or the government. Government bonds are about as low-risk an investment as you can find.

How Much Money You’ll Need to Invest

Minimum investment amounts vary depending on the type of bond you’re buying. U.S. Treasury securities can be bought in $100 increments. Corporate bonds are sold in $1,000 increments. Municipal bonds are tax-fee and typically sold in increments of $5,000. The largest minimum investment is a mortgage-backed bond, starting out at $25,000.


3- Retirement Accounts

There are several different types of retirement accounts, each offering specific tax advantages. The most common retirement accounts include, 401(k), Traditional IRA, and Roth IRA.

Many companies offer employees a 401(k) account, and some will even match your investment amount up to a certain percent. If your employer matches any amount put toward your 401(k), you should be putting at least that matched amount into your retirement account each month. A 401(k) is not taxed until the money is withdrawn after reaching retirement age.

Traditional IRAs can qualify for tax deductions on your yearly tax return. This is a tax-deferred retirement account where your money will grow tax-free until it’s withdrawn at retirement age.

Roth IRAs are after-tax contributions. When you reach retirement age, you can start making withdrawals that are tax-free (as they’ve already been taxed). Many people choose a Roth IRA over a traditional 401(k) because they’re earning a lower salary while making contributions, which mean they’re in a lower tax bracket. This comes with the assumption that you’ll be in a higher tax bracket upon retirement age and don’t want to pay more in taxes when money is withdrawn. If you think you’ll be in a lower tax bracket when reaching retirement age, it may be wise to go the 401(k) or traditional IRA route.

How Much Money You’ll Need to Invest

There is no minimum investment requirement for retirement accounts. There is, however, a cap on how much you’re allowed to contribute each year. If you are under the age of 50, you can put up to $5,500 into an IRA and $6,500 if you’re over 50. For 401(k) accounts, the maximum contribution amount is $18,500 annually, under the age of 50 and $19,000 if you’re over 50.


4- Individual Stocks

Investing in the stock market can be a great way to grow your money. If you decide to dip into individual stocks, your age will play the biggest factor regarding how much of your portfolio should be allocated to stocks. If you are new to investing in stocks, it’s best practice to do extensive research before buying individual stocks and stick to a buy-and-hold mentality. Remember, the stock market rises and falls. Try and keep a cool head and avoid pulling your money out of the investment based on fear.

How Much Money You’ll Need to Invest

The cost of individual stocks can vary depending on the value of each share and the success of the company. Keep in mind that if you are buying and selling individual stocks, you’ll likely be paying a commission on each transaction.


5- Peer-to-Peer Lending

P2P lending, also known as crowdfunding let’s investors lend their money to others. Many crowdfunding companies have online platforms where you can bid on a percentage of the loan amount and fund part of it. Returns from P2P lending occur through interest over the lifetime of the loan.

How Much Money You’ll Need to Invest

Popular P2P companies, like Lending Club, Prosper and Upstart, require varying minimum investment amounts. Both Prosper and Lending club only require a minimum investment of $25, whereas Upstart requires $100 to open an account and invest.


6- Index Funds

Index funds are mutual funds or ETFs. These funds passively track the performance of the benchmark index. Advantages of index funds include, a passive investment, great value with low fees and diversified risk. For example, the S&P 500 is an index of the 500 largest companies in the U.S. and generally a good reflection of the overall health of the stock market.

How Much Money You’ll Need to Invest

Minimum investment requirements vary between companies. Some require a $10,000 minimum to invest, while others require no minimum investment to access lower and no-fee funds.


7- Real Estate

Investing in real estate should be considered a long-term investment used to make steady monthly cash flow. Buying a property and renting it out can produce consistent passive income for investors. One great aspect of real estate investing is that your cash flow can increase the longer you hold onto the investment property. This is because rents typically rise along with inflation, while your mortgage payments stay the same.

A major reason people choose not to invest in real estate is due to the simple fact that they do not want to take on the responsibilities of being a landlord. These days, there are lots of options to invest in real estate without having to become a landlord. For example, here at RealWealth we connect you with property providers around the country that have property management teams in place. They do all the legwork of repairing and maintaining the property and finding quality tenants.

Or you could choose to buy your own investment property and hire a property manager to take care of the landlord stuff. The great news is nearly all of these costs and expenses are tax deductible.

How Much Money You’ll Need to Invest

If you plan to research and buy your own rental property through financing, you’ll want to put at least 20% for a downpayment. If you currently own your house and don’t have that amount of cash to invest, you may consider leveraging the equity in your current home and use the money from refinancing to purchase a rental property.

Real estate investors also have the option to participate in online platforms where you’re buying into a larger project, akin to crowdfunding. Investors pool their money through a real estate investment group to fund larger scale projects, like a hundred-unit apartment complex or townhome community.

These companies often require you to be an accredited investor, where your net worth is at least $1 million or an income of $200,000 a year. However, some companies require an investment as low as $500.


8- Businesses

Another extremely popular practice is to invest in a business or multiple businesses. The options for investing in businesses are endless. Some investors choose to put their money into privately held companies that they are passionate about or believe in, based on their own knowledge and experience.

Others prefer to buy common stock in publicly traded businesses via stock exchanges or over-the-counter market.

Or you could start your own company, which has the potential to be very lucrative, however it comes with high risk.

How Much Money You’ll Need to Invest

The lowest cost business investment will usually be buying shares in a publicly traded company. The cost of each share is unique to each business. But if you can buy into a company for relatively low-cost shares and they continue to grow, the value of your shares could increase exponentially.


9- High-Yield Savings Account

High-Yield savings accounts keep your money safe and available to withdraw at any time. Online banks like Goldman Sachs and Barclays offer interest rates as high as 1.85 percent on cash savings accounts. As these savings accounts are insured by the FDIC, they are safe from any loss.

How Much Money You’ll Need to Invest

The cost of opening a savings account can be $0. Others may require a minimum of $1,000 to open and stay in the account. There are so many options when it comes to opening a high-yield savings account, so take some time to shop around to find the best one for you.


10- Physical Commodities

Types of physical commodities one can buy or invest in include, metals like gold, silver, platinum and copper; energy like crude oil, natural gas and gasoline; livestock and meat; and agricultural like corn, soybeans, wheat, rice, coffee, coffee, sugar, etc.

Some investors prefer buying physical assets over stocks or bonds because even if the value of that asset goes down, they still own that commodity. The potential downside to physical commodities is that they can be volatile. The value of the commodity is directly tied to supply and demand.

For instance, if there’s a drought causing very low production of agricultural products, prices will go up for consumers, thus increasing the value of the commodity for investors. On the other hand, if the supply is greater than the demand, value will go down for investors.

How Much Money You’ll Need to Invest

As there are so many different types of physical commodities the cost varies substantially. Investors should expect transaction costs when buying the asset directly, like gold. If you are physically holding the asset, you’ll be paying for storage fees, adding additional cost to the investor.

For a very detailed break down of commodities, how they work, how to invest and at what cost, check out an article by fool.com at the bottom of this article.


Conclusion

Learning basic strategies and tips about how to save money fast is the first step toward reaching your financial goals. The next step is knowing how to invest your hard-earned money wisely. After reading this article and putting in the time to educate yourself, you are already well on your way to saving, investing, and hopefully watching your money grow through smart investments.


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