Tight Budget? Don't Worry, You Can Still Invest in Building a Nest Egg

• Author: Jenny Wolff
• Posted: 2024-05-06

Personal investment isn't only for the rich and young, and you can always begin now to secure a brighter future. Anyone can overcome their circumstances and create financial stability. Not sure how to start? Sit back and relax. Experts are sharing their favorite tips on personal investing.
 

Working Toward Financial Health

Building a healthy financial picture takes time, strategy and execution. Did you know that almost 80% of Americans are living paycheck to paycheck? However, that doesn't mean that you can't begin saving at a small level. Even $20 a month tucked away in a special savings account will slowly accumulate and be ready as a safety net for low-income families, for instance. Things can happen that you're not prepared for such as a job loss, a high utility bill you didn't expect, and the list goes on.

Look around for a high-yield savings account so that you can accrue higher interest on your emergency savings.

Another way is to get a side hustle or a part-time job or cut back on groceries, etc. Make small goals. That's the best way to adopt better financial habits. If you have debt you're trying to pay off, and expecting a refund, use your tax return to help. Also, consider the Earned Income Tax Credit (EITC). Under this federal tax credit, qualified low-income individuals will have their overall tax bill lowered. This can be quite helpful and can set you up for a larger refund or even a payment if you don't owe taxes.
 

Stretching Your Savings

It isn't easy trying to stay on a budget, but you have to if you're practicing personal investment. For instance, professionals advise reducing unnecessary subscriptions, shopping budgets and other non-essentials.

Can you still eat well, by spending less at the supermarket? Yes, there are a number of simple ways to stretch those dollars. For instance, shop for generic brands as the taste is often as good as the name-brand products. Choose lower-cost options for meat to save money. You could also make a meal plan and then, stick with it. Just buy the ingredients you need for each meal, and stay on that list as you shop. Impulse buying happens, but try to avoid it.

Shop the sales at your grocery market. Look through the store's weekly circular to see what's currently on sale and will work with your meal plan. There may be items you can buy on sale that can be frozen and used for another time.

If your grocery store has a loyalty program, sign up for it as you could score some great discounts. By saving extra dollars each month, you can add them to your special savings account for investing later.
 

Investing in the Stock Market

If you're not pulling in a big salary, you probably can't prioritize saving a huge portion of your income. However, there are ways to maximize your investment goals. One way is to invest in Roth IRAs. Skip traditional IRAs. You will still have to pay taxes on the money you invest, but the growth and dividends in the Roth account come out tax-free during retirement.

Another option is enrolling in your 401(k) or a similar retirement plan at work. You can even start tiny. In other words, think about investing merely 1% of your salary into the employer plan. That's such a small contribution you probably wouldn't miss. Each year, increase your contribution to 2% of your pay, and so on. It takes patience and some time to create a nest egg, but anyone can learn to do it.
 

Meeting with an Investment Pro

You can always sit down with a financial expert who can advise you on your investment journey. You can ask this expert a ton of questions so that they can educate and empower you in building a more secure financial future. Your bank or credit union can also help you learn basic financial principles.

Personal investment is different for everyone, but you can begin at any stage in life to make your future more financially secure. There isn't a one-size-fits-all kind of solution. Study the guidelines above, stay on budget, and create a plan. There aren't any easy, non-risky methods for making big bucks right away. It takes strategy, a bit of saving, patience and knowing exactly what you are putting your money into. Best of luck!