When people think about investors, they imagine high-powered, multi-millionaires rolling in the stacks of money they made off good investments. While in some cases this might be true, the reality is that anyone can invest, with any amount of money. All you have to do is overcome the intimidation, put aside a little cash, and have a positive outlook when making your money moves.
So, how exactly can you do that? The following guide will give you a few major pointers on how you can manage to invest, even if you’re working with a part-time salary.
What is a part-time salary?
Part-time refers to only working some of the time of an average workweek (40 hours). You likely work part-time if you work any amount of hours that total less than forty.
A ‘part-time salary’ simply means that you’re working with less of an income than most full-time salary jobs offer. This could be an hourly wage, minimum wage, or even just the sum of a few side hustles.
Finding extra money
Your first step before launching into the world of investments is becoming mindful of what you’re spending your money on. This will allow you to observe your spending habits and make any adjustments that’ll allow you to begin to allocate some funds to your investments.
For the next week, keep a note about what you spend your money on. Do you buy lunch instead of making it? Buy a cup of coffee instead of making a cup at home? Do you over-purchase at the grocery store and things expire in your fridge? Are there patterns of spending that aren’t necessary, you don’t need, and can relinquish?
An investor has a certain mindset about money: To get the most out of each dollar or cent. Take a look at your purchases over the course of the next week and start asking yourself if you’re really getting the most out of your money. If you feel that in some cases you’re not, recognize your spending habits, and actively seek to make changes.
Cut down on your expenses
In a lot of cases, you may be able to cut down on your expenses to help find a little extra money to invest. In addition to taking a look at your spending habits to find the extra money, take a look at your monthly expenses, such as TV, internet, music accounts, gas, food, bills, etc. Are you paying for any membership plans that just aren’t worth it? Are you taking trips in your car that aren’t necessary, or are there options to carpool?
Take a look at your expenses closely and hop online to see if there are areas you can trim, get a better rate, or eliminate entirely.
Work it into your budget
It’s a lot easier to set aside money for investments if you look at it as an item you need to budget for. If you look at it as an item on your wish list that also features tattoos, a phone upgrade, or new clothes, it’s always going to come in last place.
Investors make investing an important part of their budget. Even if you only set aside a few dollars a month for investing, make those few dollars an active part of your budget so once you start accumulating some funds, you can start investing.
The Cookie Jar Approach
The Cookie Jar Approach refers to having a little money stashed somewhere for a rainy day. If you ever had a piggy bank or money jar with your tooth fairy money hidden in your room, then you’re already all-too-familiar with the Cookie Jar Approach.
Grab an envelope, shoe box or jar, and start stashing little bits of money in there. It may sound silly and a little juvenile, but getting yourself in the habit of physically putting money away will help you stay accountable. You can even write something on your envelope for extra encouragement. Bottom line, even if it’s just a few coins, stash it away in your cookie jar.
The online version of a cookie jar is a savings account, and you can earn dividends on the money you have saved in there. You may need to deposit a certain amount of money to open one, but it’s helpful and easy to make deposits to your virtual cookie jar to use for investing later.
Ask about a 401(k)
Believe it or not, your employer may offer 401(k) options even for part-time employees. Even if you contribute one percent of your paycheck to your 401(k), the tax benefits will make that contribution seem even smaller.
Any time you get a pay raise, opt to up your 401(k) contribution. Your 401(k) investment will likely be one of your most lucrative if it’s an option.
Use an automated investment service
Outside of the financial obstacles that might be stopping you from investing, you’re probably wondering how you can manage them, or where to get started.
One of the simplest and most cost-effective investment services are robo advisors. Robo advisors were literally created to make investing as simple as possible for you to do. They’re incredibly accessible and no prior investment experience is needed to get started.
Essentially, they’re an online, automated intelligence that will track your investments while allowing you to pay lower fees. There is a bevy of robo advisor services, so find the one that you feel will work best for you and sign up.
Note: You may need to have initial capital for some of them, so keep that in mind (and keep adding to that cookie jar!).
Dabble with treasury securities
Treasury securities, or savings bonds, are easily bought through the US Treasury’s portal: Treasury Direct. Here, you can buy fixed-income bonds with different levels of maturities from 30 days to 30 years in denominations as low as $100.
You can use that same portal, Treasury Direct, to buy Treasury Inflation Protected Securities (also known as TIPS.) TIPS will pay you interest while making periodic principal adjustments caused by inflation, which are based on any increases or decreases in the consumer price index.
Research low initial investment mutual funds
If you’re new to investing, you might be thinking what the heck is that? Completely understandable. But actually, low initial-investment mutual funds are perfect for you as a new investor.
In a nutshell, mutual funds are investment securities that allow you to invest in a portfolio of stocks and bonds with a single transaction. While a key player in the world of investing, unfortunately, a lot of mutual fund companies tend to ask for initial investments of anywhere between five hundred and five thousand dollars. If you’re just getting your feet wet in the world of investing, especially with a part-time salary, you may not have the kind of cash to kick toward mutual funds.
Researching low initial investment mutual funds means you’ll be provided with options to suit your specific beginning needs. The initial amount you need to get started with them will be on the lower side, so you’re not eating two meals a week just to start investing.
Bottom line, the fact that you’re thinking about allocating some of your part-time paychecks to investments is a hearty step in the right direction. You’re already getting into a mindset of someone who wants to turn their money into more money and with a few smart steps, a couple of good decisions, and a good attitude, you definitely will.