Most of us don’t have the luxury of starting out life with a Trumpian salary. Heck, Donald Trump didn’t start out with Trump-sized salary. A key to successful investing though, is to find something in your budget – anything, even $25 a month – and use it to get started. When we say “investing” what we really mean is “saving” because, when you’re starting out, they are essentially the same. That $25 each month needs to go into a savings account that earns a little interest until it’s a large enough amount to meet the minimum purchase for a mutual fund or to make the down payment on a piece of real estate.
Young people just starting their working career tend to fall into three different categories.
1. Have a viral infection of “stuffitis” and max out every credit card they can get their hands on. Sorry, we can’t help these people in the short space available. Check out DaveRamsey.com.
2. Are busy hoarding every spare penny they’ve got for college tuition for a kid who’s not even born yet. Hey, at least they got the saving part down.
3. Earn a modest salary in an expensive urban area, and are barely able to cover rent and food.
The good news is that, if you make it a high enough priority, there is almost always space in your budget to steal $25 to $100 bucks a month to put into savings for eventual investment. And savings is critical for reasons other than simply investing. Are you lucky enough to be the one person on earth who never has a car repair expense, unplanned doctor visit, or any other type of financial emergency? If you’re like most of us, every once in a while a humdinger comes out of nowhere and turns your monthly budget into chaos.
That’s when a savings account is REALLY nice.
So, let’s get to it. Saving is just like exercising. Even a little bit helps. Skip a few soft drinks and you’ve got five extra dollars this week. To help you get started, here are six tips to save money on a modest salary.
1. Make it a priority!
2. Take your savings chunk out early in the month rather than waiting to see what’s left over.
3. Don’t shoot for the moon all at once. That sets you up for failure. Pick a manageable number and simply do it.
4. Open a separate account for your savings and LEAVE IT ALONE!
5. Decide what your first investment will be. Make it a specific, concrete goal.
Now get out there and start saving if you ever want to be able to afford The Donald’s hair stylist.
The Young Wealth Team
(Flickr / Gage Skidmore)