Roadmap To Saving And Investing

Roadmap To Saving And Investing

In today’s post I am going to layout a road map to saving and investing your money. I hope that the information I write about will be helpful in the pursuit of learning about personal finance. The best thing that you can do for yourself is long term saving and investing. Don’t forget to send this post to a friend that could also benefit from reading this post.

Saving Your Money

Before we even talk about investing money, the first step is to become disciple in saving it. To do this I always suggest that you go about it in baby steps and work your way up to however extreme you desire. For instance, start with putting away $20 on the first paycheck and $40 on the next. Build that habit until you are saving 30% or more of each paycheck. You’ll be surprised on just how much was saved in the span of a couple months.

On top of just saving money, you need to also evaluate how you are spending it. We all want some type of object or temporary satisfaction without realizing that you are never going to get that money back. Choosing desires over needs creates an unhealthy spending habit. Buying fast food over cooking or that starbucks coffee over making your own. According to an article by FOX News, it states,

According to the report, the average American spends approximately $1,100 a year– or $3 each day– on coffee.

If you chose not to buy all that coffee then that $1,100 could’ve been in that savings account you have. What to know how much you should have saved by 30? Well according to Bankrate, they suggest that,

Here’s what you should plan on saving by the time you reach age 30:

Retirement savings goal: $74,082

Emergency savings goal: $11,097 to $22,194

I think that this is a good goal to aim for and could definitely be done with the right habit of saving. There is no secret tricks or ebook you need to read on how to save. Start with a budget and a savings goal each month. I suggest that you read a book called The Compound Effect here. This books revolves around getting you to build a habit and just how effective long term habits can do for you in all aspects of life.

So here’s the quick roadmap:

Budget the money, spend majority on only needs, become really good at saving 30% of your check, keep building that habit, and be satisfied at what you’ve accomplished in 1 year. I should also mention that of course you need to live yourself and have memorable experiences, but you need money to do that. Becoming a really good saver will help with that

You can do it!

Investing Your Money

Once you have be able to steadily save money really good, it’s now time to start investing. Just keeping your money in a typical savings account over a long period of time is not going to help at all when you become old. That $20,000 is not going to turn into $25,000 or $40,000. You need to start investing that money into stocks. I highly suggest that putting that money into an many EFT’s and other stocks (among different industries) will forsure have lots of gains long term.

Now we a lot of trading apps offering fractional shares, you can invest $50 across a lot of stocks instead of having to purchase 1 whole share. I really love this feature and is a big plus for new investors. If you’re feeling more confident with how much to put into the stock market then start with $100. Yes a lot of you already know that the markets are always going up and down everyday. What should be noted is that they will always go up long term. If you don’t believe me then look up Warren Buffett and see if I’m still wrong.

If this type of investing isn’t for you then maybe look into a Roth IRA. Every year you should find a way to invest $5,000 (maxing out the contribution) to obtain the most gains for when you retire. At the age of 60, you will have invested $200,000 into a Roth IRA and be able to cash out the $1,068,048 tax free! It should be mention that investing $5,000 per year is a lot for someone that has little to no good income at all.

This is why as part of my road to investing, I suggest that:

Download Acorns, invest weekly or monthly, let them handle where the money should go. This option is for those that don’t want to do the research on thier own and want it to be automatic.

If Acorns is not what you prefer, then download Robinhood and invest on your own.

Everything that I have covered in this roadmap to saving and investing is obtainable! Start today, save, invest, and improve those habits everyday. Make sure to send this blog post to a friend that could also benefit from reading. Thanks for supporting The Finance Starter and don’t forget to read what else I have written below!