You only need one powerful habit to become financially free … and that powerful habit is investing. BUT WAIT! Investing doesn’t start with stocks, bonds, and real estate — it begins with investing in yourself and changing your financial habits.
Keep reading to find out what you can start investing in today to set in motion your journey to financial freedom.
- Related: 7 Frugal Habits of the Super Rich
1. Invest Your Time Towards Making a Budget
The most important step in gaining financial independence is to create a budget. In the simplest terms, a budget is a spending plan based on how much you earn. In other words, it’s a plan to spend your money correctly.
This is the most important step because if you can spend less than you earn, your money will grow. When you can consistenctly spend less than you earn, there is nothing stopping you from becoming financially free. A budget is the key to spending less than you earn.
Empower Makes Budgeting Easy
There’s a reason the Empower app is called “budgeting for people who hate budgeting!” — it makes budgeting easy for everyone, including those who dread it. Empower includes budget suggestions, as well as fully customizable budgeting options and categories, such as major expenses, coffee, fashion, rideshare, and beauty. Best of all — Empower lets you set up spending limits in each category and will send you alerts when you’re close to going over budget.
Try the Empower app today. Because a simple budget is what you need to keep your income over your expenses.
Bonus Tip #1: Cut Your Expenses
Before we continue discussing your investment strategy, it’s important we address expenses. If your expenses are so high that you are stuck living paycheck to paycheck, then it is necessary to go through your expenses and make some cuts.
Take a good hard look at your banking and credit card statements. Look for expenses you can live without. (Do you really need to subscribe to four different streaming services?) Eliminate the expenses that aren’t making your life better, and save your money!
Use This App to Trim Your Expenses
Don’t want to spend free time combing through bank and credit card statements? That’s where Trim comes in.
The Trim app not only finds and cancels your unused subscriptions, but they also have a team of negotiators who can lower your internet, cable, phone, and medical bills.
Simply send Trim your information, and their team will get to work lowering your expenses. If none of your expenses can be lowered, no worries, they won’t charge you a dime. But if they are able to lower a few of your bills, you keep 66% of your savings the first year and 100% of your savings every year after that.
Trim saved their users $1M last month alone. Why not try the Trim app, and see if their team can save you some money. You have nothing to lose… literally.
Bonus Tip #2: Only Spend Free Money on Yourself
Okay, one more money-saving tip before we get back to how to invest your saved money.
There are times when you need to treat yo’self. But when you are aiming for financial freedom, you need to spend less than you earn. The trick is to go about treating yourself in the right way. You’ve got to only spend “free” money on yourself. You can get free money with cash back apps like the ones below.
- Ibotta – Ibotta gives you cash back when you shop online or in store for everyday items, such as groceries and pet supplies. Download the free Ibotta app (+ grab a $20 welcome bonus), snap a pic of your receipt, and get free cash.
- Wikibuy – Wikibuy is a saver browser extension that automatically applies coupons at checkout. It also allows users to earn loyalty rewards, which can be redeemed for gift cards to popular retailers. Get the free Wikibuy browser extension to start earning rewards today.
- Dosh – Dosh allows users to earn money while shopping and dining out by linking your cards to the app. Download the free Dosh app (+ grab a $1 welcome bonus) and get some free money.
- CoinOut – CoinOut, as seen on Shark Tank, makes it easy to get cash back. All you have to do is take photos of your receipts to earn a randomized reward. Download the free Coin Out app to make some easy cash.
- Rakuten – Rakuten is a browser extension that lets you earn cash back at more than 2,500 stores online. Download the free Rakuten browser extension (+grab a $10 welcome bonus) and start making easy money.
2. Invest a Percentage of Your Income towards Financial Goals
Remember Tip #1? It was to invest in a budget so that you spend less than you earn. This is the most important step!
What’s next? Learn to pay yourself first. The next time you get a paycheck, the first thing you need to do is set aside 10%. This becomes your investment money, and you need to live on the remaining 90%. Can you live on 90% of your income. Try.
Remember, the bigger the percentage you save to invest, the faster you will achieve financial freedom.
3. Invest 10% in Savings
Your 1st financial investment is to build your savings. Invest 10% of each paycheck into your savings account every month. Your goal is to save up for three months’ worth of expenses. You never know when something is going to happen. If you don’t have adequate savings, then you will likely go into debt trying to cover an unexpected expense.
Build Your Savings Faster with Empower
With Empower you will reach your savings goal of three months’ worth of expenses even faster. Not only does Empower allow you to set up automatic savings transfers each week with their AutoSave feature, but it also has the smarts to analyze your income and expenses and will only “AutoSave” when you can afford to do so. Plus, Empower offers an interest checking account with a high 0.25% APY* (that’s 4X the national average!), which means your money will grow faster than it would with a traditional bank account.
*Banking services for new accounts provided by nbkc bank, Member FDIC. 0.25% Annual Percentage Yield (APY) may change at any time. APY as of July 30, 2020. Empower charges an auto-recurring subscription fee of $8 for access to the full suite of money management features offered on the platform after your first 30 days.
“Help me stop being poor!”
Here are the facts. The *only* way to save money is to spend less than you earn. There’s no way around it.
So what does this mean for you? It means you need to either decrease your expenses or increase your income.
We want to help you do both. Join our 6-day Savings-Account Accelerator Workshop. We’ll send you expense-lowering tools and techniques (and even a few tips on how to boost your income). These frugal-living hacks will help you accomplish the cardinal rule of personal finance: keep your income over your expenses.
When you can spend less than you earn, your money will grow. You will build your savings, pay down debt, and save for retirement.
Join our free 6-day Savings-Account Accelerator Workshop, and start growing your wealth today.
4. Invest 10% towards Your Debt
Your savings is built? Great. What do you do with your 10% investment fund now? How about pay off your debt? You will never be financially free if you are in debt. Make it a priority to pay more than the minimum payment each month. Invest 10% of your income + the minimum debt payments towards paying down your debt. This will have you paying down debt fast! But make sure you lower your interest rates first before paying down debt (see below).
Lower Your Debt Interest Rate with a Credit Land Balance Transfer Card
You don’t have to keep paying ridiculously high interest rates. Balance Transfer Credit Cards take all of your credit card debt, and put it onto one card. Why would you do this? Because balance transfer credit cards offer lower interest rates, sometimes down to 0% APR for 12-18 months (your rates will depend on your credit score). Can you imagine 0% interest for an entire year? What an opportunity to get ahead!
Visit Credit Land Balance Transfer to see which credit card is perfect for you. I.e. the card offering the lowest interest rate 😉
5. Invest 10% in Growing Your Wealth
You made a plan to spend less than you earned. That allowed you to put money in the bank and become debt free. Now what? Keep investing. Your new job is to take 10% of every paycheck, and make that money grow. Essentially, you want to buy things that will make your money grow, such as investing in real estate, stocks, or a small business. Eventually your money will grow so much that your investments can support your lifestyle. You will be able to quit your job, and you will officially be financially free.
Invest in Your Financial Education
The more you understand about money, the easier it is to grow your wealth. That’s why it’s important to invest in your financial education.
Don’t know much of anything about money? Read Rich Dad Poor Dad! by Robert T. Kiyosaki to learn real-life investing tips. Get it today. There is no reason to wait to read this enlightening book.
Fast-Track Your Investing
Investing helps you grow your money faster. So if you want to start investing now immediately, you can do so with very little money. Check out the Acorns app. It helps beginners to easily start investing in stocks using only pennies. The app takes your spare change from everyday purchases and invests your spare change in stocks. It’s a great way to learn and fast-track growing your wealth.
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Save More Money! Read these next…
- 42 Hacks to Live Frugally on One Income
- 7 Habits of Women Who Always Have Money
- 9 Things to Stop Buying to Save Money Fast
*Wikibuy compensates us when you sign up for Wikibuy using the links we provided*
No Money in the Bank?
If you struggle to save money, it’s because you don’t know how to do it. Start growing your wealth every month with our 6-Day Free Workshop.
Michelle Salater is a freelance finance writer with a passion for personal finance education. When she’s not in front of her computer, she’s reading biographies and exploring remote areas of the world. She also freelances for Wooster Media Group LLC.