6 Clever Ways for Women To Find More Money To Invest
More than half of women are not investing, according to a new survey from GOBankingRates. Findings from the survey of over 1,000 women reveal that a third of women say they do not have enough money to begin investing.
One of the biggest misconceptions about investing is that you need thousands of dollars to get started. Every woman, regardless of her budget, can begin establishing a habit of saving and putting investments in motion that grow her money over time. Follow these thoughtful approaches that will help you find and put aside money to invest with.
Start Saving Early
Carla Jackson, vice president and senior portfolio manager at First Bank, said to start saving early. This may not seem like a clever tip, but consider the impact of investing over time.
Jackson uses the example that you began saving at age 25. Each year you put $10,000 away in savings, including any matching contributions offered by your employer. By age 40, however, you need to stop saving for some reason. You would only be able to save $150,000 over the span of 15 years.
Meanwhile, Jackson said to consider you have a friend who starts saving at age 35. This friend saves the same $10,000 a year for the next 30 years. You both retire at age 65. Your friend saves $300,000, or $10,000 for 30 years.
At that point, all else equal, you’ll actually have more money than your friend, despite having put away only half as much.
“With time on your side and by starting early, you can invest less money, but have more to spend in retirement. Start with the amount that works for you whether it is $1,000 a year, or $5,000 a year — whatever works,” said Jackson.
Make It Automatic
It’s vitally important that you pay yourself first. Jackson said to start doing this automatically. If the company you work for offers a 401(k), sign up for it. If the 401(k) option isn’t available to you, open an IRA. Set aside a bit of money to be automatically taken from your paycheck.
Anecdotally, Jackson said that at her first job out of college she started putting $25 from her paycheck toward investing. It was all she could afford to do, especially after paying for necessities like food, bills and gas. But, it was enough to start significantly growing over the years.
“I had already put some money away, automatically, into savings, and didn’t even think twice about it — out of sight out of mind,” said Jackson.
Jackson also recommends automatically moving some money from your checking account into a savings account. Over time, this helps build up a little reserve for emergencies.
Purchase Low-Cost Index Funds
Lawrence M. Bell, MBA, CFP and private wealth advisor at Summit Financial, LLC, recommends women with limited means begin to save monthly into low-cost index funds. You may also consider investing in low-cost exchange-traded funds (EFTs). Bell said investing in the overall index long-term has proven to be a successful means to grow assets.
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Sign Up For a Company 401(k)
Bell said if you’re working, it’s highly recommended that you participate in your company’s 401(k). Contribute at least up to what the company is matching if they offer that.
“This will enable you to not only save, but also receive an extra contribution from your employer,” said Bell.
Start the 52-Week Money Challenge
What’s the 52-week money challenge? This is a clever program Jackson said some people are participating in to start saving at least something. It’s an incremental savings plan that helps you put aside money each week.
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“The concept is simple: you save $1 for each week of the year. For the first week, you put aside $1. In week two, you set aside $2, and in week three you set aside $3, and so on,” said Jackson.
By week 52, you’ll set aside $52.
Easy enough, right? The best part is how much you’ll have saved by the end of the year. Jackson said to check your account — there should be a total of $1,378 there!
Create a Financial Plan and Budget
Rather than view all the advice in this article as clever, consider it your financial bread and butter. Creating a financial plan and budgeting is critical to ensure you find more money to invest and consistently invest.
“Regardless of age or level of savings, it is never too soon to identify your goals and objectives and start putting yourself on a path to achieving them,” said Bell.
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