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How to Invest With a Tight Budget

Currently, I make a good income, but I have struggled with being financially strapped in the past. Therefore, I know what it feels like to live virtually paycheck to paycheck.

For lots of other people, though, living on a tight budget is a situation they may never escape from. And trying to find room in their budget to squeeze in one more thing, such as investing, can seem nearly impossible.

Perhaps you have thought about investing before but dismissed it for that very reason. But I’d like to share with you how to invest with a tight budget so you can build wealth for the future.

1. Quit Making Excuses

The first step to invest with a tight budget is to quit making excuses about why you can’t invest. Nearly everyone can find a way to trim their budget a little bit. Even if you are only able to save a few dollars each month it is still possible for you to invest.

For instance, if you decided to sock away $50 every month in 20 years you would have $12,000. Investing that same money each month could get you another $10,000 or more on top of your initial investment.

2. Create a Budget

Creating a budget would be a great next step toward investing for your retirement or other future goals. Gather your current bills and take a look at what you are really paying for. Compare your expenses and your income.

Even if your budget it tight you may be surprised to find items you spent money on that are not absolute necessities. If you really want to invest in the future, cut out the frivolous items and use that money to invest.

One example would be to make your lunch each morning and take it with you instead of going out every day. You would be amazed at how much money that can save you. Another idea is to stop drinking pop and use that money to invest instead.

3. Change Your Habits

Rather than keep bad spending habits, change them. You can’t keep spending in the same old way and expect to get different results. Now that you have created a budget you must stick to it and stop spending in ways you shouldn’t.

Don’t fall into the trap of competing with friends or relatives when it comes to possessions. If someone notices your frugality, explain that you are using the money to invest instead of spending it now.

4. Pay Off Debt

Paying off debt is another important step toward investing with a tight budget. The more money you can apply to high interest debt, like credit cards, the sooner you can get your finances on track.

As you pay down your debt you will find it much easier to stick to a budget. You may have a little more disposable income which allows you to increase how much you invest each month.

5. Use Windfalls Wisely

Another way you can invest with a tight budget is to use any cash windfalls in a wise way. Extra money such as tax refunds or work bonuses should be used to invest.

Rather than using this extra money for vacations or the purchase of luxury items you can deposit it into your investment account instead. You can easily invest through a robo-advisor because there are some that have no minimum deposit requirement.

6. Set Goals

Setting goals can help you invest with a tight budget. Knowing what you are investing for helps to keep you on track with household budgeting so you can afford to invest.

Without a goal it is easier to put off investing until the next month and then the next. Before you know it you are middle aged and haven’t saved a dime toward retirement or any other future goals.

Develop a clear idea of why you are investing and you will be more likely to stick to it.

7. Get Help if You Need it

Finally, if you are not sure how to invest or have questions, get some help. You can turn to information on the internet, a financial advisor, friend, or other source.

As you can see, it is possible to invest with a tight budget. Don’t wait. Start investing today so you can reach your goals for the future.

What changes will you make so you can invest with a tight budget?

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