The Complete Guide to Saving Money While Investing
For most people, it’s important to keep saving money, even while you’re investing. After all, while your investments are a way for you to plan for your future and build your portfolio, you never know when you might need an emergency fund, or some savings tucked away.
When you’re trying to balance your income between expenses, savings, and investments, however, things can start to get difficult. That’s why it’s important to know some critical savings tips that will help you stay on top of your finances, even while you’re pursuing investment opportunities. Here’s what you need to know.
Start by paying yourself.
With every paycheck or direct deposit, it’s easy to start racking up the costs. While this may vary depending on your spending habits and monthly expenses, it’s often easy to push your saving money to the back of the priorities list. After all, when you’re done paying for groceries, utilities, and mortgage expenses, you still want enough money left over, right? But, in most cases, hitting a firm savings goal means finding the right balance. That’s why it’s important to pay yourself first.
Every time you get a paycheck, take a portion of that and immediately place it in your savings account or emergency fund. Otherwise, it’s harder to keep your monthly savings consistent if you leave all your money in your checking account. When you really want to hit a savings goal, the best way is to prioritize savings as much as you can.
Depending on your financial situation, it’s often a good idea to set up automatic bank account transfers. This is an easy way to consistently set aside a small amount of extra cash on each payday.
Plan for unexpected expenses.
Planning for an unplanned expense seems a bit oxymoronic. However, while you might not be able to plan for a specific dollar amount, you can save a general sum of money to give yourself a bit of a safety net in the event of any unplanned expenses, job loss, or financial hardship.
Often, when someone’s facing a financial crisis, the temptation is to forgo ongoing investments in favor of immediate funds. However, with an emergency fund, you don’t necessarily have to compromise your long-term financial stability to pay for medical bills, home repairs, and unexpected emergencies.
Many financial experts agree that your rainy-day fund should account for roughly three to six months of expenses. While you can certainly add extra money or less money, having an emergency fund is a great option to supplement retirement funds, savings, and investment accounts. Again, if you don’t want to spend a lot of time creating a separate account for your emergency fund, automatic transfers might be a good option for your needs. Since a string of unexpected events can impact your financial health, your saving money in an emergency account is a great way to protect yourself in the long run while you continue to build wealth.
Consider a side hustle.
At this point, the side hustle is officially a United States institution. Whether you’re working on getting your credit score to a good place or you’re using a financial planner to help you choose a high-yield savings account, a side hustle or part-time job can go a long way toward helping you meet your financial goals. Plus, as more U.S. industries continue to lift in-person restrictions and encourage business, this is one of the easiest ways to take the next step in your financial journey.
You can take whatever amount of money you earn from your side hustle, passive income opportunity, or part-time job and put it toward your retirement savings, high-yield savings, or another investment or financial product.
If a part-time job isn’t your style, you may want to consider selling things you no longer need. The first step is to look through your belongings, decide what’s worth selling, and list it online. For a simple way to sell clothing and accessories, you can consider popular resale sites. For furniture, decor, and other possessions, you might want to consider local resale groups.
Try to pay off your debts aggressively.
If you have credit card debt, a loan at your financial institution, or any other high-interest debt, it can make it that much harder to build an emergency savings fund and continue investing in your future. It can also limit how much money you put into your online banks and accounts. If you find that your existing debts eat into your general savings goals, you might want to consider prioritizing loan and credit card payments. In some cases, you may want to work with a financial advisor to review your credit report and see what debt you should prioritize. This can help you eliminate high-interest debt, which frees up more resources to dedicate to your investments.
Understand your investment costs.
Every mutual fund, CD, and broker service has its own costs that you need to understand. Whether you’re talking about a retirement savings account or your supplemental investments, it’s a good idea to weigh the costs against your returns; this can help you make better decisions that benefit your overall financial well-being.
For instance, say you’re on a workplace retirement savings plan. If your employer-based plan is too expensive, you may want to consider contributing to the match and then seeking external investment opportunities. As long as you stick within your general investment plan, this can improve your financial fitness.
Are you ready to master saving money while investing?
At Goodegg, we have experience working with investors at all skill levels, and we always think it’s best when you take the time to set and review your financial goals truly. So, whether you need to reconsider your subscriptions and gym membership or you need to diversify your investments to better align with your long-term plans, prioritizing your savings growth and overall financial health is a smart choice. With the right investment decisions, you have the potential to hit your financial milestones that much faster.
If you’re looking for the right partnership, you should consider joining the Goodegg Investor’s Club. With our industry expertise, we give you insight into savings tips, investment strategies, and growth tools that can help you succeed.
About the Author:
Annie Dickerson and her partner Julie Lam are founders of Goodegg Investments — an award-winning real estate private equity firm — and creators of the Real Estate Accelerator Mentorship Program. They are authors of the book Investing For Good and hosts of the popular Life & Money Show podcast: https://goodegginvestments.com/
Disclaimer: The views and opinions expressed in this blog post are provided for informational purposes only, and should not be construed as an offer to buy or sell any securities or to make or consider any investment or course of action.