Written by Chris Davis, Western Region Workforce Specialist
Many people have money sitting in their savings account or stashed in their freezer. This can be a good thing until you compare it to how much you would earn by investing a part of it each month. If fear or a lack of know-how keeps you from making the step towards investing, here is some info to help you move forward.
What Will Your Needs be?
It’s important first to take a look at what your needs might be in upcoming years. Will you be buying a home? Helping your parents? Retiring from your place of work? Our expenses rarely decrease, and often increase over time. This is why taking a closer look at investing is important now. In general, the longer you save, the greater the return on money invested.
The Difference: $23,603 vs $6,000
A recent article on thebalance.com gives an example of what not investing $20 per month can cost you. Before interest, $20 per month adds up to $240 per year. Over 25 years, that is $6,000, which is a chunk of change, but investing it could produce a lot more. For example, if you were to invest the $240 at the end of every year for 25 years and earn 10% — a rough estimate of stock market investments over time — you would have $23,603 at the end.
What to do if You Don’t Have Money Saved
If you don’t have money saved, you may be wondering where you can find money to invest in your future. To begin saving, take a look at your spending and review your budget. Once you feel the excitement of growing your money, it will be easier to curb your spending. Take a look at things you don’t actually need or can spend less on if you get creative (thermos your coffee, purchase necessary clothing at thrift stores, find free events in your community vs spending at the movies, etc.).
Always keep some money in a regular savings account for the unexpected. It is also encouraging to put a some of your income every week to save for a mini vacation or other treats. Put the rest (plus bottle return money, gift money, rebates, etc.) in your investment account on a monthly basis.
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What do I do Next?
Every day that we wait to invest some of our income, we potentially lose out on future returns. Visit a bank or investment firm that you trust for a free consultation and get an idea of investment options that sound right for your future plans. This article from NerdWallet.com also provides information to help you get started on your investing path.