Make Investing Part of Your Routine
In order to get money into your investing accounts, you need to make contributions. If you wait to invest until you have extra money, you’ll never add any money to your account. The key to making these contributions is to make them part of your monthly, weekly and even daily routine. Start thinking in an investing frame of mind. Here are some tips on how to make investing part of your routine.
Add investing to your state of mind.
Make it a part of your thinking each time you make a money decision. Think about giving up that $2 cup of coffee and putting the money in your savings account. For every purchase you make, compare the cost to the cost of not putting the money in your investment account. For example, you can go buy that new electronic gadget for $500, or you can put $500 in your investment account. Two years from now your gadget will be worthless and outdated, but your $500 investment could be worth over $600. If you forego just a few purchases like this every quarter or month, you can add a lot of money to your accounts. In fact, do this for a year and you will be earning more on the money you saved, than what you were spending initially. For example, forego 10 $100 purchases in a year, and you will have saved $1,000. Invest that and earn 10% and your earnings will be $100 per year, or the same as one purchase. Seeing your everyday purchases including dining out, impulse spending and even grocery shopping as competition to your investing account can change the way you spend and encourage you to save and invest much more than you otherwise would.
Find weekly or monthly investment programs.
You can find lots of programs from companies that allow you to invest small amounts of money each week in their stock or mutual funds without charging any transaction fees. Nearly every mutual fund company and many brokers have programs that fit into this category. Find one and commit to it. It will force you to invest often and it will help make investing a habit. A very good habit.
Take advantage of any employer programs.
If you have a 401K or other plan through your job, take advantage of it. Employers often match a portion of your contributions. This is the equivalent of getting free money. In addition, most of these plans are tax-deferred, which means you put the money in now and you don’t have to pay taxes on that money until you withdraw it from your account during retirement. Even if they don’t offer matching, make sure and make the maximum contribution to your plan. It may feel hard at first but you’ll adjust and learn to live on the remaining amount of take home pay. This will also make investing part of your routine, as it will be automatic.
Find new ways to save money.
Once you’ve changed your thinking about your spending and have started saving, the next step is to find ways to save more money. Since your income is usually fixed in the long run, the best way to get more money into your investment accounts is to find ways to save money. There are literally thousands of ways to save more money. Start with your largest expenses such as mortgage, car payment, insurance, utilities, food, and entertainment. Do your research and see which expenses can be reduced with simple refinancings or switching providers. You’ll also want to start lowering your smaller expenses. The best way to do this is to create a personal or family budget.
So, in conclusion, changing your state of mind about spending and making investing automatic and part of your routine is an important way to put you on the right investing path. Invest and invest often.
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