How to Find More Money to invest

How do you find more money to invest? For most people there are two solutions: you either grow your income or reduce your expenses. Aside from inheriting or coming into additional money or selling something, there really is no other way. One thing to keep in mind is that your income can grow only to the extent that you do. If you are not constantly improving yourself and your skills, you will find it difficult to increase your income.

Think big! You will be paid in direct proportion to the value you deliver to your company. Focus on opportunities and go beyond your job description. Making a higher income is often correlated to the level of commitment you have toward your job. If you love what you do, it is easier to be successful. If you have others around you who are successful, learn from them. Partner and mentor with someone wealthier and more successful than you. Leaders earn a heck of a lot more than followers.

You are bigger than your problems. Grow yourself above your problems. Grow beyond your internal ceiling. Get paid based on re­sults. Earn what you’re worth. Focus more on your net worth than your income. Even if you are not earning much now, manage money well. Until you show you can handle what you’ve got, you won’t get any more. Develop good money-management habits and save money to invest. Good money-management skills are more important than the amount of money you have.

There are people who always seem to live crisis to crisis. They tend to also live paycheck to paycheck. Do you see where I am going with this? They end up digging themselves a pretty deep hole. They find a way out, and then boom!—they are back in the hole. Crisis after crisis tends to drain all they’ve saved or, worse, max out the credit cards. Like a rat trapped on a wheel, the cycle continues. A new perspective and a new set of rules are required to break the cycle.

Send Money Off to Work for You

“Money is a great friend, once you send it off to work.” —Peter Lynch

Remember when you were a child and you wanted a new bike or a new toy and found out that you had to work and save money to pay for it? So you mowed lawns, delivered newspapers, or did other chores, earned the money, and bought those things you wanted. When you got older and earned more money, you became enlightened with the concept of saving money. Eventually, you may have taken your cash out of the piggy bank and opened an interest-bearing savings account. You quickly discovered that money could actually make money. This is the concept of money working for you instead of you working for your money.

You probably work hard for your money and, if you’re fortunate, have some left over after paying your expenses. You want to commit that extra money to earning a financial return but realize that savings accounts provide very little interest. You’re ready to expand your portfolio to in­clude investments that have the potential to provide greater returns.

The Rainy Day Fund

It is often said that when it rains, it pours. Disasters can happen in the blink of an eye. In times of crisis, you don’t want to be shaking pen­nies out of a piggy bank. Having a financial safety net in place can ensure that you’re protected when a financial emergency arises. One way to accomplish this is by set­ting up a cash reserve, a pool of readily available funds that can help you meet emergency or highly urgent short-term needs.

You should have at least three to six months’ worth of living expenses in your cash reserve. The actual amount, however, should be based on your particular circumstances. Do you have a mortgage? Do you have short-term and long-term disability protection? Are you making pay­ments on your child’s orthodontics? Are you making car payments? Other factors you need to consider include your job security, health, and income. The bottom line: Without an emergency fund, a period of crisis (e.g., unemployment, disability) could be financially devastating. If you haven’t established a cash reserve, or if the one you have is inadequate, you can take several steps to eliminate the shortfall:

  • Save money aggressively: If available, use payroll deduction at work; budget your savings as part of regular household expenses.
  • Reduce your discretionary spending (e.g., eating out, movies, Starbucks).
  • Use current or liquid assets (those that are cash or are convertible to cash within a year).
  • Use earnings from other investments (e.g., CDs, stocks, mutual funds).
  • Check out other resources (e.g., do you have a cash-value insur­ance policy that you can borrow from?).

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  1. Craig

    I am slowly doing what you are talking about and seeing where I can cut a little so I can save for about a 10 year period. Income isn’t going to be added any time soon and if anything expenses will increase. Nice to start though to at least take advantage and do things the right way.

  2. Infinion

    I don’t know that I can recommend borrowing from a cash value life insurance policy to boost your cash reserves. You have that policy because you thought someone would need it if you suddenly weren’t around any more. Unless you need to borrow from it to *save* your life, then leave it alone, if you just need it to get by a little better. If you have a cash life insurance policy, a better tactic, depending on age and other factors obviously, may be to cash it out completely, stick those funds in the bank, and buy good term life. You’ll get a lot more bang for your buck, and you’ll have some cash in the short term. Get a long enough term to ensure that when it expires, you’ll be able to self insure your own life, or at least have some assets to cover your final expenses.

    As for saving up for ‘stuff,’ we use what I like to call ‘savings streams’. I have several automatic pulls from my checking account into various savings accounts that are easy to set up at any online bank. These are small amounts, and I don’t really notice them coming from the checking account. However, over time, they tend to add up quickly. We have one set up that is always saving for a vacation. I’m redirecting several of my existing streams to pay off my car loan really really fast, and it’s working wonderfully. We’d like to have a new TV, so I set up another account and a new stream to it. In several months, we’ll have the cash to buy whatever TV we want, without borrowing or worrying about it. We also do the same things to furniture and other ‘expensive’ stuff. It’s work for us, but be forewarned that it makes tracking your checking account balance nearly impossible, so you have to be careful.

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