It may be the twentieth century, but there are still many who are living from paycheck to paycheck, research shows. It is not always easy to land a high-paying job or own a big business after graduating from high school or even college, but you have to start somewhere as they say.
The good news is that there are ways of making your money work for you without working harder. All you have to do is be smart about putting your money and avoiding any unnecessary expenses. Here are some tips from financial experts on how you can stretch and grow your hard-earned paycheck:
Choose a Bank and Start Saving
One of the most common mistakes people make is spending more than what they are making. If you just started at your first job, avoid impulse shopping and expenses and focus on saving money. Look for the best savings account incentives and offers from any bank and save at least 20% of your pay every month. Think of this as a payment to yourself and spend only what is left after depositing your savings account.
A typical savings account earns 0.05% Annual Percentage Yield (APY). This means the amount you save will be earning this interest on an annual basis, which may seem like a small amount. However, the more money you save, the more interest you will earn through the years. You may be surprised how easy it is to save and that anyone can do it as long as they have the discipline to do so.
Contrary to popular belief, you do not need to have millions to start investing. There are investments that you can start for as low as $100. Of course, your earnings would depend on how much you invest and the type of investment you have made. There are many investment types around, which is why you need to do some research first before putting your money in.
Make sure to start with a low-risk investment first and then see how it goes for a few years. Keep in mind that low to medium risk investments are long term, which means you may only make money out of it in a span of at least three to five years the earliest. Make sure not to invest money you will need for day to day expenses like food, shelter, and medication. Investment money should be something that you have on the side.
How many credit cards do you currently have? How about loans and mortgage? According to studies, Americans have an average of $90,000 in debt. It is quite rare to find someone who does not have any form of debt, whether it is a credit card, home loan, or car loan.
However, debts are only bad when they remain unpaid in full for months or years. You are more likely to pay half the amount of your capital or much worse, more than the amount you owe in interests and fees. This can easily put a dent in your financial standing and affect your credit rating. If you find yourself putting most of your paycheck onto monthly payments to credit card companies, it is time to let go of the other cards and keep just one. Choose one that has the lowest interest rate and no annual fees.
It takes conscious effort and discipline to make your money work for you, and not the other way around. Many have to spend long hours at work and work two or three jobs to make ends meet. If you find yourself having to do these without improving your quality of life, it is time to make a change.