One of the regrets I have about how I’ve handled money in my life? That I didn’t start investing earlier. I didn’t know how to invest small amounts of money. (Because small amounts were all I had!)
Wait, I take that back. When I was very young I worked at Starbucks. A portion of my paycheck went towards Starbucks stock which was matched by the company. I (stupidly) sold that stock after a few years and made around $1500 profit. While I did it to get out of debt as a single mom, I should have held on to it and kept adding to my investment account. Short-term thinking got me again, and that was one of my biggest money mistakes.
Once I started having children and became a stay-at-home-mom, with no income of my own (something that’s dangerous and that I will never do again), I had no way to invest because I had no money. That was dumb, dumb, dumb of me. But enough about that. When you know better, you do better!
Nowadays, things are thankfully very different.
Because of the internet and cell phone apps, it’s easy to save and invest small amounts of money.
You can begin with as little as $5. There are two apps I use to accomplish this: Digit and Stash.
Saving money with Digit
Digit works by taking small amounts of money out of your checking account and saving it for you. By observing your spending and deposit habits over time, it calculates how much you can safely set aside. It holds the money in an FDIC-insured savings account until you withdraw.
You can see a video about how it works here. It’s savings on auto-pilot!
Of course, you can do the same thing by setting up an automatic transfer from your checking account into your savings. Because you don’t think about it, you don’t miss the money, and you’re forced to live on what’s left. But I like Digit because it forces me to stretch a little, and as a result I end up saving more money each month.
Trust me, Digit starts off very small and conservative.
It’s not going to drain your account. Digit guarantees that if you incur an overdraft using the service, they’ll refund the fees. You have control – you can raise or lower the savings amounts (I raised mine because Digit started off so small!) Digit is totally free to use.
Digit communicates with you every day via text message. It tells you your checking account balance and how much it’s saved you.
Now that you’ve set that up, it’s time to pull out all the frugal tricks. Do a No Spend Challenge. Use up everything in your house before buying more. Quit going to stores (here’s a list of things to do instead of shop). Read all your favorite frugality books. Get my book, The Temporary Tightwad. Use your tax refund to start a home business. Save all the money you can, as fast as you can. Get some leverage.
Now that you’re saving some extra money, it’s time to invest it!
How to invest small amounts of money.
I use the Stash app for this. You can start investing with just $5. And they give you that $5 for free, just for signing up! There is no excuse not to be an investor anymore. It doesn’t take fancy knowledge. It just takes a bit of action!
You tell Stash how much money, how often, to transfer from your checking account into ETF funds. They charge $1 a month for accounts under $5,000, so you don’t have to worry about your ‘stash getting eaten up in fees either.
Stash makes it SO easy to invest. You get to pick from the investments you want, such as “Clean & Green,” “American Innovators” or “Globetrotter.” You can also choose NOT to invest in things that go counter to your values – for example, tobacco industries. The funds available on Stash are actually ETFs run by well-known investment firms (names like Vanguard and Charles Schwab).
Stash explains in plain English what you’re investing in and allows you to invest small amounts of money instead of having to wait until you have $1,000 or $2500 like a typical investment account. (The Stash blog has some great information about what ETFs are and what all the jargon means.)
One final thought about investing in the stock market. For those who believe it’s unsafe, I present this long-term view of its performance. Does that look risky to you? Investing is a long-term game. We’re talking decades, not days.
Technology is a tool like anything else. If we don’t let it be our master but rather use it for good, it can be a blessing. One of these blessings is knowing how we can save and invest small amounts of money with the click of a button!
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