Nearly everyone who was ever given a piggybank has at least a vague understanding of the concept of saving money. But in the quest to find creative ways to save money, one method is sometimes overlooked: investing. What’s the difference between saving and investing? Saving is setting money aside for a future transaction you’ve been wanting to make or using that amount for emergencies. On the other hand, investing is buying stocks, bonds, and other financial instruments with the intention of seeing the money you invested make more money for you. Semantics aside, we can agree that the best way to save money is to grow money — and that’s done through investing!
If one of your Bold Goals resides in the Finances Pillar, then the desire to grow your money is probably strong. So here are some suggestions!
Declutter, Sell Stuff and Open a Money Market Account (MMA)
It’s time to clean up your closet and declutter—and make money out of your stuff you don’t actually use anymore. Sell them online through Craigslist, Facebook Marketplaces, or eBay. Or, you can lay them out in the yard as you extend invitations to your neighbors or passing onlookers to check out what’s out on the block. Make it an enjoyable activity for yourself and your potential buyers. Go all out on the themes. Decorate, bake goodies, or offer ‘yard sale coupons’. Just be creative and have fun. Then, with the money you’ve earned from your sales, set up a money market account, and deposit your profits there.
A money market account or MMA gives you the best of both worlds of a savings account and a checking account. It’s both similar to yet different from a regular savings account. Just like with a savings account, you can deposit your funds and expect them to grow according to a set interest in an MMA. However, an MMA gives you more accessibility to your money because you can use debit cards and ATM as well as write checks for withdrawals — compared to a regular savings account, which usually gives you just ATM access. Having an MMA is great for those who have developed a habit of limiting their access to their savings. In a nutshell, you get to save and grow money in your account while having the ease of access when you need to withdraw from it. (Just remember to check if your bank offers MMA.)
By making these tasks like decluttering, selling and saving, a monthly habit, you not only make money and grow money via MMA from selling your old or ‘pre-loved’ stuff, but you also maintain a clean and tidy closet and avoid the space-wasting habit of hoarding. (It’s true what they say: “One man’s garbage is another man’s treasure.”)
Follow the 10-10-80 Budget Rule
Aside from following the 10-10-80 budget rule i.e., setting aside 10% for your savings, 10% for charity/investments, and 80% to your necessities, you can try dividing your 10% savings to two or four categories, then put them in two or four labeled mason jars. For example, you can label your categories as “Future” and “Vacation”; then, you can put half of your total savings into one jar and then half into the other. Play with the ideas for your categories. Then split your savings equally and religiously (yes, religiously without excuse!) into the jars and close the lids immediately! Then place the jars where you get can easily see them each day. That way, you’ll feel encouraged to continue as you save up. So you won’t be tempted to spend them, regularly deposit the contents of your jars—after jotting down how much you’ve saved for each category in a Certificate of Deposit every trimester.
A Certificate of Deposit is a timed deposit account. True, putting your money in a regular savings account is somewhat similar to depositing your cash in a CD. However, unlike with a regular savings account, you cannot withdraw any amount from your CD for a certain and an agreed-upon period or term. Thus, a CD doesn’t offer much flexibility for you to withdraw funds just at any time or frequently—because when you do, you can face a pretty big penalty. Plus, a CD offers a higher interest rate than you can receive with an MMA or a regular savings account.
When the term of your CD has reached its end, and that CD has reached its maturity, you can get your initial deposit back along with all the interest it earned over the set period. Thus, a CD is an excellent saving option for those who often find themselves tempted and falling into the temptation of spending the money they’ve already supposedly set aside for savings. It can “force” you to not touch your savings and remain committed and consistent in depositing and “caring” for your savings as it earns interest! (Just remember to check if your bank offers CDs.)
Use an App to Invest in Real Estate
It’s relatively easier to help yourself save up nowadays compared to a decade or two ago. With the technology available to us, we can balance our checkbooks, develop our budgets, and even save money with the ease of use of our smartphones. So, now, one of the creative ways to save money is to use an app! And you can use an app to invest in real estate! Yup, it’s that easy.
Contrary to the publicly-embraced perception that you need to buy a home to get into the real estate market, you don’t. You can invest in real estate long-term and for cash flow. Sure, you can get into it for the appreciation—that is, the increase in a house’s value over time. But it’s a fact that smart investors invest in real estate for cash flow — that is, the money you get from rental properties each month after all the expenses have been paid for. And since rents increase with inflation, cash flow will also go up. It’s a win-win situation for real estate investors. So, try setting aside at least 5% of your monthly salary and investing that in real estate. Save up and build your wealth at the same time. So, to get you started, check out apps like BiggerPockets, Fundrise, and Property Fixer.
Grab a Friend and Invest in a Mutual Fund
Cut out unnecessary monthly expenses and drop that money into a mutual fund. A mutual fund is a kind of financial tool that is made up of a pool of money gathered or collected from various investors to invest in securities like bonds and stocks. By investing in a mutual fund, you can have access to professionally managed, diversified portfolios at a low price! Some mutual fund providers have no account minimum, while some require a minimum amount from you to open an account and start investing. Nevertheless, you just need to be single-minded when investing in mutual funds: grow your savings by investing in the best type of mutual fund out there.
But wait! Truthfully, another best way to save money is to save money with a friend who also wants to save up. So why not grab a friend to go into investing in mutual funds? In doing so, you both can research the best ways and best offers there are available. Together, you can have fun building your portfolio (and rebalancing it once a year); encouraging each other to be accountable and to stick to the plans and continue saving and investing — and, of course, looking out for each other’s portfolios.
So, don’t make the mistake of spending all your money on designer coffee. Instead of shelling out green stuff on calories (that you may, in fact, regret getting later), choose to use that money to save up and grow your wealth through mutual funds!
On Creative Ways to Save Money: First, Remember Your “Why”
Saving money is part of living a bold life, and offers many advantages. One of the main reasons why people find it difficult to save up — aside from not having a well-thought-out financial plan — is that they don’t know their “Why”. And, at the end of it all, you must know and take hold of your “Why” in saving money. Whether your reason is turning over a new leaf, saving up to pay off all your debts, or responsibly preparing for a financial rainy day, you will be able hold yourself to your commitment of saving money when you come back to your “why” — yes, even when the temptation to go on a spontaneous buying spree pops out.
Now is the time to take a bold step toward practicing good financial stewardship. And what’s better and more enjoyable than embracing creative ways to save money while, literally at the same time, grow your wealth in the process!