Many quote the adage that “you have to spend money to make money” but that’s not necessarily true. Unless you really need the items you’re thinking about purchasing, saving your money can be a great way to make money too – especially if you place extra cash in a savings account or long term investment.
Avoid Credit Card Interest
In today’s society, buying is easy. Goods are sold everywhere. Impulse buying has become a common phrase and is one of the major reasons for high credit card debt among Americans. Before you make your next “impulse buy”, consider how much you will be paying for that item if you use a credit card. If your interest is ten percent and you have over $ 1,000 in debt, you will pay one hundred dollars per year on that debt.
When you avoid frivolous spending and credit card debt, you can begin to save money. Create a monthly budget to help you. Your budget should allow for at least ten percent of your earnings to go into a savings account each month.
Earn Savings Account Interest
A savings account is the first step to creating financial security. In case of an emergency, you should save enough money for three months living costs in your savings account. Once your emergency fund is established, it will earn interest until you need it.
Find Investment Opportunities
Savings accounts are a great place to put emergency funds, but additional nest egg savings should be placed elsewhere. If all of your money is in a savings account, inflation may lower the value over time. Look for long term investment options, such as stocks and bonds, to grow your nest egg. Investment earnings can help you pay for a house down payment, college education or your retirement.
To ensure your portfolio can help you meet your goals, you should consult a qualified financial advisor.