Finding Money to Invest in Your Budget

You may say that you want to climb Mt. Everest, but if you don’t spend the time learning mountaineering, get yourself in top physical condition, and start saving up a lot of money, you aren’t going to do it.  Likewise, you may say that you want to start investing, but unless you find the money to invest in your budget, it just isn’t going to happen.   In fact, setting yourself up to save and invest money regularly is probably far more important than the investments you choose.  If you invest regularly, starting from when you’re in your twenties, you’ll easily have $3 million when you retire if you invest and get average returns, and $10 Million if you invest and get great returns.  If you don’t set money aside to invest at all, you’ll have $0 million.
Now hopefully you’re reading this, having just started your first job with the human resource forms sitting on the couch beside you.  It is easiest to find money to invest before you’ve already grown your lifestyle into your full income, which happens no matter how much money you make.  If you’re used to living on $45,000 per year, it is easy to set aside $5000 per year from a $50,000 salary for investing.  It also takes about 20 years to get to financial independence through regular investing.
If you’ve been working for a while and already got that $5000 going into cable bills, cell phone plans, and timeshare maintenance fees, it’s a lot harder to find investment dollars because to free up cash you need to give things up.  Add that to the shorter time you have available, and the answer to when should I start investing quickly becomes, “Right now!”  So if you’re lucky enough to have some free cash flow, get into the habit of setting that money aside for investing.  If not, here are some places to look:
Upgrade your investment plan when you get a raise.   It is difficult to cut things from your budget, but it isn’t that difficult to start investing new income.  When you get a raise, keep half and put the other half into investments.  Remember that you really aren’t losing the money (you can always take it out and spend it later if you want).  You’re investing it so that it will generate income for you for the rest of your life.
Buy a used car and pay cash.  If you’re making payments on a car, you’re paying out interest, meaning you get to enjoy less of your money.  You’re also losing thousands to depreciation each year – enough to fund your IRA.  Instead, find a 4-6 year-old used car that you can buy for cash.  That money you’re saving on depreciation and interest will far outweigh any repair bills you may see.  You can actually become a millionaire just by buying used cars and investing the savings alone.
Ditch the lunches out.  Eating lunch out every day will easily cost you $40 per week, or $160 per month.  Cut that back to one meal out a week, with the rest of the meals at your desk or maybe with friends in the break room, and you’ll have $128 per month for investing.
Pay off your student loan, then divert the money to investing.  If you come out of college saddled with loans, you should keep living the college student lifestyle for a few years until you pay the loans off.  After that, put a portion of the money you were sending to loans into investing.  Do the same for other loans you pay off, always directing some of the cash flow you free up into investments.  This will increase your income, making it easier to save up for things like home down payments.
Skip the vending machines.   In case you haven’t noticed, vending machines are getting really pricey.  A bottle of soda can run you $1.50 or more, and that candy bar or bag of chips can set you back a dollar or more.  Not to mention the extra calories you’re packing on.  If you can ditch the vending machine habit by bringing in some of your own drinks or snacks (preferably things you make yourself, since that will be a lot cheaper than prepackaged things from the store), or even better, find ways to skip the snacking altogether, that’s maybe $1 per day you’ll be saving.  That may not sound like much, but it’s $40 per month, bringing you up to more than $160 per month for investing if you pair it with meals in.
Buy refillable water bottles.  OK, I don’t know who the guy was who was able to get people to think they need to buy water in little plastic containers for a dollar or more when they have a faucet providing water for pennies per gallon sitting right there, but that person was a genius.  Even if you buy water in bulk from the store, you’re still paying 25 cents per bottle, which is like a jillion percent too much.  Buy a refillable water container one time for $2-$10 from the store and just fill it up during the day.  As a bonus, you’ll have a nicer bottle to drink from than the flimsy plastic ones.  If you want, you can buy two and keep one in the refrigerator so that you have a nice, cool bottle waiting.  And no, the water you get from the sink is not less safe than that from a bottle – it wasn’t like people were dropping like flies before 1990 from water-borne diseases and chemicals.  If you don’t like the taste, buy a filter.  Even if you don’t drink that much water, you can easily save $50 per month, or $600 per year in water.  Plus, you won’t have all of those plastic bottles to throw away.
Downgrade your cell phone plan.  Let’s face it, many people think they need a cell phone plan with lots of data and features, but really it is just for entertainment.  Sure, it’s fun to watch TV shows when you’re standing in line, but isn’t it more important to reach financial independence and not need to worry about a lay-off when you’re 55?  Downgrade your smartphone plan and you might be able to save $30-$50 per month.  Go to a flip phone, and you can probably save $80 per month.
 Find cheaper hobbies.  Like playing golf?  Look into playing disc golf instead.  Go to the gym to work out?  Look at taking runs or bike rides around the neighborhood.  There are a lot of very inexpensive or even free things you can do.  Save $40 in green fees every couple of weeks, not to mention $10 in balls every month, and it starts to add up.
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Disclaimer: This blog is not meant to give financial planning or tax advice. It gives general information on investment strategy, picking stocks, and generally managing money to build wealth. It is not a solicitation to buy or sell stocks or any security. Financial planning advice should be sought from a certified financial planner, which the author is not. Tax advice should be sought from a CPA. All investments involve risk and the reader as urged to consider risks carefully and seek the advice of experts if needed before investing.


  1. Great tips. Also, spending less at the grocery store; a lot of people don’t track grocery spending as religiously as restaurant spending since they’re “saving money” by not eating out. But, all food costs have a tendency to creep up if not watched.

    • You’re right. You can save a lot in the grocery store. I tend to pick the store brand unless there is a big difference. In general, I find they’re the same (actually, a lot of store brands are made by the same factories that make the name brands). Also, you can save a lot of money by buying things with less processing. For example, we used to always buy whole chickens and cut them up rather than buying cut up chicken (we’ve gotten wealthier and lazier now, so we’re doing this less). Even cut-up chicken would be less than breaded, ready-to heat chicken. Picking vegetables that are in season also helps.

      Going from eating out every meal to even buying prepackaged meals in the grocery store, however, is still a good step in the right direction. I can get a pizza for four with drinks in a restaurant for about $20 with tip, a frozen pizza with a 2-liter for $4, or make my own pizza with tea for about $2.50.

      • So true! I’m not brand loyal at all, and that saves a ton. We too, buy whole chickens and cut them up before freezing, though it is a lot of work and I don’t always feel like doing it. Mr. MyCountDown makes a delicious homemade pizza with dough made from scratch and this saves a ton our “junk” food costs (we’re big Friday night pizza fans). These are great additional tips!

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