If you are struggling to save money to invest in the stock market then you just may need to change the way you spend money so that you actually save. Although what I am about to share is a kind of psychological trick you can use to get past your free-wheeling spending habits, it still requires discipline. That means you must commit to following through on this plan and not spending the money on other things.
To be sure, you really don’t need that much money to begin investing in the stock market. But you should only be investing money you will not be missing. So this is a method for managing your spending that changes how you allocate your money in relatively small expenses. You still need to pay your bills on time and you should definitely be accumulating an emergency savings account in case you need a quick infusion of cash.
Take a Look at Where You Are Spending Money on Entertainment
Entertainment includes “dining out”, not just movies, sporting events, games, etc. In fact, if you keep a daily spending diary you will quickly find that you are spending hundreds of dollars on dining out every week (assuming you actually dine out because of your work schedule).
But any form of entertainment that you regularly engage in presents an opportunity for you to save money without sacrificing the fun. Yes, I am serious. If you are spending money on theme parks, museums, fast food, movies, etc. you should be able to save money and still enjoy these little daily excursions. But first you have to document where you are spending your money.
Identify Opportunities for Savings on Daily or Weekly Entertainment
Any one-time expense is probably not a good opportunity for saving money (although don’t pass up any easy discounts). What you are looking for is a pattern in your daily or weekly spending where you are paying full price with cash, a credit card, checks, or your checking account debit card. These kinds of regular expenses usually include restaurants, bars, and local movies.
If you eat a cheap fast food lunch every day your opportunities for savings will be somewhat limited; what I mean is that you will have to look for fast food coupons because they don’t usually offer the kinds of savings I am going to show you. But if you eat at bistros and major restaurant chains you are probably spending 20-30% more money than you should be. And the same may be true of movie tickets, too.
How do you identify these opportunities? Look for discounted prepaid debit cards for these businesses. You may be able to find them at the businesses themselves. For example, restaurants sometimes offer a $10 gift card if you buy a $50 gift card (or a $5-for-$25 deal). But you may have to visit your local wholesale club (like BJs, Costco, or Sam’s) to find the $80-for-$100 prepaid debit cards.
Buy a Month’s Worth of Prepaid Debit Cards
This may seem like a large expense but you will thank yourself if you can make the effort without missing any vital payments. If you use a credit card to pay for the purchase pay it off as soon as possible because you do not want to pay interest on these debit cards.
Now, what you have to do next will be the hard part. For every dollar you saved from full price on menu and activities you need to set aside that much money. In other words, if you buy $500′ worth of prepaid debit cards for a $400, you have to put $100 aside where you will not spend it. So in a way you are still spending full price on meals and entertainment but now you are really saving money that can be used to start your investment plan.
And you don’t always have to have a wholesale club membership club. For example, you may find chances to buy Fandango cards online while saving money. Services like Fandango occasionally offer discounts in order to attract new online customers (just remember they are going to shower you with other offers).
There are some interesting blogs that explain the benefits of using prepaid debit cards for meals and other forms of entertainment. You can also learn how to manage other expenses with prepaid debit cards so this is not something you do just for meals and entertainment.
You Can Also Save Money on Holidays and Special Occasions
Next Mother’s Day you can save money with prepaid debit cards if you plan ahead, and I have just shown you how to do that. You can do this for birthdays, anniversaries, and other occasional celebrations that you would normally pay full price for without thinking.
Once you fall into the habit of arranging your discounts in advance you will be able to adjust your budget accordingly. I mean you should literally add a line item (or two or three if necessary) to your monthly expense planning for buying prepaid debit cards. These cards take the place of your daily or weekly full-price dining and entertaining.
Just remember that your prepaid debit cards will eventually expire. You have to spend the money, usually within a year, sometimes within six months. So you want to organize them and stay on top of which ones have money on them. Many of these debit cards are loadable, which means you can put more money on them, although you may not get the discounts. Although it is wasteful and environmentally unfriendly, you will want to buy new cards at a discount rather than simply reload them.
Ask the businesses that issue these cards if they will allow you to reload at a discount. Many may say “no” but it doesn’t hurt to ask; and, who knows? Maybe you will find a consumer-friendly business that gives a discount. The debit cards may not always be available in the stores, so it’s worth looking into.