The words “investing” and “budget” don’t often go together.
After all, if you are living on a budget and have limited funds available, the idea of being able to invest is likely something that is far from your mind. Living to a strict budget tends to focus on the right now and getting to the end of the month with a surplus leftover– there’s not a lot of time or space to think about the future.
However, there is an argument to suggest that there should be time and space for thinking about investing. Investments are not necessarily for the future; investments can be used to increase your revenue in the present day, and add a little more leniency to that budget of yours. Read on to find out how it’s not only possible to invest while living on a budget, but why it might actually be preferable…
Investments aren’t lost money
One of the major reasons many people feel they shouldn’t invest is because the money is “lost”. When we buy stocks, shares, or property, it seems like we’re taking a huge gamble– that money is no longer cash, so it can’t be used to help us through a financial crisis if we happen to experience such an event.
However, it’s important to remember that all investment money is recoupable, even money “locked away” in high-yield savings accounts for a fixed term. Yes, if you were to withdraw money from that account, you’d lose your interest – but you’d still have access to it. The same applies to property, stocks, and shares: you can always liquidate them if your financial circumstances change and you need ready access to cash. Investment isn’t lost money; it’s just money in a slightly different form.
Investments can earn you extra money for your budget
To achieve this, you have to think outside the box. The most obvious investment that has the potential to earn you money is property investment; if you buy a house, you can then lease it out, and collect enough in rent to cover the mortgage payments and have a little extra cash to ease the constraints of your budget.
If your immediate response to this idea is that you can’t afford to buy property, then again, it’s worth thinking outside the box. You might not be able to buy conventional properties, but what about cheaper properties, or properties being sold at a reduced price? Mobile homes can be a great investment if you’ve less money to spend, while learning how to find foreclosed and back owned properties can give you access to far lower-cost properties that might be more suited to your budget. You don’t have to invest in standard properties from the standard open market, so it’s well worth exploring other areas.
The need for an emergency fund
No proper budget is complete without an emergency fund, but ultimately, emergency funds aren’t a huge amount of use without an emergency. If, however, you take that cash — that would otherwise be sitting in your bank account waiting for a rainy day — and invest it, then you profit from the investment and still have your emergency cash set aside if needed.
As the above show, whatever your budget, investments might still be a sound financial choice for you and your family.