When we talk about saving money, we usually have large amounts in mind.
We do not believe that a hundred dollars can bring us any benefits and make any changes in our lives. Investing so little money into anything will bring such a tiny reward that the investment itself does not seem worth the trouble.
This is how we generally think, when somebody advises us to invest a bit of money into business. But in many cases, our thinking proves to be wrong.
There are many opportunities to make our money grow, no matter how small our initial investment might be.
Even if our investment does not bring us substantial rewards immediately, a penny saved every day will turn into the amount that will help us solve financial problems on some rainy day.
In this article, we are explaining how people can put money aside even without large initial capital.
By following one of the methods to save money discussed in the paragraphs below, you will soon understand that even a very small investment might soon bring you rewards and make you richer tomorrow than you are today.
1. Choose the right credit card
One of the simplest ways to get rewards from your money is to choose the right credit card.
There are certain cards that offer rewards on your purchases. They are appropriately called rewards credit cards and are divided into three categories. You can have rewards in the form of cashback, points, and travel.
If you choose a cashback rewards card, you receive back a certain percentage of the amount you spent every time you make a purchase. That is, you receive a monetary reward with your cash rewards credit card.
As a rule, you will receive between 0.5 percent and 2.0 percent of your purchases not including refunds as an annual rebate, which will usually be credited to your credit card account.
If you are interested in applying for the rewards credit cards and wondering which of them to choose, see the list here. The referred article elaborates on the merits and demerits of every rewards credit card that you can have in 2019, making your choice easier and more informative.
2. Robo advisors
It is also fashionable now to save money with robo-advisor. You do not need to be rich to start investing with robo-advisors that are much cheaper than human financial advisors.
Robo-advisors also do not require a large initial investment. Whereas human financial advisors ask people to invest several thousands of dollars, your initial investment with robo-advisors can be as small as $500.
Previous experience is also not needed with robo-advisors. Nor do you need to make informed investment decisions: the robo-advisor will make them for you.
Robo-advisor is a sophisticated platform that financially advises people with the help of cutting-edge technology. But even though robo-advisors use difficult algorithms, investing with them is easy.
All you need to do is to fill out your personal data, clarify your investment goals, and indicate your risk-tolerance.
When you have put in all this information, the robo-advisor will create your portfolio and will manage it for you. Indeed, from that moment on, you do not need to worry about your money, since, even without your active participation, the robo-advisor will enlarge your investments.
3. Save loose change
Another money-saving innovation gaining in popularity now is platforms that save your loose change for you every time you make a purchase and pay by your card.
With the change-saving platform, you do not need any initial investments at all. The biggest advantage of this saving method is that it will never hurt your finances.
Moreover, you will not ever even feel that you are putting money aside.
The most popular change-saving platforms are Acorns, Betterment, and Wealthfront. These platforms combine the robo-advisor model with an automated savings tool.
Called “round-ups,” these platforms automatically round up your payments on linked debit or credit cards.
The cents or pennies that were added to the amount you have just paid immediately become transferred to your computer-managed portfolio.
Suppose you have just bought a 3-count multipack of MAGNUM Chocolate Infinity bars for $3.99. The software will round this amount up to $4 and will invest $0.01 into your portfolio.
Or let us say you have used your card to pay $4.89 for two Cheeseburgers in McDonalds. The platform will round this amount up to $5, placing the difference in your portfolio. This operation will be repeated every time you use your card and pay an uneven amount of money for your goods.
All round-ups apps have low fees.
Usually, if you have less than $5,000 in your bank account, you will pay only $1 per month.
With a larger balance on your account, you will pay around 0.25 percent of the balance per year. Nor do you need to make large initial investments. Your initial investments with round-ups platforms can be as small as $5.
Of course, you may say that if the platform saves for you $0.01 or $0.25, you may live without it just as well. The tiny amount it saves for you will not make any difference in your budget, you may protest.
One cent or even twenty-five cents might indeed look like an insignificant amount of money. But think how many purchases you make during the day with your credit card. By the end of the month, all small savings added to your portfolio after every purchase might turn into a tangible amount of money, after all.
These are only several methods to save money without making large investments. Although money you put aside does not immediately add up to substantial amounts, you will still manage to build a more secure financial future with their help.