Happy New Year! I have seen and heard so many New Year resolutions around money! People want to save, invest, make, and sell more. It’s all very exciting and I hope everyone hits their goals. I have a little trick that’ll help you in the save and invest department. In this post I am going to share my very satisfying way to save money.
What You’ll Need
To participate in this hack you’ll need a checking account and a discount brokerage account. The accounts will need to be linked, meaning you can send money from checking to the brokerage account. Lastly, you’ll need your discount brokerage account’s app on your phone. My checking account is currently linked to my TD Ameritrade Brokerage account.
I love using TD Ameritrade. However, I am not thrilled that they don’t offer stock slices (being able to buy fractions of a share outside of dividend reinvestment program). They’ve been bought out by Schwab that has a limited stock slice program so, hopefully that will be available to TD Ameritrade clients soon. I also recently opened up a Fidelity account and may transfer all my holdings there once I get used to and like their interface. Fidelity offers an excellent stock slice program and zero fee funds, like FZROX. Our entire HSA account is invested in FZROX.
The Very Satisfying Way to Save Money
So, here’s my trick. When I’m about to spend money, if I decide not to buy something or happen to spend a little less, I whip out my phone and send my “savings” to my brokerage account. For example, I was out shopping with a friend and I found a blouse I really liked. It was on sale and my friend was encouraging me to buy it. Why not? As I was walking up to the register, I had a change of heart. I put the blouse back. My friend was confused – why not just get it? I explained that I did have a similar blouse at home and I wasn’t in need of a new blouse. Plus, this gave me an excuse to send over $25 to my brokerage account. My friend paid for her purchases while I sent off a little win to my brokerage account.
Over a week or two how many other opportunities are there?
Another example; going to the nail salon. I don’t go often. It feels really indulgent to get my nails done at a salon – plus its super expensive. I decided to skip the manicure and get a pedicure, only. Another $15 sent to my brokerage account.
I was out to dinner with a few friends. When everyone started ordering their second round of drinks, I stayed with water and sent $10 to my brokerage account.
The next day, I was looking up a book that was recommended to me and was about to buy it on Amazon. Before hitting the checkout button, I remembered to check for that book at the library. Bingo! It was available and I checked it out for free. I saved another $15 and slid that money to my brokerage account.
Skip the Dunkin or Starbucks? Get that phone out and send your account some money!
Is it worth it?
Over the course of 2 weeks, I was able to send almost an additional $70 to my brokerage account. Sure, $15 doesn’t seem like a lot but if you consistently do this trick, you can end up saving hundreds or even thousands. I tend to be careful about buying things because I live in a smaller home and we just don’t have lots of closet, storage or space in general. I have to be intentional with what I buy because of this.
The key is to send the money over in the moment
What I found difficult to do is “deprive” myself of buying something without getting something in return. This little trick of sending the money I saved over to my brokerage account makes it feel like a reward. It sort of feels like, “hey I was “good”, here’s what I have to show for it.” Instead of feeling deprived, I feel a little more empowered; a little more confident.
After the money is sent over to your brokerage account, make sure that money actually gets invested; buy a share of a company you love like Disney or an ETF like IVV or VNQ. Make sure that money doesn’t just sit un-invested in your brokerage account.
Its Not a lot of Money…
Until it is. If you routinely skip an extra non-essential spending opportunity and send your savings over to your brokerage account it’ll add up to a handsome sum. Plus, that money will grow for you. Remember, time in the market is key to becoming rich. When I do this little trick I don’t feel deprived, I feel empowered. Like, yeah, I could have bought XYZ, but instead I’m going to buy myself a lovely pair of shares instead.
Consistently saving, $50 or $100 a month and investing it, year after year, you’re going to really see your money compound for you. Its not a lot of money until it is.
If you try this very satisfying way to save money, please let me know about it. Leave a comment about a spending opportunity you turned into an investing opportunity in the comments below.
Good luck to you!