Beating Broke

Personal Finance from the Broke Perspective

Is It Really Possible to Invest When Broke?

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Investing is the best way to grow your wealth.  You can watch your money grow thanks to the compounding power of interest and dividends.  Especially if you start investing at a young age, say your teens or twenties, the power of time is on your side and you will increase your money much more rapidly than someone who begins investing in their 40s or 50s.  But if you’re just starting out or have debt, you may wonder, is it really possible to invest when broke?

Is It Really Possible to Invest When You're Broke?

The answer is, yes, it’s completely possible, though you may start investing with less money and in a less conventional way than other individuals who are investing.  Remember, every little bit helps!

Is It Really Possible to Invest When Broke?

Should you be investing at all if you have debt or if you don’t have an emergency fund or extra money each month?  Yes, you should, but feel free to invest in a smaller way.  Consider some of these options:

Take Advantage of a Company Match

The first place to start investing is in your company’s retirement plan.  This is an even smarter option if your company matches your contribution.

Is It Really Possible to Invest When You're Broke?
Photo by Allef Vinicius on Unsplash

When I started my first full-time job in my 20s, I was broke.  Flat out broke.  And my company automatically withdrew 8% of my paycheck every paycheck to put in the state retirement system.  There was nothing I could do to stop this investment, and trust me, I would have if I could have.

But, I’m so glad I couldn’t!  My company also matched the mandatory 8%, so I was investing 16% of my salary in my retirement.  When I left that job 10 years later, I walked away with an impressive start to my retirement, thanks in large part to the company match.

Use Acorns

Another easy way to invest is with an investing app.  Acorns is a microsaving app that takes the discipline out of investing.  You connect the app to your checking and credit card accounts.  Every time you make a purchase, Acorns rounds up, and the difference is invested.

You can also choose the option to boost your round ups by up to 10x.  So, if you make a purchase for $4.60, normally, 40 cents would be invested.  However, if you boost that amount by 10x, Acorns will invest $4.40 for you.

There are over three million people currently using this app, which is a great way to start investing even if you’re very young, say still in college, and don’t have a full-time job.

How to Learn More About Investing

Once you start investing, you may want to know more and invest more.  If you’d like to learn more about investing, there are several low-cost classes such as Udemy’s Investing in Stocks: The Complete Course.  This 11-hour course is currently $14.99.  If you’d like a free option, Morningstar offers a free investment class that includes 170 lessons!

Is It Really Possible to Invest When You're Broke?
Photo by Markus Spiske on Unsplash

Final Thoughts

The best time to invest is now, especially if you’re young.  But even if you’re not, it’s never too late to start investing.  Your future self will be so glad that you did!

Can You Earn a Stable Income by Only Freelancing?

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Many ambitious professionals are turning to freelancing in order to advance their career and make extra cash. In fact, studies suggest that freelancers will soon comprise a majority of the US workforce. What’s more, there are lots of well-known benefits to freelancing. After all, freelancers get to be their own boss, set their own schedule, and follow their passion. However, it’s understandable for prospective freelancers to wonder about the financial viability of such a job. At the end of the day, can you really make a good living just by freelancing?

How Much do Freelancers Make?

Unfortunately, the answer to this question depends on a number of factors including your experience level, skills, personal connections, and industry. However, it’s not unreasonable for freelance writers, for example, to make anywhere from $40,000-$60,000 per year. And while that’s hardly an opulent salary, it’s certainly enough to keep the creditors at bay. It’s important to remember though that these figures are just estimates. Certain freelancers with highly sophisticated knowledge of an industry or web-design practice should be able to attract high paying jobs. Indeed, B2B companies will pay top dollar for freelancers who are familiar with an esoteric product like a chamber slide or a high pressure homogenizer. Alternatively, new freelancers without much experience and with few connections could find it difficult just to make ends meet.

Financial Drawbacks of Freelancing

While on paper freelancers may seem to make more money than their traditional, nine-to-five counterparts, the reality is that there are certain financial considerations that only freelancers have to deal with. For one, most freelancers operate as independent contractors. As such, freelancers have to cover all costs associated with their business, such as office equipment and startup expenses. Furthermore, freelancers are unable to access certain benefits like group health insurance, which are usually provided by an employer. Instead, they typically have to pay a premium for such services.

Do Industry Trends Affect Freelancers?

The short answer is that the fluctuations of the stock market and changes within a given industry inordinately affect freelancers. Harsh though it may sound, business owners will typically cut ties with a freelancer before they think about laying off any full-time personnel. On the other hand, freelancers can make a killing in a market that’s riding high while large corporations have plenty of capital available.

Is Freelancing a Good Idea?

In the end, each professional is different. They have different goals, dreams, and preferences. So while it is possible to carve out a career working solely as a freelancer, it’s probably a wise idea to take on a few side projects first before you commit yourself fully to this path.