Learn To Invest Money - Set Yourself A Budget To Build Up An Investment Fund

By James C Kerr

Before you learn to invest money, you need to have money right? Unfortunately this is the stumbling block for many would be investors. The excuse is often made by people that they can not afford to invest money. The simple solution is to set yourself a budget.

The first step in setting yourself a budget is to spend one month making a log or diary of everything you spend money on, no matter how little an item is. Doing so can be a very powerful tool to highlight to you exactly where your money goes to each month Once you know this you can attempt to focus any unnecessary spending can be turned into savings, which in turn can be invested.

Categorise your spending

Once you have a full log of all of your monthly spending, simply categorize every item into categories such as: rent/mortgage, food, transport, clothing, going out etc. Once you have done this you can simply add up the totals for each category. Obviously if 80% of your income is spent on going out you should probably consider cutting back, not only for the sake of your bank balance, but also your liver!

Once you have your spending categorised, try to identify areas where you feel your current expenditure is excessive. In such cases, try to forecast what you can sensibly reduce this too. Then simply the following month allocate yourself a weekly budget for each category, according to your newly forecasted budget. Do everything in your power to stick within these limits.

Invest the savings

There is an old saying about pay cheques that says, spend a third, save a third and invest a third. Try to do this with the money saved from your budgeting. Start simply by investing your savings in a high interest deposit account as initially you should build up an emergency fund which you can access in a hurry. Once you have done this you can consider more complex, higher risk investments such as foreign currency trading or stock investments.

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