Military Family Investing

Saving & Investing with $200 a Month Available

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by

kingmarine
in

Congratulations on having $200/month to save and invest—it’s a big deal. Yes, I am being serious. I remember a time (not too long ago) when I finished each month in the red.

I created this series to give you ideas on how and where to save and invest your money as you build your financial empire. As this is the first article in the series, let’s take it from the top.

Reaching $200/month in investment funds. It’s tough to reach $200/month for investing. You will probably need to be debt-free and follow a tight budget.

Staying Debt-Free in Your 30s

Luckily, I have some articles to help you along this path. The Staying Debt-Free at Any Age series (20s, 30s, 40s, 50s, 60s, 70s) will help you achieve freedom from financial bondage.

Budgeting is the most fun of all the financial movements, at least for some people. I reviewed a simple budget in “What is Your Recession Budget?” I also cover my budget plan in “My Recession Investment Plan.”

Passive Income for additional support. Don’t get complacent as you start saving and investing $200/month. Your goal isn’t to save and invest $200/month for the rest of your life.

Design Your Own Book Covers

You will need to continue growing your wealth by creating passive income streams. You can use these income streams to invest additional funds in your financial future. For example, I made $130 in Amazon book royalties last month that I can put directly toward saving or investing.

Stock your emergency fund first. The first goal of saving is to build your Tier 1 emergency fund, which covers your minor emergencies. The Tier 1 emergency fund is your first $1,000.

The best place to keep your Tier 1 emergency fund is a High Yield Savings Account (HYSA). I use Discover for my HYSA, which currently pays 2.4% interest.

F.I.R.E. Financial Independence Remain Employed

It will take you five months to save $1,000 in your HYSA. This will also be an excellent time to grab a Discover debit card that gives you one percent cashback on purchases. This cashback goes directly into your HYSA.

I use my Discover debit card for my food budget and small bills like Netflix, Amazon Prime, and Ad-Free YouTube. This totals $1,700/month which gives me $17 in cash flow toward my HYSA—not bad. 

Keep building your emergency fund after five months. What I have learned over the years is to keep a budget for saving in your emergency fund. 

This means always setting aside money to build your emergency fund, even if you have met your savings goals. 

Don’t Gamble with Retirement 7

For example, let’s say you reach your Tier 1 emergency fund goal of $1,000; you still want to set aside $100/month to keep building your fund.

Something will always happen in your life, and we truly don’t want to tap into our emergency fund unless it’s urgent. Always setting aside cash flow for your emergency fund ensures you don’t dig yourself a hole.

After you reach $1,000 in your Tier 1 fund, you want to set aside $100/month to continue growing the money pot. Your Tier 2 fund should be at least $10,000, which covers significant expenses.

Run an Upscale Bed and Breakfast

Your money goals. After saving $100/month, you have another $100 to save and invest. You’ll need to review your financial freedom goals.

  1. Protection from going into debt (Tier 1 emergency fund)
  2. Protection from major emergencies (Tier 2 emergency fund)
  3. Protection from job loss (Tier 3 emergency fund)
  4. Building wealth slowly (investing for interest)
  5. Creating cash flow (investing for dividends)

Once you reach $1,000 in our HYSA, we move into step two as you continue to build your Tier 2 emergency fund. However, you can move to step four simultaneously with your remaining $100.

Investing for interest. Investing for interest is when you purchase debt in the form of bonds. The best options at this level are Series “I” Bonds because you can buy any quantity above $25.

I have written many articles on Series “I” bonds because it is a top investment choice for the average person. I recommend investing $50/month into Series “I” Bonds.

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Not only are you building wealth, but they can serve as your Tier 2 emergency fund because they are easy to liquidate after holding for one year.

Investing for dividends. Finally, you want to create cash flow via dividends and investing for income. You can also go the dividend growth investing route; however, you won’t see cash flow for 20-30 years.

I want my cash flow now, so I became an income investor. You have many choices as an income investor; my From Dirt to Dividends Series breaks down each option.

  1. From Dirt to Dividends 1: Gardening & Preferred Shares
  2. From Dirt to Dividends 2: Livestock & Closed-End Funds
  3. From Dirt to Dividends 3: Insects & Business Development Companies
  4. From Dirt to Dividends 4: Community Farming & Mortgage REITs
  5. From Dirt to Dividends 5: Composting & Dividend ETFs
  6. From Dirt to Dividends 6: Vermiculture & High-Yield Blue-Chip Companies

For your remaining $50/month, I recommend buying 2-3 preferred shares. I like preferred shares because their par value is $25, so you can always buy two.

Free Food: Turn Your Garden into a Business

However, if you shop around, you might be able to find some good deals under $20, giving you three preferred shares at a higher yield. To me, it is a fun game to get the best deals at the highest yields.

Here is a quick recap. You used your first five months to build your $1,000 Tier 1 emergency fund. Next, you continued to save $100/month into your HYSA.

You spent $50/month on Series “I” bonds and the remaining $50/month on preferred shares. It is important to mention that your preferred shares will begin to pay you quickly.

Become CEO of Yourself 3

You can reinvest the dividends payments into your Series “I” bonds. You’ll be surprised how quickly the extra dividend income will grow your Series “I” bonds.

Conclusion. I bought two preferred shares (CSSE.P) precisely two years ago. I spent $41 total, and they have already paid me back $10. They pay me $0.41 a month in dividends.

I can use that income to increase my Series “I” Bond purchase to $50.41 monthly. Now, imagine I bought two of these preferred every month.

Retirement Plus: Use Bonds to Supplement Your Retirement

My Series “I” bond purchase would go something like $50.41, $50.82, $51.23, etc. That is the power of growing your wealth by investing. 

Yes, building wealth slowly doesn’t seem fun; however, it is pretty exciting once you get the hang of it. You will constantly find new ways to squeeze a couple more dollars to save.

Congratulations again on becoming a saver and investor; most people never reach this stage. It takes a great disciple to save $1,000, let alone invest in preferred shares and Series “I” Bonds.

My next article will cover how to save and invest $500/month. Keep your dream alive until next time. Good Luck!

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Disclosure: I am not a financial advisor or money manager, and any knowledge is given as guidance and not direct actionable investment advice. I am an Amazon Affiliate. Please research any investment vehicles that are being considered. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it.  I have no business relationship with any company whose stock is mentioned in this article. All Right Reserved Military Family Investing

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