How to save money is one of the most common areas of concern for beginner traders: how can you save enough money to open a trading account? How can you save enough to feel like you're not 'wasting' your hard-earned income on trading?
But there's a solution to these anxieties: the idea that you need a lot of capital to begin trading is a myth; the good news is that you don't need a fortune to become a trader (did you know a BluFX subscription is £99 a month?). Here are some tips on how to save money for your forex goal, and how to find the funds you need to get started.
This blog is part of our new Make It Happen series, a series of blogs aimed at total beginners to forex: for people working a full-time job, with little capital to start off with, and limited time to learn how to trade. Sound familiar? Here’s how to get started on your trading journey.
How to Save Money for Your Forex Goal
When you are wanting to change your financial destination, the first step is understanding where you currently are. This can be done by analysing your present financial situation and figuring out where you stand and where your money is going. Categorise each of your expenses - leisure, food, bills, and so on - and figure what percentage of your income is going to each category.
No time? Here's how to fit trading around your day job>>
Follow the 50-30-20 rule
Ideally, your budget should be allocated roughly in the following ways: 50% for needs, 30% for wants, and 20% for savings. Your own personal financial situation may mean that one or more of these categories are distorted. Housing will obviously be one of the more essential needs and if your rent or mortgage is expensive, it may cause your needs to rise above 50%. Some areas are simply more expensive to live in for example. Whether this increased cost is worth it is completely up to you. Just know that the decisions you make will have a correspondence with the achievement of your goals and whether the trade-off is worth it is your call.
There are a few options with the 50-30-20 rule: you could set aside a portion of the 20 category for your trading each month, or include your trading as a 'want' under the 30 category and cut down on a restaurant visit twice a month, for example. How you separate your categories is up to you, but the key here is flexible thinking: can you cut down somewhere so you can save more for your trading dream? What can you go without to make it happen?
Looking for inspiration? See how women in trading make their trading careers happen - read how Marina started her trading business from scratch>>
Get a side gig
How to save money for a goal when you don’t have the spare income? Getting a job on the side is one way to address a distorted budget or to earn money that can be directly put to good use in your trading account. If you simply can't find extra money in your budget, one alternative is to increase your income instead.
Obviously, you need the time required to work your side gig to earn this extra income. But if you have enough time to spare - perhaps one day on a weekend - it can be the answer to compensating for expenses that you just can't shave down, or it can directly fund your trading. There are a lot of different apps nowadays that can be utilised to earn extra income. Food delivery, babysitting, and professional services are some common side jobs that can be used to bolster your income and give you some much-needed capital for beginning your trading endeavour.
Can't focus on your goal, your work, or, well, anything? Here are some tips on how to focus during lockdown>>
How to save money fast
How to save money fast for your trading goal? Good question! The fastest way to save money is to recognise what is utilising the largest part of your budget and reducing it.
Cut down on expenses that don't serve you
Simply analysing your bank statement can lead you to discover vast amounts of money that are not going to good use. If you’re not in the habit of keeping track of your finances, it is not hard to find services you have been paying for several months without using. Other times, reflection can lead you to realise that even expenses that you are fully aware of are serving you no good and can be cancelled without the slightest hesitation.
This could include unused TV subscriptions, music streaming packages, express delivery services, and so on... the good thing about this option is that it doesn't have to mean no TV streaming service forever, just for 6 months while you spend your TV-watching-time on forex instead. Sorted!
So much of saving is about determination to make it happen. Here are four psychological traits shared by all successful traders>>
One of the quickest methods for how to save up money is to sell things that you no longer want or need. This could be anything from your old DVD collection, books, or anything laying around the house that has value. One person's trash is another person's treasure and even though something may seem useless to you or too big of a worry to deal with, others may disagree.
Re-evaluate your priorities
If trading successfully is something you consider important, it may be time to re-evaluate some of the decisions you’ve made and the responsibilities that come with them. One of the most pressing dilemmas in managing one’s finances is how to start saving money when there is no income to spare. Any analysis of your financial status can bring about serious questions about your innermost desires and tendencies.
Perhaps you own a car or a house that is vastly impractical for your income. Sometimes this is done to “keep up with the Joneses” or to fit in with the social status you feel you must belong. No one can tell you how to handle your finances, but your long-term financial goals should be balanced with your short-term expenses.
Often, your largest expense will be your housing, which will be a more or less fixed cost. However, if you are dedicated enough to freeing up funds for your trading, you could move in order to free up more funds. Going down the list of your expenses will often reveal several moderately large expenses that, when combined, form a large chunk of your income. The difficulty in resolving these demands on your income will vary, but the strength of your determination to obtain the funds will cause you to consider your options and result in a prudent and practical decision. You can do this!
Stay tuned for more in the Make It Happen series for practical tips on learning forex as a total beginner and getting your head in the trading game...