|
|
When you’re young, $1000 seems like a lot of money. Once you enter the “real world”, the more that number seems to shrink despite staying the same. Saving money is critical, and 28% of Americans don’t have any kind of emergency fund.
When you have $1000 saved up for the first time, you might be tempted to blow it all on fun things or a huge vacation, but this is the prime time to start doing things that can better your life in the long term.
Do you know what to do with $1000 to help push your life in the right direction?
If you’re feeling a little bit lost, don’t worry, you’re in the right place. Keep reading to learn nine super savvy ways to really make your money count.
Direct Wealth Building
$1000 might not seem like enough to invest in anything, but if you’re smart with your money, you can turn it into passive income or a new opportunity.
There’s a saying that you have to spend money to make money, and this is true. You’re in the best position to start using your funds to build your wealth. Here’s how.
1. Starting a Side Business
Starting a side business is a great way to start contributing to your future self. A side business is a way to generate extra income on top of your current job, as well as passive income.
If you have excess time that you’re not using to be productive (via self-education, personal growth, or otherwise), you could be using it to make more money. If you play your cards right and have a bit of luck, your side hustle can become your main hustle.
If you’re looking for side business ideas, great places to start are by doing:
- A blog focused on product reviews (so you can make affiliate commissions)
- Courses or consulting in an area of your expertise
- Social media marketing for small businesses
- Setting up video studios (this is hot right now with COVID)
- Video editing
- Podcast editing and distribution
- Copywriting
- Phone and Zoom sales
You can either launch your services via a website or a Facebook page, or you can get started quickly using a freelancing platform like Upwork.com.
2. Investing Wisely
When you only have $1000 to work with, making wise investments is crucial. Make sure to look for these criteria when you choose an investment:
- Protects your original capital
- Pays you cash flow
- Has the potential for price appreciation
If it also offers tax advantages, this will make your returns even sweeter. If you invest wisely, you can get a return on your investment of 5% to 20% (or more). This could turn your $1000 into $1050 to $1200 within a year.
Slow and reliable growth like this can snowball into a fantastic income stream.
There are several ways to invest for cash flow, but some of the great lesser-known ones are peer-to-peer lending, where your loans generate interest, and crowdfunded real estate. If you’re interested in crowdfunded real estate options, Fundrise requires only a $500 minimum investment to get started.
You don’t have to be rich to invest, but investing can help you get there.
3. Paying Off Debts
This is a crucial step in your wealth-building process. Not all debts are created equally, but if you have any debts that need to be paid off, this is the time to start doing that.
When you have high interest debts, you’re actively losing money as time goes on. Paying them to save money might seem counterintuitive, but you’re doing this as a gift to your future self.
There are several effective approaches to debt paydown, but one savvy way to start is by paying off your high-interest debts first. Another effective method, known as the Snowball Method, is to pay off your smallest debts first.
Debt paydown is one of the best investments that you can make, even if it doesn’t feel like one.
Personal Growth And Self-Investment
If you want to put some of your money into personal growth, then self-investment can help you in the future.
4. New Classes and Certifications
There are plenty of certifications that you can get for under $1000. There are also many classes that you can take for under or around $1000. If one of these certifications or classes can help you advance your career or start a new one, you’re investing in your future self.
If you’re happy with the company that you work for, check into opportunities for promotion. What is the employer looking for? How can you meet their needs?
Certifications can help make you a better prospective employee, but they’ll also teach you important skills for life.
5. Networking: Conferences, Events, and More
When you’re early in your career and you’re focusing on building wealth for your future, networking is the name of the game.
You can certainly use sites like LinkedIn for some surface-level networking, but if you really want to succeed, going to conferences based around your goals and interests is key.
This is where you can meet the people who will truly elevate your life. If you want to be around people who are success-minded, you have to go where they go.
Most people don’t know this, but Tim Ferriss got his start by networking—in person at blogger conferences—prior to launching his first book, The Four Hour Workweek.
6. Investing in a Mentor
If you can afford a mentor that’s in your desired field, it can be an incredibly valuable investment in your future. Mentors can do several things for you.
They can shift your thinking about your goals and ambitions. They’re clearly successful and they know the right way to do things and the mistakes to avoid (likely ones that they’ve already made).
Having a good mentor also contributes to your networking. This person becomes an important part of your personal network.
7. Skill Stacking
Depending on your work (or desired work), you may have some skills that you need to really boost yourself up.
In your field, you may require a specific set of skills. Only relying on those skills leaves you stagnant.
Skill stacking is the process of diversifying your skill set. For example, if you’re a skilled writer and editor, you likely have a job writing and editing. If you learn to code websites, do basic graphic design, and work social media, you’ve opened up new options for yourself.
Not only are you now more valuable to prospective employers, but you also can use these skills to build your own personal business (or collaborate with other skilled people via your network to work together on something new).
Preparing for Your Future
If you’re sitting on $1000, you could also put some of it toward preparing for your future.
8. Saving for Emergencies
Saving money looks different to everyone. If you prefer to have cash on hand for emergencies, saving money in a secure place in your home (like a safe) is a smart idea. You never know when you’re going to need money right away.
You can also put money into a secure bank account or a savings account. When you put it there, leave it until you absolutely need it. It can be tempting to take money out for trivial things, but this is for your future.
9. Pre-Pay Your Mortgage
Another powerful use of $1000 is to pre-pay one month (or several months) of your mortgage principal. The principal is the amount you borrowed from your lender and have left to pay back. Each time you make a monthly payment to your mortgage lender, part of that payment goes toward principal paydown and part of it goes toward paying the interest you owe on the loan.
When you pre-pay your mortgage principal even by a single month, it can takes years off your loan, slash thousands of dollars off the interest you’ll owe over the course of your loan, and build up your equity more rapidly. It also means you’ll be mortgage-free sooner than anticipated!
Why is this? Because when you prepay your mortgage principal, it moves you farther along your amortization schedule, also known as your mortgage payment table. That’s just a fancy way to say that when you prepay the principal, you get to start having more of your monthly payment go toward principal paydown and less of it toward the interest you owe on your borrowed money.
What to Do With $1000: Takeaways
It can be difficult to know what to do with $1000 if you’ve never had that much money all in one place.
The best thing that you can do is invest. That can be traditional investment, investment in yourself, or investment in your future via an emergency fund or skill and experience building.
Click here to join nearly a million readers who are learning Cade’s secrets. Or, connect with Cade on Instagram.