Achieving an A+ financial strategy and building a comfortable net worth seems pretty straightforward — make some sacrifices, cut your costs and save as much as you can.
But we spoke to Certified Financial Planner Robin Hartill. (She’s also an editor and financial advice columnist here at The Penny Hoarder.) She explains that while cutting costs is often a good way to meet your short-term goals, it can only go so far.
For the big, long-term goals like retiring comfortably, living debt-free and protecting your family’s future, there are times when it’s smart to spend money.
So while yes, saving money and cutting unnecessary costs are absolutely important parts of your financial strategy, here are a few times when it’s smart to pull out your wallet.
1. When You Want Your Money to Grow
Investing is a smart way to grow your money. “Spending money by investing it in the stock market and earning returns can compound into even more money,” Hartill says.
While the stock market does go up and down over days, weeks and months, over time, the returns tend to rise.
If you haven’t started investing and have some money to spare, you can start small then build your way up. In fact, you can get started with as little as $1 with an app called Stash.*
We like Stash because it lets you choose from hundreds of stocks and funds to build your own investment portfolio. But it makes it simple by breaking them down into categories based on your personal goals. Want to invest conservatively right now? Totally get it! Want to dip in with moderate or aggressive risk? Do what you feel.
Plus, with Stash, you’re able to invest in fractions of shares, which means you can invest in funds you wouldn’t normally be able to afford.
If you sign up now (it takes two minutes), Stash will give you $5 after you add $5 to your investment account. Subscription plans start at $1 a month.**
2. When You Want to Save Money
This might sound counterintuitive at first, but you can often save money by spending it.
Here’s an example: Your car insurance? You’re probably paying too much. That’s why it’s time to cancel your existing policy and spend money on a new one — it could save you hundreds of dollars a year.
A free website called Savvy will help you find the best rates — in just 30 seconds. In fact, it saves people an average of $826 a year.
All you have to do is connect your current insurance, then Savvy will search hundreds of insurers for a better price on the same coverage. It’ll even help you cancel your old policy and get you a refund from your current insurer.
Best yet: This is totally free.
If you find a better deal, you can switch right away and don’t have to wait for your next renewal or even your next payment.
3. When You Want to Leave Your Family $1 Million
Have you thought about how your family would manage without your income after you’re gone? How they’ll pay the bills? Send the kids through school? Now’s a good time to start planning for the future by looking into a term life insurance policy.
This is one of those occasions when spending a little bit of money each month can pay off later.
You’re probably thinking: I don’t have the time or money for life insurance. But your application can take minutes — and you could leave your family up to $1 million with a company called Bestow.
Rates start at just $8 a month. The peace of mind knowing your family is taken care of is priceless.
“Your life insurance needs are greatest when you have young children,” Hartill says. “Fortunately, this is often a time when you’re still young enough that life insurance is relatively inexpensive.”
If you’re under the age of 54 and want to get a fast life insurance quote without a medical exam or even getting up from the couch, get a free quote from Bestow.
4. When You Want to Get Out of Debt
To stay out of debt, you need to spend less than you earn, but if you’re already battling credit card balances, Hartill says a debt-consolidation loan can help you shed that debt faster.
You might be wondering how getting a loan when you already have out-of-control credit card balances makes sense. The answer lies in lower interest rates — and a website called AmOne wants to help.
If you owe your credit card companies $50,000 or less, AmOne will match you with a low-interest loan you can use to pay off every single one of your balances.
The benefit? You’ll be left with one bill to pay each month. And because personal loans have lower interest rates (AmOne rates start at 3.49% APR), you’ll get out of debt that much faster. Plus: No credit card payment this month.
AmOne won’t make you stand in line or call your bank, either. And if you’re worried you won’t qualify, it’s free to check online. It takes just two minutes, and it could help you pay off your debt years faster.
Kari Faber ([email protected]) is a staff writer at The Penny Hoarder.
*For Securities priced over $1,000, the purchase of fractional shares starts at $0.05.
**You’ll also bear the standard fees and expenses reflected in the pricing of the ETFs in your account, plus fees for various ancillary services charged by Stash and the custodian.
The Penny Hoarder is a Paid Affiliate/partner of Stash. Investment advisory services offered by Stash Investments LLC, an SEC-registered investment adviser. This material has been distributed for informational and educational purposes only and is not intended as investment, legal, accounting, or tax advice. Investing involves risk.
This was originally published on The Penny Hoarder, a personal finance website that empowers millions of readers nationwide to make smart decisions with their money through actionable and inspirational advice, and resources about how to make, save and manage money.
This was originally published on The Penny Hoarder, which helps millions of readers worldwide earn and save money by sharing unique job opportunities, personal stories, freebies and more. The Inc. 5000 ranked The Penny Hoarder as the fastest-growing private media company in the U.S. in 2017.