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Are you itching to get ahead and start investing, but being held back by a lack of savings? Progress saving and investing is slow and demoralising initially. Getting a headstart with a boost of cash flow can speed up the journey. Feeling like you are actually getting somewhere helps you stick to the investing plan, instead of giving up. Sometimes, asset prices are increasing faster than you can save!
If you are a professional early in your career it is likely that you don’t have tens of thousands of dollars to get started. If you are interested in optimising your finances, it is well worth digging deep to find a cash flow boost.
The good news is, a little hustle to boost cash flow through some extra income, or cutting expenses in the short term can deliver outsized results over the long term. The faster you can get into investing, the better your returns should eventually be. As long as you don’t fall victim to FOMO and buy rubbish assets!
“Cash flow is having the right amount of money in the right places, at the right times, every time.”Adam Steward, Debt collection Expert
Adam Steward, Debt collection expert
Hurdles for New Investors
There are two large hurdles new investors need to get over to get started.
- Knowledge deficit
- Cash to invest with
By reading (and subscribing) to this blog, your knowledge will grow over time. Read and/or listen to a range of sources to get a balanced view overall. Build your knowledge gradually, but don’t let learning delay investing. You can get started with simple index (or micro-) investing with less than a weekend of learning.
You need a good money management system place to capture a portion of your income for saving and investing. Some sort of an emergency fund is essential before starting to invest. If your fridge (or car, or laptop) dies, you don’t want to be forced to sell investments.
Sometimes you just have to suck it up, dig deep and go the extra mile. Pay down debt, build an emergency fund, get your home investment property deposit, or build an ETF starter fund.
After the initial hard work, you can set investing on autopilot, and it will get far easier.
So how do you boost cash flow enough to get started?
How much money are you earning? If you are wasting large amounts of it, and are earning over $180,000 it is likely more efficient to look at cutting costs first. If you are in the top tax bracket, you can save $1 extra by earning an extra $1.45 or cut the $1 from your spending. The more tax you pay, the more efficient it is to save money over investing more.
Most people waste some of their income on low-value spending, even if they aren’t high earners. Start by looking at the really boring stuff – bills. Can you save on your electricity and other providers by switching to another provider? Do you actually utilise your current phone and internet plan or could you cut back to a more basic plan without noticing the difference?
Shop around for insurance and indemnity cover. A few hours spent finding hundreds of dollars to save without compromising your lifestyle could be an excellent investment. Cancel insurance policies you don’t need.
Save some cash on groceries. Perhaps use that huge points balance you’ve been saving for nothing in particular? Check your fly buys, Every day rewards and credit card point balances. Can you use them to reduce spending for a month?
Do a pantry and freezer challenge, where you spend only on fresh fruit and vegetables, and use up (rather than waste) the piles of food in your home. Time to get creative with improvised recipes!
A no-spend month, where you spend no money on discretionary items can help reset your spending habits and build a cash cushion for emergencies, or an investment starter fund.
Sell stuff you No Longer Use
Most of us have impulse buys at home that we never use. If you are looking to boost cash flow to start investing, hunt your house for treasures. Plan a weekend to put them for sale on market place and let people come get their bargains. Yes, you will have no shows, but if you plan for a weekend at home chilling, it’s no big deal. If you have rarer and more valuable items, it may be worth putting it on other sites and actually bothering to post your items to buyers.
Boosting Cash flow with Your Current Job
Earning extra through your usual job, through overtime or a promotion is the most practical, accessible and reliable way to increase income for most nigh income professionals. You have already developed these skills, that are in demand. Can you move to the next level, or take on a few extra shifts boosting cash flow for your investments?
Medical professionals will usually have no difficulty obtaining overtime. This is the easiest and fastest way to earn extra cash fast. If you love your job, it’s the perfect solution, it’s nice to help your colleagues so they are not short-staffed.
But if you’re weary of certain challenges (or people) in your workplace, too much overtime can risk burnout. Sometimes a change is as good as a break.
Boosting Cash flow by Moonlighting
Using your in-demand skills to moonlight for another employer is another option. It can have advantages of broadening horizons, building your network and even finding new ideas to take back to your usual workplace. It may even result in a job offer that’s better than your current employment.
But the flip side of this, is many of us will need permission from our employers to moonlight. Most (in my experience anyway) will happily approve it if you have a positive work history, with little work absence.
As most will be paid more working in the field they already have qualifications and skills, it is often an easy way to boost cash flow.
Boosting Cash flow with Side Hustles
Starting your own side hustle, or business on the side of your usual employment involves time, risk and no guarantee of return.
If you have a well-paid career, you should only start side hustles if your primary motivation is passion, not money. But if you don’t need cash imminently, and would like to build another income stream, a side hustle may be perfect. Your favourite hobby could be a perfect passion project if you don’t feel monetizing it would spoil your enjoyment. If you need to make some cash to make up your property deposit, probably best to stick to the day job.
There are side hustles you can make (small amounts) of money quickly. These may be appropriate for those that do not yet earn a high income, and have little ability to work extra hours in their own occupation. Examples include driving for uber, uber eats deliveries, surveys and cashback rewards.
It may take a little sacrifice in terms of working more hours or spending less, but to get ahead, a cash flow boost will help you get started investing. Set yourself a time limit, and hustle hard to reach your short term goals. In the long-term you will look back in fond memory at this hard work, to produce a little extra cash that compounds over the decades to produce incredible outsized results.
Are you creating a cash flow boost through extra income or cutting expenses? How are you gathering enough cash to get started investing?
Aussie Doc Freedom is not a financial adviser and does need offer any advice. Information on this website is purely a description of my experiences and learning. Please check with your independent financial adviser or accountant before making any changes.