Putting together an excellent financial plan and growing a healthy net worth might seem simple — make some sacrifices, trim your expenses and sock away as much as possible.
But we talked with Certified Financial Planner Robin Hartill. (She also serves as an editor and financial-advice columnist at Savinly.) She points out that while cutting back often helps you hit short-term targets, it has its limits.
For the major, long-range objectives like retiring comfortably, becoming debt-free and securing your family’s financial future, there are moments when spending is the wiser choice.
So yes, saving and eliminating needless spending are key elements of a strong money plan, but here are a few situations when it’s smart to open your wallet.
1. When You Want Your Money to Grow
Investing is one of the most effective ways to expand your savings. “Using money to invest in the stock market and earn returns can compound into substantially more over time,” Hartill notes.
Although the market fluctuates daily, weekly and monthly, historically returns trend upward across longer horizons.
If you haven’t begun investing and have a little extra cash, start modestly and increase as you go. In fact, you can begin with as little as $1 using an app called Stash.*
We recommend Stash because it offers hundreds of stocks and funds to construct your portfolio. It simplifies the process by grouping investments into categories tied to your personal goals. Want a conservative approach now? That’s fine. Prefer moderate or aggressive exposure? That option’s there too.
Additionally, Stash allows you to buy fractional shares, so you can access funds and companies that might otherwise be out of reach.
If you sign up today (it’s quick), Stash will credit you $5 after you deposit $5 into your investment account. Subscription plans begin at $1 per month.**
2. When You Want to Save Money
This may seem paradoxical, but spending money in the right places can actually lower your costs over time.
For example: Your auto insurance? You’re probably overpaying. That’s why replacing your current policy with a better-priced one could save you hundreds annually.
Try a website called EverQuote to view your options side-by-side.
EverQuote is the largest insurance marketplace online in the U.S., which means you’ll see top choices from more than 175 carriers in one place.
Answer a few quick questions about yourself and your driving history. With that data, EverQuote will present recommended car insurance options. In just minutes, you could cut your costs by as much as $610 a year.
3. When You Want to Leave Your Family $1.5 Million
Have you considered how your loved ones would cope without your income? How would bills get paid? How would children’s education be funded? Now is an excellent time to plan ahead by exploring term life insurance.
This is one of those cases where paying a modest monthly premium can yield huge future benefits.
You might be thinking: I don’t have time or money for life insurance. But applications can take only minutes — and a policy could leave your family up to $1.5 million through a provider called Bestow.
Premiums start at roughly $20 per month.* The reassurance that your family will be protected is invaluable.
“Your life insurance needs are greatest when you have young children,” Hartill says. “Fortunately, this often coincides with being young enough that coverage is relatively affordable.”
If you’re under 54 and want a rapid life insurance estimate without a medical exam or leaving the couch, get a free quote from Bestow.
4. When You Want to Get Out of Debt
To remain debt-free, you must spend less than you earn, but if credit card balances are already mounting, Hartill recommends a debt-consolidation loan to accelerate repayment.
You may wonder how taking out a loan makes sense when you already have high credit-card balances. The key is securing a lower interest rate — and a site called AmOne can assist.
If your total credit card debt is $50,000 or less, AmOne will pair you with a lower-rate loan you can use to pay off all your cards.
The upside: you’ll have just one monthly payment. Because personal loans often carry lower interest rates (AmOne rates begin at 2.49% APR), you can eliminate debt much sooner. And you won’t have a credit card bill this month.
AmOne lets you apply without waiting in line or contacting your bank. If you’re concerned about eligibility, it’s free to check online. The process takes about two minutes, and it could shave years off your repayment timeline.
Kari Faber ([email protected]) is a staff writer at Savinly Readers.
*For securities priced above $1,000, fractional-share purchases start at $0.05.
**You’ll also incur the standard fees and expenses reflected in the expense ratios of ETFs in your account, as well as fees for various ancillary services charged by Stash and the custodian.
Savinly is a paid affiliate/partner of Stash. Investment advisory services offered by Stash Investments LLC, an SEC-registered investment adviser. This content is provided for informational and educational purposes only and is not intended as investment, legal, accounting, or tax advice. Investing involves risk.
*Bestow: Policies are issued by Bestow Life Insurance Company, Dallas, TX on policy form series BLI-ITPOL. Bestow products may not be available in every state. Policy limitations or restrictions may apply. Not available in New York. The application asks lifestyle and health questions to determine eligibility to avoid requiring a medical exam. Prices start at $10/month based on an 18-year-old male rated Preferred Plus NT for a $100k policy with a 10-year term. Rates will vary based on underwriting review.
