M1 Finance: How Investment Taxes Are Handled

Investing Simple is affiliated with M1 Finance. This relationship does not influence our opinion of this platform.

M1 Finance offers automated investing and rebalancing of your portfolio or pie. In doing so, M1 Finance must make buy and sell orders that many times can create a taxable event for the investor. With the unique investing strategy M1 Finance offers, it may be difficult for investors to see and understand what is causing their taxable event, as well as when it occurs.

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M1 Finance Website Homepage

Will M1 Finance pies cause tax consequences?

Any time there is a buy or sell in your account, as long as its a regular taxable brokerage account, there may be tax implications. Dividends and interest received within M1 Finance will also be subject to income taxes. M1 Finance claims to always make trades in the most tax efficient manor.

What this means is that they sell securities prioritizing them by…

  1. Losses that offset future gains
  2. Lots that result in long term gains
  3. Lots that result in short term gains

While M1 Finance tries to minimize your taxes, odds are that you will still have tax implications when it comes to year end. It is important to understand what these taxes might be before you begin investing. A good investor plans for and anticipates what taxes may be during the year. Trust me, nobody likes the surprise tax bill!

In this article, we talk more about the tax minimization feature offered by M1 Finance.

Will M1 Finance retirement accounts be subjected to tax consequences? 

One of the pros of investing with M1 Finance is that you can invest in a retirement account. This results in different tax situations that will be explained below. Remember, your tax situation may be different and we always recommend taking to a professional tax advisor!

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M1 Finance Retirement

Unlike traditional brokerage accounts, taxes on retirement accounts are not incurred on a buy and sell basis. Dividends and interest will also not be taxed at the time they are received. The only time a taxable event occurs within a tax deferred retirement account is when money is distributed out of the account. Once funds are distributed to the account owner, the taxpayer must pay tax on those funds as ordinary income.

At the end of the year, you will receive from 1099-R for any funds that have been taken out of your retirement account(s). A copy of this form is sent to the IRS to ensure proper reporting of the income.

As for Roth IRAs, any funds distributed out of the account will not be subject to income tax. Since the funds in a Roth IRA have already been taxed before they were deposited in the account, there will be no tax liability if funds are withdrawn.

However, early distributions out of any type of retirement account before age 59 1/2 will be subject to a 10% penalty. It is important that you commit to investing for the long term when you open a retirement account of any kind.

There are some exceptions to this 10% penalty rule such as first time home buyers, disability, medical, and higher education fees. You may also withdraw contributions out of a Roth IRA tax free as long as the account has been open for at least 5 years. Any earnings within a Roth IRA cannot be withdrawn before age 59 1/2 without the 10% penalty.

You will also receive from 1099-R for any distributions from a Roth IRA, however the form will be coded as a non-taxable distribution (if you meet the age and distribution requirements). Consult a tax professional for guidance on your specific tax situation.

Retirement accounts offer a huge tax savings advantage to the keen investors who utilize them! If you are investing for years ahead, you should consider investing in a tax sheltered retirement account with M1 Finance.

What are capital gains and how are they taxed?

In a regular taxable brokerage account, any sell trades resulting in a gain or loss will incur a taxable event. If there is a gain on the security, it will result in a capital gain. Depending on the length of time you held the security, there will be tax implications.

M1 Finance offers a feature known as tax minimization. As the name suggests, this is designed to minimize your investment taxes. First, all capital losses are used to offset capital gains. If there are excess gains, you will have to pay taxes on that income. Capital gains and losses are categorized by short term and long term.

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www.diffen.com

This is why the tax minimization strategy offered my M1 Finance can be helpful. M1 Finance will attempt to minimize taxes by incurring more long term gains, rather than short term gains, which will result in a lower tax rate.

In this article, we talk more about the tax minimization feature of M1 Finance.

What is a wash sale?

Investors recognize a capital loss on an investment when the investment is sold for a lower price than it was purchased for.

These realized capital losses can offset capital gains and reduce your ordinary taxable income by up to $3,000 per year. If you have more than $3,000 in capital losses, they can be recognized across multiple years.

There is a tax rule in place to prevent people from abusing this, known as the wash sale rule. A wash sale occurs when an investor sells a security for a loss and then attempts to buy it back within 30 days of the sale. In an effort to reduce artificial losses for tax purposes, the IRS disallows any wash sales.

If you attempt to sell a security for a loss then buy it back within 30 days the IRS will deny this loss. In order to avoid a wash sale, you would need to wait longer than 30 days before buying back the identical investment.

When will my M1 Finance tax forms be available?

M1 Finance will send you an email with your tax documents within the first couple months after the end of the calendar year, depending on your account type. Your tax documents will always be available through the M1 Finance website and mobile app.

One of the pros of investing with M1 Finance is that this platform integrates directly with TurboTax, H&R Block and TaxAct. This allows you to import your tax documents directly.

Click Here To Get Started With M1 Finance

Is M1 Finance Legit?

Investing Simple is affiliated with M1 Finance. This relationship does not influence our opinion of this platform.

Many of us have learned that if something seems too good to be true, it is. Is that the case with the investment platform M1 Finance?

First of all, M1 Finance is a member of the Financial Industry Regulatory Authority (better known as FINRA). The purpose of FINRA is to protect you, the investor. FINRA regulates broker-dealers like M1 Finance. FINRA is a not for profit organization authorized by congress to protect America’s investors.

FINRA has written rules that all registered broker dealers and registered brokers in the United States must follow. These rules are written and enforced by FINRA.

FINRA offers a free tool called BrokerCheck where you can learn more about brokers and broker dealers operating in the United States.

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M1 Finance BrokerCheck Report

 

Second of all, M1 Finance is a member of the Securities and Investor Protection Corporation (SIPC).

When a brokerage firm is closed, SIPC steps in and, within certain limits, works to return your cash, stock, and other securities you had at the firm.

Being a member of SIPC, you will be insured in the event that M1 Finance goes out of business or goes financially insolvent. Each account at M1 Finance is insured with up to $500,000 in coverage ($250,000 for cash). It is important to understand that SIPC does not insure you in the event of a decline in the value of your M1 Finance investments.

You might be wondering if M1 Finance is FDIC insured. They are not, as FDIC insurance is only for bank holdings.

M1 Finance is a regulated brokerage account that is in compliance with both the SPIC and FINRA. If you have any doubts about this platform, read the BrokerCheck report here.

Click Here To Get Started With M1 Finance

What Are Fractional Shares On M1 Finance?

Investing Simple is affiliated with M1 Finance. This relationship does not influence our opinion of this platform.

If you have been exploring the M1 Finance app, or researching the platform online, you have probably come across this term; fractional shares. 

To put it simply, a fractional share is a fraction of one share of a company.

But wait a second… a share of a company is a fraction of that company. So, why do we need a fraction of a fraction of a company?

The answer: not all shares are created equally.

Take Amazon for example. Right now, there are around 488 million shares of this company. The market capitalization, or market value, of this company is around $935 billion. As such, each share is valued at around $1,916 per share.

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Amazon Stock August 14th, 2018

Now, let’s consider Ford. Right now, there are around 3.91 billion shares of this company. The market capitalization, or market value, of this company is around $37.7 billion. As such, each share is valued at around $9.64 per share.

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Ford Stock August 14th, 2018

Now, we don’t know exactly how many shares of Ford or Amazon are out there, so that results in some price deviation. But what we have here is two popular stocks with a drastically different share price.

So, let’s say you are an investor and you like Ford and Amazon. You want to own an equal amount of Ford stock and Amazon stock. You are just getting started with investing, so you have $3,000 to invest.

In a perfect world, you could invest $1,500 into each stock. (Spoiler alert, you can)

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Portfolio Allocation Goal

BUT! You are only able to invest in whole shares of each of these stocks.

Your only option is to invest $1,918 in one share of Amazon stock and invest the rest in Ford stock. After buying your share of Amazon stock, you have $1,082 left. You are able to purchase 114 shares of Ford stock. On top of that, you end up with $3.56 left over.

This is what your investment portfolio would look like…

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Actual Portfolio Allocation With Whole Shares

Wait a second… you liked both of these companies equally! You wanted to invest half of your money in Amazon and half of your money in Ford. Now, you are overweight in Amazon and underweight in Ford.

This exact situation has been a frustrating predicament for investors for years. You set your goals for diversification, but that pesky share price causes your actual allocations to change.

Enter M1 Finance. M1 Finance was launched in 2016 and is an online roboadvisor for everyday people who want to invest in stocks or exchange traded funds (ETFs). One of the biggest benefits of this investing platform is the fact that you can invest in fractional shares.

M1 Finance splits every share into 1/10,000th of a share. This allows you to trade the exact amount and achieve your portfolio allocation goals.

Back to our example, let’s consider Amazon stock. With M1 Finance, you can buy as little as 1/10,000th of a share of this stock. Each of these fractional shares would have a value of 19.18 cents.

Now, your $1,500 investment in Amazon stock would actually be about 78% of one whole share. (7,819/10,000 for the math people)

This means that with M1 Finance, you can set your allocations for each stock and meet those allocations regardless of the share price.

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Actual Portfolio Allocation With Fractional Shares

M1 Finance allows investors to purchase fractional shares. The fractional share allows small investors to invest in stocks with a high share price. Traditionally, you could not buy Amazon stock unless you could afford a whole share. This also allows investors to better diversify their portfolio without ending up overweight in a certain stock simply due to the share price. Finally, fractional shares also allow investors to remain fully invested.

Remember that $3.56 left over from the first example? While it may seem insignificant, that is money that is sitting in cash that is not being put to work through investment. With M1 Finance, you could invest that money in fractional shares.

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M1 Finance Website

Now, did M1 Finance invent this concept of fractional shares? The answer is no. In the past, brokers have offered fractional shares to investors but they would typically charge a fee for this convenience. M1 Finance does not charge a penny.

To recap, fractional shares have these benefits:

  1. They allow small investors to consider stocks with high share prices like Amazon or Google
  2. They allow you to remain fully invested and reduce or eliminate idle cash
  3. They allow you to reinvest your dividends into partial shares of the issuing stock
  4. They allow you to allocate your portfolio as close to your allocation targets as possible
  5. With M1 Finance, fractional shares are available free of charge

Click Here To Get Started With M1 Finance

M1 Finance Review 2018: Best Free Investing Platform?

Investing Simple is affiliated with M1 Finance and Betterment. This relationship does not influence our opinion of these platforms.

Times have changed, and investing in the stock market is not the same as it was 10 years ago. The rise of the robo advisor and algorithm based trading have taken the brokerage industry by storm. One of the most established examples being M1 Finance.

Traditional online brokerage platforms have costly trade commissions, on average ranging from $4.95 to $6.95 per trade. These same brokerages often require minimum account balances of $500 or more. These fees and minimum balances create high barriers to entry for someone who is just beginning to invest.

In recent years, the offerings for individual retail investors have gotten a lot better. Brokerages like Robinhood and M1 Finance learned that by handling everything electronically and not having brick and mortar locations they could offer their services for free! As a result, these free brokerage accounts have been extremely disruptive to the industry.

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M1 Finance Website Homepage

What Is M1 Finance?

M1 Finance was launched in 2016 and is an online robo advisor and brokerage hybrid for everyday people who want to invest in stocks or exchange traded funds (ETFs). M1 Finance combines features of a traditional brokerage account with a modern robo advisor. First, you select your investments and your allocations. Then, you automate the entire portfolio!

M1 Finance focuses on low cost passive investing with additional features such as automatic rebalancing of your portfolio and tax minimization strategies. The only fees you pay are the fees associated with any ETFs you invest in. M1 Finance is a completely free investing platform!

Click Here To Get Started With M1 Finance!

What Is An ETF?

An exchange traded fund (ETF) is an investment vehicle that holds a collection of stocks, bonds, or commodities in a portfolio. The fund then splits into thousands or millions of shares and the shares are sold on a major exchange. Typically, this is the NYSE or NASDAQ exchange. There are a wide variety of investment options with ETFs such as index funds, bond funds, or international funds. ETFs trade just like stocks on public exchanges. By investing in ETFs, you are gaining diversified exposure to a particular market.

ETFs can give you diversified exposure to a certain sector or industry as well. For example, let’s say you want to invest in the semiconductor sector but you are not sure who the clear winner will be. Instead of buying individual semiconductor stocks, you could invest in an ETF that gives you exposure to the whole sector. One example of this is the PHLX Semiconductor Sector ETF.

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PHLX Semiconductor Sector ETF

Compared to a mutual fund, the fees associated with an ETF are often significantly lower. This is primarily due to the fact that mutual funds are actively managed while ETFs are passively managed. An ETF simply replicates the performance of an underlying benchmark, like the S&P 500 for example. With a mutual fund, a team of people are deciding what to buy and sell within the portfolio.

How Does M1 Finance Work?

M1 Finance operates by creating portfolios of stocks and ETFs called “Pies”. Each pie can be customized meaning you can choose specific stocks and ETFs that you want to add. For example, you could build a pie with 50% Tesla stock and 50% Google stock.

Within each pie, you can have up to 100 stocks or ETFs. Each can carry a different weight in the portfolio. There is no limit on the number of pies you can have in your M1 Finance account! For example, you could have one growth oriented pie and one income oriented pie in your M1 Finance account.

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M1 Finance Custom Pies

There are also prebuilt pies that M1 Finance has created based upon the amount of risk you would like to take, investment time horizon, and personal preferences. These are called custom pies.

It is important to understand that these portfolios or custom pies are not tailored to any one person. Each investor has a unique set of circumstances. If you want a personalized portfolio, you should consider a robo advisor like Betterment or a financial advisor. Betterment is another cutting edge platform that saves investors money by leveraging technology.

Most investing platforms charge an asset management fee in exchange for any kind of investment guidance. M1 Finance offers these prebuilt pies for free. They do not charge any fees outside of the ETF expense ratio. This is an expense you pay regardless of what platform you invest with.

M1 Finance also allows you to buy fractional shares of a corporation within your pie. For example, if your M1 Finance account had a total of $1,000 in it, but you would like to buy a share of Amazon for $1,885.60 then you would be offered a fractional share of Amazon to hold in your portfolio valued at $1,000 or less depending on its weight in your pie. With fractional shares, you can buy as little as 1/10,000th of a share!

In this article, we talk more about fractional shares on M1 Finance. 

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Amazon Stock, August 8th 2018

Is M1 Finance Safe?

A lot of people are skeptical about M1 Finance. They hear about everything this platform is offering and how they are doing it for free. Don’t worry, this isn’t too good to be true! M1 Finance is a member of Financial Industry Regulatory Authority (FINRA) and the Securities and Investor Protection Corporation (SIPC). Being a member of SIPC, you will be insured in the event that M1 Finance goes out of business or goes financially insolvent. Each account at M1 Finance is insured up to $500,000 in coverage ($250,000 for cash).

In this article, we talk more about the safety and legitimacy of M1 Finance.

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M1 Finance BrokerCheck Report

M1 Finance Fees And Requirements

There are no trading commissions or mark up fees for using M1 Finance as long as you open a brokerage account and fund it with a minimum of $100 ($500 for retirement accounts). M1 Borrow has a fee of 3.75% APR and a required account maintenance balance of 35% of your initial loan. M1 Borrow allows you to borrow against the securities in your account.

Beyond that, these are the requirements to open an M1 Finance account:

  • You must be a US Citizen
  • You must be a permanent US Resident
  • You must be 18 or older
  • You must have a US mailing address

Click Here To Get Started With M1 Finance!

M1 Finance has very basic requirements and a low minimum account balance, making this investing platform very accessible for new investors.

You may be asking yourself, so how do they make money? M1 Finance makes money in a way similar to Robinhood, by directing order flow and offering margin to investors.

What are the features of M1 Finance?

M1 Finance offers a variety of additional features, the two most prominent being tax minimization and smart rebalancing. Using a simplified method of tax loss harvesting, M1 Finance offers options to sell positions in the most tax favored way.

In this article, we talk more about the tax harvesting feature of M1 Finance.

However, there are alternative robo advisors that offer more effective tax loss harvesting strategies. If you are interested  in this feature, we recommend checking out Betterment, the most popular robo advisor.

Tax loss harvesting in Betterment involves the platform offsetting any gains by selling losing securities in your portfolio and replacing them with a similar security. For example, say you have $2,000 in realized capital gains in your portfolio. You also hold Lowes stock in your portfolio which has a potential loss of $2,000 if you sold it today. To offset your gain, Betterment will sell Lowes stock to realize the loss and buy back a similar security such as Home Depot!

Unfortunately, this feature is only available through a robo advisor like Betterment. It is important to remember that Betterment charges an annual fee of 0.25%, while M1 Finance is 100% free!

Another key feature of M1 Finance is smart rebalancing. Using smart rebalancing, all deposits will be automatically invested into your pie without your manual input. When withdrawals are taken out of your account it will automatically rebalance your pie so it has the correct weight of your holdings at all times.

Rebalancing is a crucial aspect of investing. Rebalancing ensures your portfolio has the correct ratio of holdings and makes sure you are not taking more or less risk than you originally planned.

For example, if you held a portfolio of 50% stocks and 50% bonds and the stock portion grew faster, your portfolio is now 60% stocks and 40% bonds. Your risk has increased by not rebalancing your account because you are more exposed to stocks. To tone back risk you would sell off some of the stocks and buy bonds to get back to your 50% stock and 50% bond portfolio. If you invest with a platform like Robinhood, you will have to manually rebalance your portfolio. M1 Finance does this automatically, for free!

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M1 Finance Automatic Rebalancing

What are the pros of M1 Finance?

  1. M1 Finance is a 100% free investing platform with a wide array of features and benefits that go above and beyond other free investing platforms out there.
  2. M1 Finance is a 100% passive investing platform. This automation is great for people who do not want to worry about remembering to contribute to or rebalance your portfolio.
  3. M1 Finance offers complete flexibility with the custom pies. This flexibility is not available through most roboadvisors.
  4. Fractional shares allow you to remain fully invested and improve diversification.
  5. Automation of your portfolio takes your emotions out of investing.
  6. M1 Finance offers retirement accounts
  7. Bank deposits can be automated.

What are the cons of M1 Finance?

  1. Investments are limited to ETFs and stocks trading on the NASDAQ, NYSE or BATS. No mutual funds or over the counter stocks.
  2. Other roboadvisors offer more efficient tax loss harvesting, however they charge a fee for using the platform.
  3. Market orders are automated. You cannot use any other types of buy or sell orders.

Click Here To Get Started With M1 Finance!

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M1 Finance Website Homepage

Who Is M1 Finance For?

M1 Finance has a great platform for long term investors. The ideal user for M1 Finance is someone who is a somewhat passive investor, relatively fee sensitive, and does not want to spend a significant time managing their investments. M1 Finance offers a greater amount of flexibility because you can choose exactly what you invest in. With other robo advisors, you are limited to a handful of ETFs.

M1 Finance is also a great platform for dividend investors. Your dividends will automatically be reinvested back into your portfolio once the cash balance exceeds $10. Other free investing platforms like Robinhood do not offer any kind of automated dividend reinvestment. Brokerage accounts that offer dividend reinvestment and fractional shares charge a fee for this service.

Who Is M1 Finance Not For?

M1 Finance is not an ideal platform for short term traders or mutual fund investors. It is also not ideal for investors in over the counter stocks or executing other unique investment strategies such as hedging or short selling.

Trading is the goal of profiting off of short term price fluctuations in the market. Trades are usually executed over periods of weeks, days, or even minutes. Many traders use price analysis called technical analysis to exploit predicted movements in the market.

While using technical analysis, there is no consideration of underlying financial stability of a company. Instead, technical analysts use trading patterns, volume and price movements to predict future market prices. Trading is considered highly speculative and can be extremely risky if you don’t know what you are doing. M1 Finance is not the ideal platform for an active trading investment style.

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Warren Buffett, Famous Long Term Investor

The Verdict

Compared to the options available to retail investors even 5 years ago, M1 Finance is truly a fantastic platform. The tax minimization, fractional shares and smart rebalancing make this platform superior to other free platforms out there like Robinhood. M1 Finance is our favorite free investing platform and our top pick for beginners.

We believe that investing is for the long term. History has shown us that the most successful investors follow a long term investing strategy. This can be as long as a few years to decades if not longer. M1 Finance was designed for long term investors who want to build a well diversified investment portfolio.

Through the automated portfolio rebalancing, you are taking advantage of a powerful economic force known as dollar cost averaging. By regularly accumulating shares over a long period of time, you are paying the market average price for these shares. This helps to smooth out any hills and valleys over time.

The automated reinvestment of dividends will allow you to earn compound interest. Your dividends will be used to purchase more stocks, and as a result you will be earning more dividends from each of those shares.

Click Here To Get Started With M1 Finance!

M1 Finance: What Is A Custom Pie?

Investing Simple is affiliated with M1 Finance. This relationship does not influence our opinion of this platform.

Times have changed, and investing in the stock market is not the same as it was 10 years ago. The rise of the roboadvisor and algorithm based trading have taken the brokerage industry by storm. One of the most established examples being M1 Finance.

M1 Finance is a pie based investing platform. No, this is not the kind of pie your grandmother would make, but instead this is a pie based investment portfolio.

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M1 Finance Pie Based Investing 

With M1 Finance, each of your investments make up a slice of this pie. You may decide that you want a bigger or smaller slice of each investment. This is determined by your allocation into each investment. Each M1 Finance pie can be broken up into 100 individual slices, or 1% allocated into each investment.

Now, with M1 Finance you are not limited to just one pie. You can invest in expert pies created by financial experts or you can create multiple custom pies.

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M1 Finance Expert Pies

You could create a growth oriented pie and also create an income oriented pie. With M1 Finance, the power is in your hands. This platform is built for the do it yourself investors out there.

In order to offer this level of investment flexibility, M1 Finance offers fractional shares. M1 Finance splits every share into 1/10,000th of a share. This allows you to trade the exact amount and achieve your portfolio allocation goals. There are many benefits to investing with fractional shares.

In this article, we talk more about fractional shares on M1 Finance. 

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M1 Finance Website Homepage

M1 Finance is a versatile investment platform, and the pie based investing is revolutionary. By investing with pies, you can automate the entire process. You simply create your investment portfolio and automate contributions. M1 Finance will automatically purchase fractional shares of each investment and rebalance your portfolio. The best part? They do it all for free.

Click Here To Get Started With M1 Finance

What Happens With Dividends On M1 Finance?

Investing Simple is affiliated with M1 Finance. This relationship does not influence our opinion of this platform.

M1 Finance focuses on automation of your investments and building wealth in a relatively passive way. Within M1 Finance, you have the ability to buy a variety of stocks and ETFs ranging from high risk growth stocks to lower risk income generating ETFs.

As the investor you have the ability to determine the structure of your portfolio or “pie” within M1 Finance. For investors who would like to hold dividend paying stocks or ETFs within your pie, you may be wondering “so what happens with my dividends?”

Within M1 Finance, all dividends are held in cash in your account until the value reaches $10. Once your total amount of dividends reaches $10 in your account, M1 Finance automatically reinvests them into your pie. This allows you to build wealth through the power of compounding, and without selling the actual shares themselves.

“Compound interest is the 8th wonder of the world.” – Albert Einstein

Dividends offer a return of capital to the shareholder without having to sell the stock. This allows the investor to reinvest dividends and grow their account using compound interest. Compounding is the ability to reinvest capital (dividends, interest, capital gains) to generate additional earnings over time.

Think about it like this: You invest $1,000 into Company A and they announce a 5% dividend at the end of the year, thus you earn $50 in dividends. You then reinvest the $50 in dividends and buy more shares. Now you have $1,050 worth of Company A.

Next year, they announce another dividend at 5%. You now receive $52.50 in dividends and you reinvest them back into Company A. You now have $1,102.50 worth of Company A stock.

If you followed this strategy and reinvested your dividends for 20 years, your $1,000 investment would be worth $2,653.

If you did not reinvest your dividends, your $1,000 investment would be worth $2,000. ($1,000 worth of stock + $50/yr in dividends for 20 years = $2,000)

This is why compounding is such a powerful tool in the investment world. It allows you to build interest upon interest and can result in fortunes being built.

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www.suredividend.com

Earned vs Paid Dividends 

All earned dividends within M1 Finance will show up under market gains in your portfolio. These are the total dividends that you have earned over the life of your portfolio, not necessarily the total you have received. Paid dividends are the amount of dividends you have actually received in cash. Paid dividends show up under each security in your activity feed.

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M1 Finance Website

To understand earned vs paid dividends, we must focus on two important dates; the ex-dividend date and the payable date.

The ex-dividend date is the date by which you must own the stock to receive the dividend. It is often 1 day before the date of record. Ex-dividend simply means: at this date you are buying the stock without being entitled to the most recent dividend.

On the date of record (1 day after the ex-dividend date) the company records everyone who is entitled to receive a dividend.

Lastly, the payable date is the date you actually receive payment for the dividend. The payable date is typically around one month after the ex-dividend date and payable date. If you sell the stock after the date of record, but before the payable date then you are still entitled to a dividend payment.

Is this the same as a DRIP?

Most dividend investors are familiar with a DRIP, or a dividend reinvestment plan. With a DRIP, the dividends received are used to purchase more shares of the issuing stock. This, again, allows you to earn compound interest.

Most brokerages out there charge a fee for a DRIP. M1 Finance is completely free. While M1 Finance does offer reinvestment of dividends, it is a little bit different.

If a dividend payment pushes your cash balance in your portfolio above $10, the cash is returned to your portfolio. This cash will be used to purchase whatever you are underweight in.

For example, let’s say you built a pie with 50% Boeing stock and 50% General Electric stock. Fast forward one month and you are now 55% Boeing and 45% General Electric due to the differing performance of the share price. If Boeing pays a dividend and that dividend pushes your account above $10, that money would be allocated into General Electric stock to rebalance your portfolio and return it to a 50/50 split.

Click Here To Get Started With M1 Finance

6 Best Passive Income Ideas For 2018

Investing Simple is affiliated with Fundrise. This relationship does not influence our opinion of this platform.

Welcome to the new frontier of making money, where there are countless ways to earn it. Some of these money making methods are passive, where you do not have to trade your time for money! Here at Investing Simple, we love passive income.

But there is a catch: You need to put in time setting it all up. Lots of time.

The investment, however, is well worth it.

In other words, you work a lot today, and you don’t work nearly as hard tomorrow!

It takes time and patience to start seeing money coming in with passive income. That’s why most people just get jobs. My favorite definition of passive income is that it is income paid on your past efforts. Put in the work today and reap the benefits tomorrow!

Here are our favorite passive income ideas for 2018. 

1. Real Estate:

Real estate is one of the best ways to make passive income. At first, this is going to anything but passive! You will be managing the property, collecting rent and making repairs. Down the road, you will be able to hire a property manager and this can become passive.

If you want to learn more about investing in real estate, check out Graham Stephan on YouTube. He became a millionaire in his 20’s simply by saving his money and investing in real estate.

Here is a great video on investing in real estate by Graham Stephan.

If you don’t have the money for investing in real estate on your own, another option is to invest in real estate through Fundrise!

With Fundrise, you are pooling your money with other people and investing in real estate projects. Fundrise is a relatively new investment, but so far they have seen 8 to 11% returns. This type of real estate investment is 100% passive! You put your money to work and you sit back and earn your returns.

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Fundrise Returns 2014 To 2017

Click here to learn more about Fundrise.

Another way to make passive income with real estate is by offering short term rentals. If you live in a tourist area, this is a great option. Rather than renting your spare living space out for extended periods of time, you can often make more money doing short term rentals on sites like AirBnb.

While AirBnb is great, you are actually better off building your own site for rentals. This will cut out the middleman and keep more money in your pockets since you will be avoiding the AirBnb fees! At first, this will be active income but down the road you could hire a property manager for a fee.

2. Dropshipping:

One of the most popular ways to make money online these days is by dropshipping. Essentially, you are selling products that you are never putting your hands on. You build out a website, run ads to get traffic to the site and then fulfill the order.

For example, many people are creating a Shopify store where they can sell products from AliExpress. Keep in mind that it will take weeks if not months for products to ship from China, so you want to be transparent about this on your site!

A better way to dropship is to ship the products to the United States first and pay for fulfillment services. This will significantly reduce the shipping time.

Dropshipping Model.png
Dropshipping Explained, Oberlo

3. Online Courses:

Ready to demonstrate how to write the perfect resume? Knit a sweater? Read tarot cards? Buy a car? Balance a checkbook?

If you’re an expert (or willing to do the footwork and become an expert) on any topic, you can create an online course to teach others your skills.

Setting up the curriculum requires a time commitment, as does marketing your course, but once it’s up and running, you’ll earn passive income based on the number of students.

Teachable 5
Teachable Course Earnings

Ryan Scribner offers a free course all about building a successful online course or membership site. You can enroll here!

This is one of the best ways to make passive income. Once the course is completed, you just collect the payments! Hosting sites like Teachable will handle the rest.

TIP: Ask people who’ve completed the course to write a testimonial praising it, and publish their words.

4. YouTube Videos:

One of the coolest ways to make passive income is to start a YouTube channel. Once your channel becomes established, you can run ads on your videos and collect a check every single month!

You will need to continue to post new content in order to keep the views coming in, but if you enjoy doing this it can be a great way to earn passive income. Take Financial Education for example. He uploads a daily stock market commentary video and typically gets 10,000 to 20,000 views per video.

In a recent video, he shares just how much money he is making on YouTube!

Financial Education Ad Revenue.PNG
HOW TO MAKE $100 PER DAY PASSIVE INCOME ONLINE, Financial Education YouTube

You are reading that right. Jeremy is making over $16,000 a month with his YouTube channel! There are countless YouTube channels out there pulling in over $100,000 a month just in ad revenue.

5. Affiliate Marketing 

The idea here is you market someone else’s product for them and earn a commission on each sale you’re able to provide for the original seller. This works best when you have a large audience of some sort on social media. This could be a blog, a YouTube channel or even an Instagram account.

One of the best ways to do this is with Amazon Affiliate Links. In this video, Ryan Scribner will teach you how to make passive income with these links.

Link a product to your blog, YouTube, Instagram, Facebook, etc.

Every time someone clicks on the product and buys it, you get paid a royalty.

There are countless affiliate opportunities out there. The key here is to become the authority in your niche and then reach out to the biggest companies serving these customers. Many of these companies will pay you for referrals!

6. Stock Market:

Here at Investing Simple, our favorite way to make passive income is to invest in the stock market. This type of investing can be 100% passive!

It may seem dicey or risky, but if you put in the time to learn about the ins-and-outs of playing the stock market, you can take small steps to start based on a long-term plan.
There are tons of sites for tutorials aimed at newcomers to the stock market, teaching you the lingo, how to assess your risk tolerance, and even giving stock tips.

Check out our beginner’s guide on investing in the stock market here!

50 Businesses You Can Start (With Little To No Money!)

It feels good serving the community and it’s good for the soul.

In fact, helping others can lead you to a longer life and happiness.

So why not make money helping others? After all, it’s good for you and for the customers. One of the easiest businesses you can start is a service based business. Whether you are helping elderly people or busy business owners, you are identifying a need and filling it. As you help more people, your business will primarily grow through word of mouth and recommendations.

Here are 50 business ideas where you will be able to make money helping others!

1. Home Painting:

If you are a good painter, you can do it yourself. Or, you could hire it out to someone else! Outdoor painting is more dangerous, but if you have the equipment and the skill you can charge significantly more.

2. Plumbing/Electrical Work:

Skilled trades like plumbing, electrical and carpentry fetch a high rate. It is not uncommon to pay a plumber or an electrician $100 an hour for labor! Educate yourself and get the proper licensing and insurance, then open a skilled trade business!

Electrical Tools.jpg
Electrical Tools, MaxPixel

3. Interior Decoration:

If you have an eye for design, offer your services and build your reputation through free work. After you have a portfolio of completed projects, create a website and market your service to others!

4. Landscaping:

This includes almost anything that improves a home’s yard, whether it’s laying sod, putting down and watering grass seed, installing fences or planting and watering flowers. You can do this yourself, hire people or contract it out!

5. Lawn Care:

Elderly people especially do not want to be out in the heat mowing the lawn. You can mow lawns during the Summer and push snow in the Winter! Most people who hire someone to mow the lawn also hire someone to plow the snow.

6. Auto Repair:

If you have the proper skills and certifications, you can start a great business doing automotive repairs and maintenance. Down the road, hire a few employees and manage this business from behind the scenes.

7. Videotaping Services:

Everybody wants memories of special events like weddings, graduations, or birthday parties. Take it a step further and offer drone video recording!

Drone.jpg
Drone With Camera, Pixabay

8. Photography:

Photography has an easy market in small communities, as everyone likes having pictures of themselves or important moments. Build your reputation by having the best camera, editing skills, and prices. A great website and business cards are essential!

9. Limousine Rental:

Limousines are big investments, but if you find a place where they are used commonly, you will become profitable after a few months or years. Down the road, you could own a fleet of limousines and have a team of drivers.

10. Tutoring:

There are hundreds of smart high-school students who need money. Hire them to tutor or do it yourself! This is by far the easiest business you can start as a young person. No equipment needed, just your brain!

11. Nanny Placement:

There are many large websites out there that connect sitters with parents in need. You could do this on a smaller scale and mark up the service being provided!

12. Transportation Service:

Greyhound is an awesome company that has done this successfully. You can start by getting a driver and a bus, then offering popular routes that people sign up for. Or, you could keep it simple and drive for Uber or Lyft!

Uber.jpg
Uber App, Flickr

13. Child Care:

Parents always want their children to be looked after. If you like dealing with children, or know people who do, this is a very easy business to start!

14. Organize Kid’s Birthday Parties:

Help them develop a theme, then use that for invitations, decorations and entertainment. Many parents would gladly hire you to plan and run a child’s party. The more unique your parties are, the more you can charge!

Remember, people pay for experience!

15. Marketing:

A lot of companies don’t know much about internet marketing. Contact companies and offer your marketing services. This could be as simple as helping a local business design a website or get listed on Google!

16. Computer Instruction:

Most people don’t know how to use computers, especially older people. Offer to teach them courses in Microsoft Word, Excel or any other element in which you are well versed. Many public schools offer continuing education courses where you can teach your skill to a class of people.

17. Consulting:

You can consult in almost any professional field, like accounting, branding, business or any other area of expertise. This can be one of the most profitable businesses out there!

18. Window Cleaning:

Window cleaning services cost an average of $207, and they don’t require much skill or many materials! If you have the skill and the required insurance, you could start a window washing business. With the help of scaffolding or a lift, you can do multi story buildings and charge a premium for this!

Window Cleaner.jpg
Professional Window Cleaner, Wikimedia

19. Power Washing:

This is the use of high pressure water spray to remove loose paint, mold, grime, dust, mud, chewing gum and dirt from surfaces and objects such as buildings, vehicles and concrete surfaces.

Invest in a power washer and go to town. Look for houses that are listed for sale and call the seller. A power wash is one of the easiest ways to boost curb appeal!

20. Mobile Car Wash:

Mobile car washes are a great idea before paying for a physical location. Travel through streets and charge to clean cars in the customers driveway or business parking lot. There is little overhead with this and it is convenient for the customer!

21. House Sitting:

This is best done on holidays and vacation periods. House sitting involves taking care of and living in houses so they won’t be empty. Start with your friends and family and grow this business through referrals.

22. Catering/Personal Chef:

Like to cook? Good at staying organized? Catering requires you to provide food and beverages for special events like dances, weddings, or graduations.

Another option is to be a personal chef. Show up for your customer, cook a meal in their home, clean up and get paid!

23. Debt Collection:

Companies hire debt collectors to collect on what is owed to them. Debt collectors track people who owe money to make sure they proceed with their payments. This business will require some persistence and thick skin!

24. Accounting:

There are so many free accounting programs, and low cost ones online. Become an expert and offer consultations for a fee to businesses.

25. Language Translation:

If you know more than one language, or someone who does, you can offer translation services online. You could also teach foreign language classes or do tutoring!

26. Essay Writing:

Are you great at writing college papers? Offer to write or review papers for students for a fee! Down the road, you could hire people to write for you.

27. Business Travel Management:

Plan out the costs of a business trip, book the cheapest hotels, best options for restaurants, and make an itinerary. Travel agents often earn a commission on referrals to restaurants, hotels and vacation spots!

28. Vacation Planner:

People who want to vacation want everything to go smoothly. Work for them and plan their vacation, find their hotel, activities, and restaurants for their dream vacation! High end clients will love this service.

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Vacation Resort, MaxPixel

29. Private Investigation:

Private investigators collect information for anyone who hires them, whether it’s businesses, families, or parents.

30. Windshield Repair:

Install and repair windshields. If you offer this service at peoples’ homes, you can charge a pretty penny. Mobile windshield repair is a great business!

31. Event Planner:

Planners meet with clients to discuss and organize the event, search and book locations, food, entertainment, staff and cleanup. Offer catering as well for the whole package!

32. Junk Removal:

It seems like everyone has a pile of crap they want to get rid of today. Go door to door and offer to clean out garages, sheds and basements!

Remember, not everything is junk! You can get paid to haul it away and then resell it on Craigslist or online.

Junk Removal.jpg
Junk Removal Business, Flickr

33. Personal Organizer:

Help people organize the items they have and eliminate clutter. You could also sell organization solutions like bins and closet shelving!

34. Notary:

Get your notary license and offer a notary service. People will often pay $50 or more for a notary in a pinch!

35. Resume Writer/Editor:

Prepare professional resumes for applicants to either jobs or colleges.

36. Tailoring:

Adjust people’s clothes using needle and thread or sewing machines. You could also offer a wash and fold laundry service, great for college dorms!

37. Pet Sitting:

Supervise pets or take them for walks while the owners are away. If you are a true animal lover, open a dog daycare!

38. Freelancing:

Freelance jobs range from writing, editing, photography, to web design, graphic arts or computer programming. You can advertise your services on sites like Fiverr and Upwork.

39. Virtual Assistance:

Virtual assistants perform administrative tasks such as replying to emails, scheduling meetings and making travel arrangements. Contact busy people and offer to be a virtual assistant for them!

40. Social Media Manager:

Take charge of business accounts and help them grow online. Business owners are busy. If you can help them get more customers through the door, they will gladly pay you $1,000 a month or more!

Take Josue Pena for example. He has an Instagram network with over 4 million followers and his social media marketing agency brings in close to $100,000 a month!

Learn more about what Josue Pena does here.

41. Florist:

Sell or produce flowers. Learn some flower arranging skills online and make pretty arrangements. Offer flower delivery for an up charge!

42. Barber Shop:

You could offer an at home barbershop if you can’t afford a physical location yet. Down the road, you can open a barbershop and rent chairs to barbers for the day!

Barber.jpg
Barber Service, Pixabay

43. Car Rental:

Rent out your car for a few hours, or even a few days. If you live in a tourist area, you could rent luxury vehicles and sports cars! You could also be a personal driver.

44. Website Design:

This is an acquired skill many people don’t have time for. Design company or personal websites and offer to update the sites if the owner pays you a retainer.

45. Security Services:

Secure homes by setting up monitoring equipment and access points. There are a number of security companies you can work with doing this!

46. Financial Consultant:

Guide people to make better spending decisions and help them to create a budget and stick to it!

47. Real Estate Agent:

Become a real estate agent and earn a commission for selling real estate!

48. Pool Service Technician:

This is one of the best businesses you can start. Open pools for people, clean them weekly and winterize them at the end of the season.

Pool Cleaner.JPG
Pool Cleaner, AdventureJay

49. Graphic Design:

Design logos, advertisements, or communications such as newsletters or direct mail for business owners.

50. Grocery Shopping:

Shop for other people, or have them order what they want online and you deliver it to them. There are a number of apps that you can use to get paid to shop for groceries!

The most important thing here is to find a business and stick with it! It will take time to get established and to build a client base. Be patient and commit to trying this business out for at least six months. 

38 Essential Tips To Save More Money Now!

Whether you’re saving for a house, looking to buy a new car, paying off a student loan or any other financial circumstance, the more money you have, the greater success you will achieve.

Have you ever gotten paid and then doled out all that money to living expenses, things like rent, groceries, gas and other necessities? Then found yourself waiting for the next paycheck, without any idea where your money had gone?

Living paycheck to paycheck is an unfortunate situation many people find themselves in, but there are ways to carve out savings for your future.

Most people know little about investing; they are only concerned with spending.

You cannot work to spend.

You need to work to invest.

Check out our beginner’s guide to investing in the stock market here!

Here are our 38 essential tips for spending less and saving more money.

1. Eat Cheaper

You don’t need to waste $20 in one night because your friends wanted you to go eat at Chili’s with them.

Stay at home, eat those leftovers, and save that money! Remember, convenience is expensive! Skip the drive thru and pack a sandwich.

Estimated Savings: $50 per week!

2. Forget The Brand

Branding = more expensive for no reason!

If you are still buying name brand razors, groceries and clothing you are spending money for no reason. Often times, the off brands are produced by the same people who make the name brands! All you are paying for is the name.

Learn how to compare prices at the grocery store and ditch the big brands.

Estimated Savings: $25 per week!

3. Quit Bad Habits

Stop smoking. Stop drinking excessively.

If you smoke a pack a day, you could be spending $3,650 a year or more!

If you drink a 30 rack of beer a week, you could be spending $1,500 a year or more!

It always amazes me how many people say they have no money to spend money or invest, but they are happy to shell out money towards a bad habit like smoking or drinking!

Estimated Savings: Up to $5,000 per year!

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Cigarette Smoking, Pixabay

4. Cancel Unused Memberships

Are you paying monthly for a music app that you don’t even use? Or maybe a gym membership? Think about it, or check your card transactions if you’re not sure.
Paying for things you don’t use is basically throwing money down the drain.

Estimated Savings: $100 per month!

5. Stop Buying New Clothes

Do you really need a new pair of shoes?

Sometimes you do, but most times you just want to spend money.

Try to resist the urge of buying a new sweater that you saw at a store, because chances are it will get lost in your closet and you won’t really use it. This is something called dead money! That money could be earning you interest or dividends, but instead it is sitting in your closet.

Estimated Savings: $100 per month!

6. Understand Wants And Needs

If you are buying something, ask yourself “Is this something I want, or something I need?”

Use this strategy for purchases large and small.

Do this every time you’re going to buy something. It doesn’t have to be long and intense, just quick and casual. You might just realize you were going to waste money for no good reason.

Better yet, follow the 30 day rule! If you want to buy something, put it on a list. If you still want it in 30 days, buy it. This eliminates the impulse purchase!

Estimated Savings: $200 per month!

7. Consider Your Future Self

If you’re going to buy something expensive, ask yourself, “Will my future self be disappointed with my current decision to spend so much money?”

Future you might thank you.

8. Avoid Credit Cards

Credit cards give you the option to spend money that you don’t really have. This creates debt. You don’t want to be in debt.

Instead, use debit cards and real cash. Credit cards only increase your monthly expenses.

Estimated Savings: Could be $1,000 per year or more!

9. Cut Your Services

If you aren’t using your landline phone or cable subscription, cut the cord! There are countless alternative streaming options nowadays.

Estimated Savings: $200 per month!

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Cutting The Cord, Flickr

10. Entertainment Expenses

You might choose the movies, a restaurant, or bowling as ways to have fun. It’s fun to have fun.

But fun does not have a price tag. You can have fun playing basketball, having a picnic, or watching movies at home!

Be flexible and creative with your entertainment. Set a monthly entertainment budget and stick to it!

Estimated Savings: $200 per month!

11. Free Transportation 

This kills many birds with one stone.

First off, if you make it a goal to exercise, this is a great way of doing so. You are multitasking by traveling to your destination while working out.

In addition, it spares you from having to fill up your gas tank every week, resulting in huge savings.

Estimated Savings: $20 per week!

12. Carpool 

This alternative works if you’ve got a close friend who works with you. If both of you work out, shop or work at the same place, go in one vehicle. You can even take turns. Whoever drives gets to choose the radio station.

Estimated Savings: $20 per week!

13. Avoid Scratch Off Tickets

The lottery is simply a tax on the stupid. If you are in the habit of buying a lotto ticket with your morning coffee, skip the ticket! (Skip the coffee too and brew at home…)

Estimated Savings: $50 per week!

14. Defensive Driving

Speeding can make your tank run out quickly. It also leads to more wear and tear on your brake pads, meaning more frequent replacement. Stop this bad habit, as it’s illegal and it’s expensive!

Estimated Savings: $10 per week!

15. Turn Off Lights

Make the best use of natural sunlight. Turn off the lights, let the light come in from the windows, and relax, knowing that your next light bill will be smaller.

Estimated Savings: $15 per week!

Lights.JPG
What’s Your Excuse? US Ad Council

16. Buy Food In Bulk

Buying food in bulk saves you time, energy, gas, and prevents you from being in an environment where you want to spend money.

Try making a bigger shopping list in order to spend less and save more.

Estimated Savings: $10 per week!

17. Don’t Shop Hungry

Shopping hungry will make you think that you need SO much food, when you really don’t. Eating a dozen muffins seems like nothing when you’re hungry. When you’re not hungry, you may not want even a single muffin.

Try to go shopping 30 minutes after you eat. This will ensure you’re not shopping out of a short term feeling of immediate hunger. Go with a list and plan what you will be buying ahead of time.

Estimated Savings: $25 per week!

18. Pay With Cash

Numerous studies have found that people who pay with cash spend less than those who use a card.

Estimated Savings: $100 per week!

19. Customer Loyalty Programs

These programs are run by stores in order to maintain customers.

By tracking your purchases, and being loyal to a select few stores, you can start earning rewards and discounts.

Just be careful. Many of these customer loyalty programs encourage spending to get rewards! Don’t fall for this trap.

Estimated Savings: $50 per month!

20. Make Coffee At Home

What’s the point of coffee? It wakes you up and gives you energy.

A Starbucks latte with 60% sugar might taste good, but it’s really unhealthy, expensive, and overrated.

Make your own coffee if you don’t already. It’s a healthy and cheap resource.

Estimated Savings: $1,500 per year!

Coffee Maker.jpg
Coffee Maker, Flickr

21. Plan Out Meals

Make a weekly schedule of breakfast, lunch, and dinner.

Buy ingredients ahead of time to avoid last minute dashes to the grocery store.

Estimated Savings: $25 per week!

22. Avoid Small Purchases

Many small purchases add up. The daily trip to the vending machine at work counts!

Estimated Savings: $5 per week!

23. Eat Out Less

Restaurants are way more expensive than they seem. You end up paying for refills and a tip that you didn’t factor into your overall price.

Yes, your plate might only be $12, but your tip, refills, and appetizers can make it $25 or more.

Estimated Savings: $100 per week!

24. Find Free Entertainment

We are humans, we need enjoyment.

Avoid spending money to enrich your life. Playing sports, hiking, picnics; these are all cheap and rich ways to spend your times. They’re definitely better than doling out $15 for a ticket to watch a movie with your friends.

Everyone needs to find something that they do that costs no money! Otherwise, you will only be happy when you are spending money.

Estimated Savings: $100 per month!

25. Avoid Checkout Line Shopping

This part of a store is a collection of stuff you don’t need. Soda bottles, candy, magazines, etc. I have heard some refer to this as the impulse isle!

Don’t even think about buying anything in these sections, because I’m pretty sure you didn’t write “Snickers Bar” and “Ring Pop” on your shopping list.

Estimated Savings: $10 per week!

Grocery Checkout.jpg
Grocery Store “Impulse Isle” Checkout, Wikimedia

26. Use Coupons And Promo Codes

You can simply Google these or find them at restaurants and stores. Or, clip coupons on Sunday for your groceries! Just don’t buy anything you usually do not.

Estimated Savings: $25 per week!

27. Skip The Happy Hour

If you grab a drink with friends a few times a week, consider drinking at home with your friends instead. It will save you and your friends a lot of money! Bars charge a huge markup on alcoholic beverages.

Estimated Savings: $50 per week!

28. Spend Time, Not Money

Instead of spending money with your friends, spend time instead. It is just as easy to walk through the park as it is to walk through the mall.

Estimated Savings: $20 per week!

29. Collect Spare Change

Most people underestimate spare change. Stash yours away as a simple method of saving money. Make sure to always keep it in an accessible place, like your car or in a jar at home. This comes in handy and can amount to large figures!

If you don’t use cash, find an app that rounds up your purchases and accumulates the spare change in a savings account!

Estimated Savings: $100 per month!

30. Leave Your Wallet Home

If you are going to school, for example, there’s almost no need to take money with you.
If you are going out somewhere, and you know you are not going need money there, resist temptation and leave your money at home.

Estimated Savings: $20 per week!

Wallet.jpg
Wallet, Pixabay

31. Learn To Say No

A lot of people let other people waste their money. Learn to say “no,” whether they ask you to go to a concert or out to eat with them. Offer to spend time with them, not money!

Estimated Savings: $100 per month!

32. Have A Weekly Budget

First, you need to calculate food, memberships, bills, gas, etc.

Come up with a number, an amount of money that you need to have each week. Then, try to stay within this budget.

Estimated Savings: $50 per week!

33. Track Your Expenses

Where is your money going? Once you answer this question with specific details and specificity, you’ll realize there’s a lot of stuff you can painlessly cut back on.

Estimated Savings: $50 per month!

34. Shower Faster

Most people get caught up in the shower, singing their favorite song or thinking about their next business venture.

Instead, take a brisk shower, get out, and get on with your day. Water bills can be reduced largely this way.

Estimated Savings: $10 per month!

Save Water.jpg
Simple Ways To Save Water, Pinterest

35. Pack Lunch For Work

You don’t have to go out, and you don’t have to spend money. Make yourself a full sandwich with snacks and sides. Some people spend as much as $20 a day on lunch!

Estimated Savings: $75 per week!

36. Set Savings Goals

Those jeans might look great on you. But, are they really in line with your goals? Will this $100 be better spent on pants or on your savings account?

Estimated Savings: $100 per month!

37. Tax Yourself

In The Richest Man In Babylon, it talks about imposing a tax on yourself. Commit to doing this and tax yourself before you have a chance to spend that money! Start with as little as 1% and build up from there.

Estimated Savings: UNLIMITED!

Richest Man Babylon.jpeg
The Richest Man In Babylon, Medium

38. Avoid Spend To Save Gimmicks 

It is impossible to spend money and save money at the same time. Don’t buy that toaster because you will save $50 with the mail in rebate.

You didn’t save $50, you just spent $50 less. The truth is, that rebate is already factored in and they are still making a profit on the sale! Plus, a lot of people will forget to mail it in.

If your toaster works fine, why buy a new one? Spend to save gimmicks are all over, so watch out!

Estimated Savings: $50 per month!

Talk down that inner voice with the voice of reason. Follow these tips studiously and you will see your savings blossom. Your future self will thank you!