How An Extra $1000 Per Month Can Change Your Life, And How To Get Started
Looking 30 years into the future isn’t nearly as exciting as buying a new iPhone or leasing a Range Rover. Instant gratification feels good in the moment and buying new things might give you a momentary endorphin rush. But once you learn how to save and invest $1,000 every month, your future gets a lot brighter.
How bright? Let’s just say the impact of investing an extra $100, $500 and $1000 per month over 30 years will be immense.
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The numbers below have been calculated using an average annual return of 8%. Most ETFs (VTI, SPY, etc) will get you — and historically have gotten — that or more over 30 years.
The exact numbers of investing extra money per month are as follows:
- Investing an extra $100 per month yields roughly $149,000 in 30 years.
- Investing an extra $500 per month yields roughly $745,000 in 30 years.
- Investing an extra $1000 per month yields roughly $1,500,000 in 30 years.
How To Save $1000 Per Month
It’s easy to save money when you’re a high earner who makes a lot of money. But how can someone who makes less money save $1000 per month while also being able to afford necessary living expenses?
The first step in understanding how much you can save is developing a budget. A simple way to budget is the 50/30/20 Rule. We’ve gone in-depth on the 50/30/20 Rule before, but here is a basic break out of how you can use it to help you save an extra $1000 every month.
- 50% of your paycheck goes to essential expenses.
- 30% of your paycheck goes to things you want (like the aforementioned iPhones and Range Rover leases).
- 20% of your paycheck goes to saving and investing.
Some people might use gross pay towards their 50/30/20 budget, but if you’re not contributing to a pre-tax 401K plan then using net pay will allow you to know what your true savings rate is.
For example, if you make $50,000 per year while living in Florida, your take home pay will be $41,880 per year, or $3,490 per month. If you are adhering to the 50/30/20 rule, your budget will look something like this.
- Net Pay: $3,490 per month
- 50% to essentials: $1,745
- 30% to wants: $1,047
- 20% to saving/investing: $698
When looking at that scenario, your savings and investing is falling short of your $1000 per month savings goal. You have two choices. First, you can try to saving more money and live off less. That may or may not be possible depending on your situation. In some cities in the U.S., most people need a side income just to pay rent.
The second choice is to find a side hustle that will earn you an extra $500 per month.
Online Side Hustles To Help You Save $1000 Per Month
According to recent data from Canva and Fiverr, these are the 10 highest paying online gigs.
- Website Design – $700
- Social Media Manager – $675
- Proofreading and Editing – $660
- CV, Cover Letter and Resume Writing – $600
- Website Building – $580
- 3D and 2D Modeling – $550
- Business Consulting – $500
- Social Media Advertising – $500
- Graphic Design – $500
- Presentation – $450
If you have marketable skills, you will never be bound to only having a 9-5 job. So while the example above might fall short of savings and investing goals in his/her day job, it is possible to hit those goals with a side hustle.
8 Ways An Extra $1000 Per Month Can Change Your Life
Financial independence: With an extra $1000 per month, you can save more money and invest more, which can help you reach your financial goals and achieve financial independence.
Paying off debt: With an extra $1000 per month, you can pay off debt more quickly, which can free up money for other expenses and reduce stress.
Building a retirement fund: With an extra $1000 per month, you can contribute more to your retirement fund and increase your savings for your golden years.
Investing in real estate: Have your money work for you. With excess cash, you can invest in real estate and make passive income from rental properties.
Traveling: An extra $1000 per month can provide an opportunity to take more trips or vacations, which can help to refresh your mind and create lasting memories.
Improving your career: With extra cash per month, you can invest in education or training to improve your career prospects and increase your earning potential.
Giving back: You can use the extra money to make a difference in the lives of others by donating to a charity or giving to a friend or family member in need.
Improving your lifestyle: With an extra $1000 per month, you can afford more luxuries and improve your standard of living.
Turning $1000 per month into $1.5 million might seem impossible to the average person. But when you’re part of the Wealth Gang, you understand the power of compound interest and the freedom that true passive income provides. The key lies in having a budget and living within your means. If you can’t do either of those, and you’re not earning in the top 1%, chances are you will never reach financial freedom.