Have you ever wondered how day traders manage to stash away money to fund their day trading accounts? Have you ever thought that you can’t stretch your budget further, in order to put some money away for starting one?
Yes, and oh, yes, we reckon.
But, we have good news for you. Saving money is not a mission impossible.
We’ve come up with a few tips and tricks and we’re going to walk you through five very simple steps to help you save some dollar bills to fund a day trading account.
And no, you won’t have to fill in any Excel spreadsheets to keep your finances in check. All it takes is a simple plan and a regular ‘date’ with your money. So, read on:
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Step #1: Know Your Worth
Or net worth, that is. Start off your money-saving plans by calculating your assets minus liabilities. That’s what you own minus what you owe. This will give you a great starting point to track how much you need to save each month to reach your goal. If you’ve done that and kept track of it, well done, you day trader! Now, you’ve reached the vantage point to assess your financial position.
Step #2: Create a Separate Bank Account
Set up a separate bank account for your day-trading resources. Better still, set up automatic payments from your ‘regular job’ paycheck. This way, you’ll stay away from your walking-around stash and you’ll find it harder to yield to the temptation to tap into the fund. That said, do yourself a favor and don’t tap into your ‘rainy-day’ fund to finance your day trading account. Your rainy-day fund is to plug budget holes, in times of decreased or declining income or in case of unexpected events, not for savings. (We know that you know that. This one is just a friendly reminder). When you’ve sorted out the separate bank account, you are ready to take the next step.
Step #3: Track Your Spending
It’s important to spend some quality time with your money—say, once a month. Regularly knowing where your finances stand gives you the power to decide how much to spend on unplanned or unnecessary stuff next month. And, it may highlight if and how you may need to tweak your overall financial plan. If it helps, imagine your regular financial sum-up date is just like date night with your significant other. “We need to talk about this” or “We need to spend some more time together” or, “We need to draw the line here” or maybe even, “We did great last month, babe!” Just be there for both your honey and your money. Your money appreciates it and so does your honey.
Step #4: Shop with Strategy
Make a list and stick to it. Keep to what you—or what your girlfriend, boyfriend, wife or hubby wants. Make a list when you go to the grocery store. And, don’t go shopping when you’re hungry—and we don’t just mean grocery shopping.
According to a study by the University of Minnesota’s Carlson School of Management, hunger not only makes us think about seeking, buying and consuming food, but it also puts us in a mode to crave buying non-food items, even though they cannot satisfy our hunger.
The authors of the study polled mall shoppers and found that hungry mall shoppers spent 64 percent more money than non-hungry shoppers. So, a snack before going shopping will save you money that you would otherwise be tempted to spend on treats, chocolates and sodas or whatever else is loitering strategically in the checkout line at the grocery store or mall. In a nutshell, shopping after you’ve had lunch will keep you away from impulsive buys that you may later regret.
Speaking of impulsive buying, here’s our fifth tip:
Step #5: Act Your Wage
If you’re serious about freeing up some cash to fund your trading account, you need to live within—that is, comfortably within—your means. Live like you have your trading goal in sight (Note that acting your wage usually means forgoing any purchases that require credit).
Maybe you’re an impulsive person. In this case, you may want to follow the ‘time rule,’ before splurging an insane amount of money on something you don’t really need. Make yourself wait for an hour, or 24 hours, before buying that new gadget. And, keep your goal in mind, while rethinking a purchase. You probably don’t need another light blue shirt right now, but you need the extra money for your future day trading account that will put you in the trading business.
If you act your wage, you will see potential savings every day. Targeting monthly recurring expenses, in addition to one-offs, can reap big savings, because you pay them again… and again… and again. Do you really need all of the premium cable channels? Is there a better priced internet provider around? Have you spent a few hours price shopping for the best home and auto insurance?
We’re not suggesting that you get the cheapest of everything out there. But, there may be a lower cost provider for some of these things that doesn’t leave you sacrificing quality. And, quality is important, particularly when it comes to efficiency. Buying a bit more expensive, but energy-efficient, appliance (of course, at a price you can afford) will save you money on your energy bill in the long run. Do your homework and research what’s the best valued item on your consumer electronics or clothes shopping list.
You can also apply this to food: more fruit and vegetables over higher priced fast food and frozen packages of whatever. In the long run, eating healthy will make you, well, healthier and potentially save on health costs, medical expenses and medicine purchases.
We can go on drafting a list of hundreds of such tips and tricks. Here, we’ve just tried to give you the general walk-through introduction on how to start putting money away to fund a day trading account. You will of course draft your own savings plans that best suit your ultimate goals, personal finances, income and expenses.
And you know what? You’ll feel really good when you sit down to execute your first trade, because you’ve accomplished your goal of putting away money for funding that trading account, without having to reduce your lifestyle to living hand to mouth. You’ll also boost your confidence at the start of your path to becoming a successful day trader.