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Retiring with a million dollars when you have little to spare is possible. It's not about how much money you make, it's about how you save, spend and invest what you have. Still think you can't afford it? Here are 4 steps to invest in retirement when you have no money.

All the traditional advice tells you to start investing as soon as you can. I regularly read about experts saying you should start investing the moment you get your first paycheck, if not sooner.

This is excellent advice.

But what if you can’t afford to?

Yes, the argument is that you can’t afford not to, but I know several people who barely make enough to live on.

So, unfortunately, investing takes a back seat until they get more stable in their careers.

If you’ve reached your 30s, or even your 40s, and haven’t started investing much if at all, fear not. There is still time.

Related: Money Moves to Make in Your 40s

In fact, one person I reference in this article didn’t start until he was 35, and he accumulated $5 million on a modest salary.

So there’s hope.

Related: Money Moves to Make in Your 30s

Steps To Start Investing Now, Even If You Have Little Money

1. Start with SOMETHING

The first, and the most important thing you need to do when you’re in your 30s or 40s and you don’t have much lined up for retirement is to start with something.

If you only take one line away from this entire article, this is it. Start investing anything you can–even if it’s only $20 per month. And if you can’t afford $20 per month, then you have some serious budgeting to do. You can read more on this below.

The minimum I would shoot for is $100, but I understand that’s not possible for everyone, so do whatever you can. Assuming you can find an extra $50-100 lying around, I would strongly suggest you put this into a Roth IRA with Betterment–it’s just the easiest, worry-free solution (I’ll explain more below).

2. Free Up Capital

After you’ve found some extra money you can invest each month by either getting rid of a subscription, cutting back on a coffee addiction or just watching what you spend, it’s time to find some ways to create and free up even more money. This is the only way you’ll begin to accelerate your investment savings.

Create a Strict Budget

Your first step in beginning to beef up your investment savings is to create a strict budget. Look, I get it that budgeting isn’t fun for most people. I used to absolutely hate it until I found YNAB. If you’ve read any of my other articles, you know that I seriously love YNAB (You Need A Budget) for creating budgets. This is for a couple of reasons:

  1. It got me back on track financially. Years ago I wouldn’t budget because I couldn’t stand analyzing every dollar I spent. I would always forecast my spending and it was never correct–so I got frustrated. YNAB takes a different approach and forces you to only budget money you have–not what you don’t have. So there’s a big difference between forecasting and true budgeting.
  2. It forced me to be in touch with my money. One of the key tenants of YNAB is that you have to be in touch with your money. You can’t just set it and forget it–you need to know what you have coming in and what you have going out. I found their software so easy to use, and it helped me really understand what was happening with my money.

YNAB worked for me, but it may not work for you. I’m not saying you have to use YNAB or their software–but I am saying you need to create a budget and do your best to stick to it.

Cut Back Everywhere You Can

After you’ve created a strict budget, you need to look at ways to cut back–everywhere you can. The first place to look is in monthly subscriptions. These types of charges add up quickly and are very easy to forget about. Things like Audible, HBO Now, or Stitchfix are all value-adding services that probably make our lives better, but they add a significant monthly cost when it all adds up.

You can also find ways to cut back on your monthly bills. Services like Trim and Truebill will work on your behalf to get your bills reduced. They will take a portion of the savings, but you’ll still end up saving money in the long-run.

The overall goal here is to cut back as much as possible–it won’t be easy but it’ll free up some extra money for you to start investing. Remember, you’ve reached this stage for a reason–so socking money away now is critical.

Pick Up a Side Hustle

I read a statistic the other day that showed over 44 million Americans now have a side hustle. Doesn’t that seem crazy? But when you think about it, it seems like life gets more and more expensive. I mean, think about the reason you’re reading this article–you’re looking for ways to invest when you don’t have any money to do so. So it makes sense that so many people are finding side hustles to earn extra money on the side.

There are plenty of things you can do to earn money on the side–but they are going to require you to work more. This might mean driving for Uber or delivering packages for Amazon, but if it gets you a few hundred extra bucks a month to invest, it’s probably worth your time. If you’re serious about this, check out our massive list of side hustle ideas.

Find Ways to Create Passive Income

Creating passive income is similar to picking up a side hustle, but it’s more… well, passive. With a side hustle, you’re usually actively working–such as freelance writing. The more you work, the more income you produce. With passive income, however, the money flows in after you’ve invested an initial amount of time and/or money.

A great example of passive income is if you own a blog, you can add links to products and services to sell via affiliate marketing. You aren’t doing anything more than adding links, and if the site is getting traffic, the money will come in.

An example of this is the mega-site The Wirecutter. This started off as a small affiliate site years ago and was recently sold for a ton of money to The New York Times. Basically, they review products and add affiliate links, so when you read their reviews and ultimately buy a product, they get a commission.

Ask for a Raise

Finally, an often overlooked way of creating extra cash flow is by asking for a raise at your current job. Most people just assume their company will say no, but that’s not always the case. Jesse Dickler from CNBC gives four steps to asking for a raise:

  1. Plan ahead
  2. Do your due diligence
  3. Be realistic
  4. If at first you don’t succeed…

Make sure to read the full article because she gives some excellent advice. If you keep it real and have a good justification for why you deserve a raise, the worst thing your employer will say is no. At that point, you’ve at least given them something to think about, and it allows you to think about your next steps as well–maybe looking for a new job if your employer isn’t willing to increase your pay.

3. Simplify Your Investing

Now that you have some idea on how to create and free up additional money each month, it’s time to figure out what you’ll do with the extra money. As I mentioned above, if you’ve waited until your 30s or 40s to begin saving for retirement, you really shouldn’t be playing any games with investing in individual stocks. There are only two recommended investment “philosophies” I’d have for you at this point:

Index Funds

Investing in index funds is a smart and easy way to get started in the stock market. An index fund is similar to a mutual fund or ETF–they’re pre-diversified “baskets” of stocks that give you broad exposure to a particular index, such as the S&P 500. They’re inexpensive, too. If you’re interested in this path, you can learn all about index funds in this article.


When you invest in index funds, you’re actively purchasing and monitoring your investments. You need to open a brokerage account, choose your index fund, buy it (at the right time) and rebalance your portfolio when necessary. This is what I’d call active investing, even though an index fund requires far less monitoring than an individual stock would.

The other option is to go with a more passive investment strategy by using a roboadvisor. A roboadvisor is essentially a robotic financial advisor. No, you won’t get to meet with an actual robot (sorry to burst your bubble).

A roboadvisor is a computer algorithm that makes investments on your behalf, based on your personal goals and individual risk tolerance. So, for example, with Betterment you can have a goal of saving for retirement and choose an aggressive risk tolerance. This might mean you put everything (100%) in stocks. Alternatively, you can open an account to save for emergencies and Betterment may guide you to have a much lower risk tolerance, being that you will need the money sooner than you would for retirement. My Betterment emergency savings is 40% stocks, 60% bonds by default, for instance.

4. Don’t Slow Down

Now that you’ve created some momentum, it’s time to keep going. At this stage in your life, it’s important you don’t take your foot off the gas if you want to retire. You can do this by focusing on two key things:

Create New Habits

By now you’ve realized that you need to start investing, and hopefully, you’ve begun thinking about ways you can free up and create more cash, as well as invest properly. Now it’s time to start thinking about how you can create sustainable habits so you don’t fall off the investment wagon.

Author James Clear says there are four stages that form what we call the habit loop–cue, craving, response, and reward–and if any of them are missing, a habit won’t be formed. This is also very much in line with what Charles Duhigg says in his book, The Power of Habit.

The habits you’re forming should be around the way you look at money–spending, and saving. For instance, when you’re tired during the workday (cue) do you want a coffee to pick you up (craving)? From there, you might go buy one (response) and feel energized for a short period (reward).

This habit loop can be broken by inserting new rewards at the end of the cycle. I’ll encourage you to read Duhigg’s book to learn more about this process, but it can work for your saving, spending, and investing habits right away.

Remember the Four Pillars

Recently, Rob did a podcast of the four pillars of personal finance. If you haven’t listened to it, I suggest you do that now. To recap, though, the four pillars are:

  1. Understand the Power of Small Decisions
  2. Know What Makes You Happy
  3. Know What Things (Really) Cost
  4. Challenge the Assumptions We Live By

By now I am hoping you’ve built some (or at least have a plan to build some) serious momentum in the way of spending less and saving and investing more. These four pillars correlate directly to your success in investing, and it’s critical that you understand them and live by them.

I found that these pillars force you to think differently about your money, and ultimately push you to spend less. This will, in turn, create more free cash for you to invest.

Bottom Line – You Can Invest In Retirement Even When You Think You Have No Money

Investing, in and of itself, is a difficult concept for many to grasp. It’s time consuming, confusing, and causes you to have to send your hard-earned dollars into the abyss of the stock market.

But it doesn’t have to be that way.

Even if you’re in your 30s or 40s and haven’t started investing.

In fact, I just read an article about a 100-year-old man who has $5 million saved, and he didn’t start until he was 35.

There’s still time–but you have to start now. Follow the advice in this article and you’ll be well on your way to retirement in less time than you think.

Author Bio

Total Articles: 121
Chris has an MBA with a focus in advanced investments and has been writing about all things personal finance since 2015. He’s also built and run a digital marketing agency, focusing on content marketing, copywriting, and SEO, since 2016.

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