The soaring cost of living is putting pressure on people’s monthly income. As a result, around 65% of people believe they wouldn’t be able to last three months without borrowing money.
On top of this, around 34% of adults have less than £1,000 in savings. There’s no two ways about it – these are incredibly tough times, but there are some ways to earn a little extra cash.
Passive income
Earning passive income can make a real difference to someone’s quality of life. Having a source of cash that doesn’t involve extra work can really help ease the pressure of inflation.
One of the best ways of generating passive income is through stocks. Investing in companies that pay dividends to shareholders allows people like me to make money while they sleep.
The idea is that an investor like me buys shares in a company. Then, as the business makes money by selling its products, it returns some of its profit to me as a cash dividend.
The FTSE 100 has some great dividend stocks. And with interest rates rising, there are more and more attractive dividend returns on offer.
Investing in the stock market is always risky and dividends are never guaranteed. But the best companies have not only maintained their shareholder returns, but increased them over time.
A top tip for getting started
This is all very well, but finding the money to invest can be tough, especially at the moment. There’s a useful piece of advice that I’ve picked up along the way for doing this, though.
Charlie Munger is Warren Buffett’s right-hand man and knows a thing or two about making money. And his advice to investors is to always pay themselves first.
In other words, I should put aside something for investing before working out what else to spend my money on. This is a simple piece of advice, but it’s been invaluable to me.
If I wait until the end of the month, I might well find I’m out of cash. But if I pay myself first and put something into investments, I’ll likely make it through on what’s left.
It’s also worth noting I can start investing in dividend stocks with just £1. That might not generate a big return, but it can pay off over time.
Persistence pays off
For an investor starting off in the stock market, returns can be small at first. But this doesn’t matter – they can really add up over time and it all helps.
Every £10 I can earn from dividends is £10 that doesn’t need to go on a credit card. I can use it to build up my emergency fund, or finance my monthly expenses.
The cost-of-living increases are tough in the UK at the moment. But each time I manage to invest something into the stock market, I put myself one step closer to financial security.
