Whether it is the school kid who has been saving his allowance, the recent graduate with $1,000 left after paying his bills, or the person who came upon some extra cash - what do you do with it?
Some may tell you that $1,000 is a small amount and if you're 'just a school kid', just live life, be happy, and spend it on something you fancy while you still can - money worries will come soon enough once you grow up. Others may say that $1,000 is too little to work with and you should continue saving till you get $2,000, $5,000, $10,000 and then we can start talking. As a start, an easy 3-step approach would be recommended.
STEP 1: START GROWING YOUR MONEY
There are as many ways to grow your $1,000 as you can possibly imagine as long as you make the first step - decide that you want to grow your money!
If you saved up your first $1,000, think of how you can earn your next $1,000 - what skills do you have that people will be willing to pay for? Go to wholesalers to look for things to sell. Whether it's giving tuition, babysitting, mowing lawns in the summer and shovelling snow in winter, it takes less than $100 to print flyers and some time to set up a webpage to market your services. If you already earned your first $1,000 through conducting classes and providing services, can this $1,000 be re-invested to increase your earnings?
Having $1,000 in savings may not be a lot and many of your friends in school may have the same. However, what you do with your money can be a major game-changer. Do you let the money sit there? Do you spend it on the latest gaming console? Or do you use it to make more money?
STEP 2: SECURE YOUR MONEY
Once you have figured out how to grow your money, what do you do when the money starts coming in?
It's important to set aside some money to ensure a portion of your money is growing in relative safety. Ideally, choose a plan which has a return which is able to protect your money from inflation at a minimum so your money does not lose it's value.
Buy long-term investment plans and get long-term security on your financial well-being so that no matter what happens, there will be sufficient funds for college, down-payment on a house, or for your retirement and your plan for your future will not be put on hold.
STEP 3: INVEST YOUR MONEY
When you have reached a comfortable level of income strengthen your financial knowledge and learn to invest your money for growth and to generate a passive stream of income.
Learn about the property market and invest in property; learn about value investing and invest in stocks. These can bring you capital gains and a stream of passive income in the long run through bonds and rental income and do not require daily effort to maintain.
Read advice from Li Ka-Shing, Asia's richest man, on How to Split Your Money - even if all you have is RMB 2,000 (US$325)!