This is going to be a column of investment advice. But before you can invest, there are a few things you should take care of first. To start with, you will need to have some money to invest. This means (unless you happen to fall into a pile of money):
(1) You need to make more money than you spend
Another way to put this is that you need to spend less money than you make. It means the same thing, but it can be a more useful way to think about it, since you have more control over what you spend.
Here are two basic strategies for achieving this goal. Which works best for you will depend on your personality, but don't be afraid to try both approaches. First, for the more organized type, you can create a budget. The second approach is to use a set aside. Let's talk about budgets first.
Budgets are really very simple. Just list your expenses by category: food, rent, car and gas (transportation), clothes, utilities, entertainment (movies and eating out), etc. Estimate how much money you spend in each category per month, and compare that to your monthly income. Be sure to include the expenses that only come up occasionally, like insurance and car maintenance.
Then add up the expenses and compare that to your monthly income. If there is no money left for saving, or if your expenses are greater than your income, then you need to look for areas to cut back. Some expenses are pretty fixed, like rent, and others are more flexible. Those are the areas to look for cuts in.
The second approach is to use a set aside. In this system you put a fixed amount of money into a savings account each month (or each paycheck). Then you just have to make sure that the rest of your income will last you for the whole month. This system can work well for people who don't like the budgeting approach. Payroll deductions like 401K's work this way, and are very popular.
The main trick with the set aside is to make sure that it is enough money to cover the occasional expenses. If you spend all your other income each month, then expenses like car insurance will have to come out of savings. The set aside needs to add up to more than these expenses in order to have true savings.
