Investing Starts With Saving
I often wrangle within myself about writing on the topics of personal finance and investment. It ain’t like people haven’t heard this all before from 50 million other personal finance bloggers. Ultimately, a person is going to do what they want to do irregardless of what I might say. So, why waste my time and energy writing that investing starts with saving? Because I know that people floss more than they are boss. Statistics show that 63% of people can’t cover unexpected expense of $500. That means though you’ve potentially heard this all before, it just doesn’t resonate enough for us to do anything about it. Or there is a great deal of denial of the facts that there is anything wrong. I still have hope, so here is another attempt to talk about personal finance and investing though it may fall on deaf ears.
Reason for Saving
I wanted to discuss a topic that may not have come out in my previous blog post so clearly that I hope to make clear now. That is, “investing starts with saving”. If you are thinking I want to start investing, you need to save some money first. I know we would not be in the position we’re in if we hadn’t saved. Saving isn’t just a matter of money but in a lot of ways akin to understanding. It involves sacrifice. Sacrifice implies understanding there is a tomorrow that we will still need some of what we have today.
Since we are talking finances, let’s take that need to be money. Will you not need it tomorrow? I think we all know the answer to that question if you live in the developed world. Money is the recognized means of exchange. However, it doesn’t mean you should exchange all your money, but it seems a large swath of civilized society doesn’t grasp that! Thus, the reason a few control a majority of the wealth in the world. Money is a resource and if you use it all today, you may not be able to get it tomorrow.
An example how most of us know money comes to us is through a job. We trade our time and skill for money. How do you feel about job security these days? You feel as though the job or company will always be there for you? So, if you use or allot all of your money today towards your lifestyle what happens if that resource dries up and you haven’t saved anything? Go ahead draw your conclusions.
In a developed world, it’s not death, but it is the likely path to economic poverty. Yes, a stark, dark characterization of the situation, but is this not the reality that many of us are on the verge of facing or know someone that is? The middle class is being hollowed out and the poor aren’t getting many rungs to climb out of poverty. Even the high income earner are not safe if they don’t adhere to basic financial tenants.
Shortened Time Between Saving and Investing
That is why I think you should save money and with that saved money invest it into assets. If you are in debt to everyone else, it’s much harder to save your money. So, get out of debt too. You may think you need to save up thousands of dollars before you feel you can start investing. However, nothing could be further from the truth. The time between saving and investing can be minuscule if you use services like Motif Investing, Acorns, or FolioFirst. For example, the amount you need to save before you can start investing in securities on stock exchanges are:
- $250 for Motif Investing
- $25 for FolioFirst
- $5 for Acorns
This is to make the point that investing starts with saving, but it doesn’t need to be a whole lot of money. Just consciously start setting aside money. For us, saving started with recognition that we will need money tomorrow. Recognizing we needed money later lead to getting and staying out of most debt, especially if it impacted our ability to save.
In Closing
Savings opens the door for a lot of things, lack of it also closes the door. So, I suggest you really look at your life and your lifestyle and consider, if you are not saving, what can you do to start. Then once you do that, next consider how you can use services like above to invest your savings faster. The reason being, we need the resource of money tomorrow. Savings set the foundation, and investing hopefully helps to grow a sustainable future.
