WHAT IS SAVING VERSUS INVESTING?
Everyday you wake up, you have 3 choices to make. Will you spend your money and lose it? Will you save your money? Or will you invest your money and try to grow it? Whichever one you choose can have a big impact on your lifestyle and options in life.
3 THINGS TO DO WITH YOUR MONEY
First, if you decide to spend your money, then you will always have to work to keep supplying that habit. You work, money comes in. You buy, money goes out. The cycle continues until you die. You’re really not much more than a funnel in the middle, watching money pass through you and hoping the supply never runs out.
Second, if you decide to save your money then you will slowly build a reserve of cash. This is a good first step. Over time this will make you less dependent on working as you build extra money up. It will be helpful in case of emergencies. Some of the most real parts of life just happen; like car accidents, impulse vacations, medical care, rare experiences, job loss or thousands of other possibilities that occur daily to people and suddenly large amounts of cash are needed.
Unless your savings rate is much higher than your spending rate, in the end it will still be like losing money (just at a slower pace) because over time the prices of things in the world go up so all the things that 5 dollars could buy 10 years ago will be fewer today. When you see a general rising in everyday prices and the value of your money decreases, that’s called inflation.
Third, by investing your money, you have the best chance of growing it to have more than you will need. When you don’t need something, you have a lot more control of a situation and give yourself options to do as you please. You can choose to work a job. You won’t be limited by prices and can experience things more on your terms. This is most definitely a luxury.
I’M BARELY SAVING ENOUGH EACH MONTH, HOW CAN I EVER INVEST?
Investing can be learned, practiced and developed like any skill or ability. You’ve learned plenty of skills in the past that you knew you’d need in life or wanted to learn. Investing doesn’t have to be any different. Take a moment to think of all the skills you’ve gained in life up to now. When you make it a point to learn and practice something, you improve at it. That’s just how it works. Time and effort spent have a result. The question is only where will you focus your time and effort.
The other day I was talking to a college student about finance and savings. They asked me why they shouldn’t just keep their money in a jar. Whether the student was being literal or playing devil’s advocate, I think there is value in considering the question. Money can be an elusive thing for some. But I believe the more you study the topic of money, the easier it is to find. Back to the question. I’d say the jar is about maintaining, not growing. And maintaining is only step 1. Growth is what really makes humans happy. Investing is about growth.
Invest your money or watch it disappear.
4 THINGS YOU CAN START INVESTING IN TODAY
Yourself. Business. Real Estate. Stocks.
