How Much Time Do You Have?
On average, new budgeters save $600 by month two and more than $6,000 the first year! Pretty solid return on investment.
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When payday arrives, do you give every dollar a job? Does your budget, more or less, account for all of your needs (even the less frequent, larger expenses)? Do you adjust, as necessary, so that your income supports the things that you need and want the most? And, finally, do you live comfortably on last month’s income (or you’re working toward it)?
If you answered “yes” to these questions, awesome. Budgeting, alone, can work miracles in terms of boosting your happiness and financial security.
… now, how about taking the next step?
As a budgeter, you spend intentionally and, financially prudent as you are, investing might seem a bit risky, or too complicated—or maybe you aspire to invest, but you just never seem to get around to it. But here’s the truth:
And it’s a powerful wealth-building tool.
If you don’t associate yourself with being wealthy, you’re in good company. For some, it simply seems impossible. For others, it’s off-putting, as in, “Who am I to deserve so much?” Or maybe, for philosophical reasons, you just don’t think too highly of ‘people with money’. There’s a lot of press about the good-hearted nature of people who live simply.
And, I’m not saying you shouldn’t live simply if that’s what makes you feel good—but consider the magnifying power of choice. Wealth opens up so many choices, and your choices affect not only you but all of the people around you.
More money could help you take your entire family on a memorable trip around the world, or buy your dream home. And, of course, there are more practical uses of funds like, for example, saving for a comfortable and enjoyable retirement—something not nearly enough of us are considering. Don’t you think it would be nice for your loved ones to know you’re OK? But, if that doesn’t entice you, imagine the satisfaction of being able to quit work so that you have more hours to serve your favorite charity? Or donating a change-making sum of cash to a worthy cause?
So, take the first crucial step towards being a fat cat: see wealth as a welcome possibility. And remember, building wealth doesn’t change who you are. Money is simply a tool that can help you amplify your purpose, and the possibilities are as limitless as you.
Investing can come across as budgeting’s snooty uncle, but it’s actually much more approachable than you think. The name of the game is leverage: you use the dollars that you have, right now, to earn more dollars.
Think about Rule One, where you give every dollar a job. When you invest, that job is to serve as a point of leverage. Your first dollar earns more dollars. Then those new dollars begin earning more dollars, and so on. That’s how you build wealth.
… and the secret to doing it successfully?
Once you’ve made sure that you’re investing enough, and that you’re doing it correctly (more on that in a moment), then your job is done. If you’re not interested in a career in finance, the less complex you make investing, the better off you’ll be.
Complexity won’t add any value to your investment performance and, worse, it’ll create anxiety-induced paralysis and/or poor investment decisions. Warren Buffet, the greatest investor of all time, said it best:
“… the active investors will have their returns diminished by a far greater percentage than will their inactive brethren. That means the passive group—the ‘know-nothings’—must win.”
Which means, you’re better off taking investment cues from Ron Popeil: “Set it, and forget it!”
Are you ready to dive in? If you want to learn how to invest—wisely and without undue stress—check out our Whiteboard Wednesday series, Invest Like a Pro. If you prefer book form, you can grab that, here.
As Jesse says in Invest Like a Pro, you don’t have to be a genius to invest better than most pros. Keep it simple, and you’ll beat 70 percent of professional investors. So, get going! The sooner you start, the sooner your money can start earning its keep.
Remember, budgeting is not restrictive. You won’t be spending less, you’ll be spending right. You can do this! Today. Right now. What do you have to lose? Except all that debt and stress. (Ok, so kind of a lot.)
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