The 5 Basic Financial Categories – Part 5
When I was in my twenties, I found myself in a very favorable investment opportunity [by accident, I might add]. The consulting company I worked for, offered employee stock purchases and I had signed up for the maximum percentage to match. Years passed and I forgot all about those stock purchases. One day with much excitement a coworker was telling me about how the stock had risen. In fact, most of the stock I had purchased all those years had pretty much doubled. I couldn’t believe it. This turn of events had now become the answer to my prayers. I sold the stock and what was earned was enough to pay for my very first post-college [luxury] vehicle. I was left with just one thought, buying stock is a powerful thing.
Don’t get excited yet. While that’s a true story, this is no way to invest. What happened in my twenties was a once in a lifetime event. However the point I’d like to make is that you need to learn how to invest so that my story can one day be your story if you execute a plan for it. Let’s discuss this 4th category: investments.
We’ve found that most people [which means “normal” people] have very little insight into the 4th of the 5 Mint categories. Category 4 is investments which is an asset in your Mint portfolio. [If you need a refresher on Mint, click the hyperlinks.]
Of the 5 categories, investments is the last one on our list of priorities, but should be our first. Here are just 3 reasons why:
- During the first few decades of your life, much cash is needed and burned. I can’t go into something I call my “decade calendar” at this time, but from age 0-9 (decade 1), you have no money of your own. From age 10-19 (decade 2), most spend the majority of their funds on themselves. From age 20-29 (decade 3), the money is spent on establishing a life for oneself. It’s tough to invest when you’re spending more than you have in hand. It’s also hard to justify investing when this occurs.
- Credit (i.e. credit cards) gets us behind and there’s nothing left to invest. Living on credit is “normal” and “normal” living is tough. That statement itself should be enough to convince you that you need to do something differently, invest.
- Because of the lack of cash and abundance of credit cards, we need loans for the really big purchases. Can you image purchasing the car of your dreams with cash? If not, you’re “normal”. I’m not “normal” and I want this experience and if you follow me this is exactly where we’re headed. As a result of ordinary thinking, it’s not until later in life [40’s and 50’s] that “normal” people get beyond the lack of cash and abundance of credit cards and I don’t want this to be you.
Here are a few investments that come to mind when we “naturally” think of investments.
- 401k / 403(b). Honestly, I can’t tell you how these totally work. The reason why is I just can’t imagine money hungry companies giving you [employees] a benefit that doesn’t profit the company more. Nonetheless, these are retirement benefits. It’s saving for life beyond decade 6 [the 60’s]. There is nothing wrong with saving for your future, but what about your now, the time you need it most? If a company offers a matching program for every dollar you put in, then take advantage of this savings.
The lesson here is this “whatever gets scheduled gets done”. In other words, whatever’s taken out automatically or systematic gets saved when it comes to your money and plus you can’t get it until a future date.
We have yet to see how these 2 will pay off for us, but I can tell you this; this savings sure does add up to more than what you’d ever save on your own. It’s worth that if nothing more. Remember this, normal people don’t save like this, that should be a sign to you that it’s worth doing. It’s worth it to keep you from being like everyone else.
- IRA / Stock. Let me tell you about this investment. I am fortunate enough to be a recipient of a pension, which is uncommon these days. So we decided to use these funds to open an IRA account. This account is setup so that we don’t blow what was a gift to us [from God]. It gives the flexibility to have your savings grow and you’re able to withdraw without the penalties of a 401k plan.
Investing can be a way for you to put away those unexpected funds. Don’t add the unexpected into the general budget. Hold it, pray about it, and ask [God] what to do with this money. Make the most of your investment; it’s not money to just blow.
If these are the only investments you can think of, that’s not okay, it’s just “normal” and I want to give you some examples of how to think beyond the norm. Investing is not an account, but a mindset. Let’s say you can turn $1 into $2, would you do it? That’s what investing is all about, how money can make money. You have a way to make this happen. Let’s say you bake cakes. If the ingredients to make that cake costs $10 and you sell your cake for $30, then your $10 made $20. That’s how you make money. Let’s say you’re a teacher, if you tutor students twice a week at $20 an hour. In just 2 hours per week, you made $40 from $0. You have the ability to make an investment of yourself. Do what the uncommon do, give investing a try.
Today is Friday!
Turning your gifts and talents into a product; that’s what we call investing. It’s you adding value and allowing that value to produce for you. Use what you have to invest into your life now. It’s not common and neither are you.