Start where you are, and go from there. This is the basic rule for anyone who’s beginning something new. There’s no way around it and investing is no different. If you want to achieve your financial dreams, then the onus is on you to take the steps to make those dreams a reality.
No one is saying that it will be easy. What I will say is that sticking to the plan puts the odds in your favor that you’ll achieve your goals.
This past week, I heard someone say that they achieved financial independence by always striving to do one percent better each month. That struck a chord with me. It’s an achievable goal for many people. Once you know what you want your money to do for you, your subconscious mind focuses on ways to make it happen.
If you’re ready to ensure that Tomorrow You is financially secure, then start today. Set up an automatic transfer from your paycheque in the amount of 10% (or 5% or 2%) of your net salary. If your budget allows, you’re always free to invest more than 10%. Just make sure it’s an amount that you’re able to stick with over the long-term.
Ensure that amount is sent to your brokerage so it can be invested in a diversified, equity-based exchange traded fund. Set a reminder on your phone to increase your contribution amount by 1% at the start of each new month, or every 90 days. Pick the interval you’re most comfortable with, but commit to increasing that percentage. The sooner you invest your money, the sooner it can compound and grow.
“That’s a a nice idea, Blue Lobster, but exactly how am I supposed to find the money to do this?”
Here’s a list of a few suggestions that come to mind. Not everyone can do these, but it’s a starting point. I have a feeling that if you really want to invest for your future, you’ll figure out where find money from your current spending. In no particular order, here are some ways to get the money for your investments.
- As you pay off your debts, use a significant portion of your former debt payment to increase the amount you’re contributing to your investments. If you were paying $700 for your vehicle, re-direct atleast $350 of that to your investments and use the other $350 however you want.
- Once your emergency fund is holding 9 months of expenses, stop funding it and re-direct that money to your investment account.
- Track your expenses and see which ones can be eliminated. Use your kitchen more often so that you’re feeding yourself instead of paying someone else to do it.
- Rotate your streaming services instead of paying for all of them all the time.
- Go to the library more often than the book store.
- When you get a raise, make sure that you re-direct atleast third of it to your investment account. Spend the remaining two thirds however you want.
By following any one of these suggestions, you will be able to increase your contribution amount by atleast 1% with ease. Some of these options might allow you to increase your target amount by 5% or more. You don’t even have to do all of them! Maybe your goal is to save only 20% of your net income, so you’ll hit that target faster than someone who wants to save 50% of her income.
Whatever amount you want to invest, you won’t hit your target unless you start. Today. As in, right now. Once you start, don’t stop. Keep paying off debt, padding your emergency fund, and investing for the future. When you’re finally out of debt, do your very best to stay out of it. Start sinking funds so you can save for your short-term and medium-term goals, then pay cash. Along the way, never stop investing and always re-invest your dividends. Do one percent better every month, every quarter, every year! At some point, you’ll look up and realize that you’re investing 25% or more of your income.
And you’ll be damn proud of yourself or having do so.