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“Someone’s sitting in the shade today because someone planted a tree a long time ago.”—Warren Buffett, CEO of Berkshire Hathaway and billionaire investor.
The Financial Tempest of Life.
One of the biggest challenges we face as humans is our tendency to plan for the NOW instead of the LATER. I’m guilty of it, you’re guilty of it, every single person promoting personal finance—or ‘poor’sonal finance if you will—is guilty of it as well. We’re talking every age, race, gender, color, income-bracket, height, weight, etc. No matter our background, we tend to forget the benefits of an investing mindset.
Not only are humans creatures of habit but we tend to be creatures of scarcity as well; if we find ourselves adrift on a stormy financial sea, we can’t imagine ourselves steering clear of the monetary icebergs, let alone surprise waves plunging our bank accounts beneath the sea.
So what do we do?
This is especially crucial for those entering the job market—regardless if you went to college for a degree or not. Many entering their late-teens and early-twenties find—like I did—that the world can be an unforgiving place in terms of financial well-being, happenstance, and luck. The world acts as a schizophrenic judge:
Oh, you just lost your job?
Congratulations, here’s a broken car-axle.
May your will to live die in a fire along with your meager savings.
For those lucky enough to get high-paying jobs early on, it becomes less of a hassle; surplus money that doesn’t cover living expenses can be stored in a savings account. After saving for a bit, that money can then be used as a primary investment for several things—retirement savings, a down-payment on a home, paying off debt…you get the picture.
For those who didn’t land a ‘good job’ (whatever that means) early in life, it can be quite an ordeal. Combine a significant other and kids into the picture, and you can end up working insane hours just to get by. Not only do the walls close in but they laugh as well.
One unforeseen expense becomes debt, which can become more debt, which then snowballs into a series of calamities.
So what do we do?
It remains important to obtain an ‘investing-mindset’ early in life. Before any possible relationship, kids, combined student-loans, or hefty mortgages can threaten to tear life asunder, one can simply get a head start if they make a commitment to not only put a certain amount of money away each month…
…but apply that same mentality to other parts of their life as well.
It Helps Build the Potential for Compound Interest Early.
This article doesn’t explicitly deal with compound interest (that article will come later) but it will shine light on how even a little bit of savings can earn interest over time. Regardless if you put a little bit of money aside into a high-interest-savings account, company-sponsored 401k, IRA, mutual funds, or any sort of nonsensical acronym that promises money earning money…that money is money that you didn’t have before.
If you set aside $50 a month for 48 months and watch it grow, putting it into one of these vehicles would net you—on average, assuming the standard market-average-return of 7%–$2,748. If you hadn’t put that $50 into something which charged interest, it simply would’ve netted you $2400. That’s an extra $348 you didn’t have!
Now it’s easy to say that’s not a whole lot of money and you’re making something sound easy that isn’t easy. To some extent, this is true: a lot of investment bundles provided by companies have minimum starting points that usually hover around $1000 to $5000 or more.
Asking people to save up that amount of money is almost like asking a fish to swim out of a whirlpool; some families are drowning in so much debt that having an over-drafted bank account is the norm. They couldn’t even imagine saving $500, let alone $1000.
Which, of all things, leads us into benefit number two…one that comes when we realize what must be done to start saving…
You Start Looking for Cracks to Chip Away At.
If we’re drowning in debt, we want to try to find a way to get out. Once we realize must be done in order to create a better financial situation, it becomes necessary to do whatever it takes. That mantra has been borrowed ad nauseum—but it becomes necessary for those facing a lifestyle that affords little-to-no-savings.
This includes everything from taking multiple-jobs, to even taking a side-hustle that is done for the purpose of making money to save or invest.
This is a prevalent mentality we all must sustain when our back is against the wall. Even yours truly has set up this blog not just for writing but also for the goal of making extra money to save and invest. When we see a problem, we tend to look for a solution.
Where all side-hustles and early investment habits begin is with the advent of a shaky financial foundation.
Because let’s be completely honest: if you had a satisfactory job that provided not only great pay—enough to not only live on but set aside for future—you probably wouldn’t think about starting something unless you’re a born entrepreneur. Maybe you have a business idea occasionally…but if a job provides security, then what’s the reason to leave the shelter?
My main reason is a little different—even though I work in sales and can make ends meet, my true passion is writing stories. Think fiction. Even screenplays. Becoming a full-time filmmaker is something that I’m striving towards. I don’t know if it will be a possibility in five, ten, or fifteen years but I’m willing to do whatever it takes.
We are always quick to build a shelter when it’s raining rather than when the skies are clear.
And once we build the shelter we then find out the third benefit of adopting an investment mentality…
It Bleeds Over Into Other Aspects Of Our Lives.
Once we get finances in order, we start to look for other things we can control as well. These may become our eating habits, our fitness, our relationships, and our mental health. If we start planting the seeds of better eating, fitness, and quality time with the ones we love, then it can yield greater dividends for years down the road.
I’m not saying that unless your finances are in order, you can’t take care of yourself physically or call your relatives…but once we remove the theoretical financial icebergs that threaten to take down our mental Titanic, it becomes much easier to do so. Developing a mentality to become financially stable BY ANY MEANS NECESSARY (legal, of course) can eventually lead to similar developments in love, school, and work.
So with all of this in mind, let’s get to work.
Let’s crush our dreams together.
