I am a ready fire aim type guy. Meaning that I like to just get it done. I told someone recently that I do things NOW because if I put it off it tends to never get done or it gets forgotten.
That said, there is a lot of strength in planning. Especially when it comes to your money. If you have been following me for any length of time you know that I promote this idea of starting NOW. But even if you are going to start NOW there are some things you should get together before you launch into the wonderful world of investing.
- Create a budget
A budget is telling your money where to go so that you don’t look up at the end of the month wondering where your money went. The Dave Ramsey approach is to map out every single dollar so that you have zero left at the end of the month. This means that you will map out your fun money, your bill money and the money you plan to save and invest.
I like this strategy because if keeps you focused. If you budget every dollar this helps you see when you are spending outside of the plan. If you budgeted $100 for entertainment and you spent $150 this means that something is going to suffer.
A budget isn’t as difficult as most people might think. You don’t need some fancy form and you don’t need a template or spreadsheet with formulas and ratios. You can sketch out your income and expenses on the back of a napkin, in a journal or my favorite in a google spreadsheet that you can carry around with you electronically and modify either at your computer or on your phone.
Another great tip for budgeting, and another one of my favorites, is the Mint app. Mint is great because you can sync all of your accounts into one spot. This is your savings, checking, credit, investment, mortgage, car note, all in one spot. If you aren’t using Mint you are losing, BIGLY.
- Decrease your expenses
I am conflicted with this one because I know that it works but I wanna ball though. The key is to look at your long term goals not the short term now. One thing I have always been is a long term thinker. I don’t want to travel coach, I want to travel first class and I cant get first class or private by balling out the 9-5. I choose to sacrifice the now for the later so I cut back out of my working income to build up assets that will let me buy the luxuries. ASSETS BUY LUXURIES and your job isn’t an asset.
So, after you create your budget you need to analyze areas where you can cut back! You might have to go out to eat less to reduce your entertainment budget, you might have to take the train to work instead of driving and blasting the AC, you might have to take lunch to work or chill out on the lattes.
I am conflicted because I believe that if you work hard you should enjoy life. The problem with saving and cutting back is you tend to pull back in other areas. You work less, you save less you enjoy life less. I am not an advocate for living below your means I am an advocate for expanding your means. But often times in order to do that you have to cut back so you have capital to invest.
So, just like the rubber band, you have to go backwards to go up. Cut your expenses and then use all that extra money that you had but were just wasting to go all in on your personal development and your investments.
- Increase your income
This is key. As I said above, its not about living below your means its about expanding your means. A lot of time your means can be expanded by using some creativity. There are so many ways to make money these days if you are creative and don’t stick to the dogmatic ways of clocking in and turning up.
You might have to sacrifice some turn up and you might have to sacrifice some weekends for the sake of your income. I always tell people that your wealth is in your weekends. If you find the energy to go outside of the norm and put in work on the weekends you will not only make money while others are spending but you will be making money at a time when you would be spending. Additionally, you still can live out of your 9-5 money. That extra dough could be another $1,000 that is invested each month or saved for a down payment.
Of course you can gain more skills, get a promotion and do all of that and you SHOULD. This section is about just finding the way. There are so many ways you can be limited but you only need to find that one way to win.
- Read read read
Stop taking investment advice from non investors. I was reading an article that said you should not seek advice from your neighbor and they were 100% right. Unless your neighbor is Warren Buffet or a successful investor you don’t need to be getting your advice from them. I only seek advice from people who I would trade places with. If your neighbors advice was so on point don’t you think he would be taking it himself?
The next best thing to getting advice from a pro is to read the information from a pro. I recommend that you get some books by Warren Buffet, Benjamin Graham and Jim Crammer. You will also want to read Random Walk Down Wall St which is a fantastic book. I would also recommend Investing for Dummies which talks about not just stock market investing but real estate investing.
You also need to watch finance TV, read finance articles and still seek help from a professional. If you need any help we have professionals here at Todd Capital that would love to work with you. Email firstname.lastname@example.org for more information.
- Keeping learning and educating yourself
Life stops when you stop learning. The greats NEVER stop learning. I like the quote by Warren Buffet where he says that he reads 6 hours a day so he sees things people don’t see. The man is worth $60 billion and he is still reading? That should show you how important it is. I think that Warren reads both to attain more wealth and to protect his wealth. Its not enough to get the money you have to know how to keep it.
Never stop learning, never stop listening, never stop growing. The key to being a great investor is knowing more than other investors and you cant just rest on your laurels. You have to keep going. I recommend that you keep finding more investment books to read, keep reading the articles on google finance, keep reading money magazines and just become obsessed with the process. Obsession is the key. Don’t just drink the stock market kool aid, bathe in it.
I know that you are ready to get off the sidelines and get in the game so email email@example.com to join our investment club. Great things are happening and you need to be a part of it.