5 Investing Habits That Will Help You Save Effectively Towards Your Future
As a young adult, the most common things we’ve been taught are basic survival skills, such as cooking (at least one type of food), household chores etc. But how many of us are taught the basics of money management and how to invest?
A lot of people believe that investing money and building wealth is a complicated affair that is completely out of their reach. We totally disagree with that! This is why we would be sharing with you 5 simple habits that you can Inculcate to save money and invest in your future.
- Invest as soon as you start earning:Starting early allows your money to grow exponentially over time, even if you don’t have much to invest. Neglecting to invest even small amounts today will cost you in the long run. The earlier you start, the more financial security and wealth you’ll have. Remember that you’re never too young to begin planning for your future.
- Use automation to help you stay on track: Making use of automation tools is the best strategy for saving and investing. Automation works because it anticipates that you could easily go off the financial rails and be tempted to spend money that you shouldn’t. It’s a discipline you set up that allows you to outsmart yourself so you manage money wisely.
- Plan for short-term goals and emergencies: Saving and investing are two separate things. Saving is when you keep cash at hand for short-term planned purchases and unexpected emergencies. Unless you have a huge amount of cash reserve, your savings should not be invested because the value could drop at the exact moment you need to spend it.
- Invest money to establish long-term goals:Investments are meant to grow money that you spend in the distant future. It could be for retirement or any other long-term goal. You should try to invest a minimum of 10% to 15% of your gross income for retirement.
- Adopt Investments based on your HORIZON: Your investment horizon is the amount of time you need to keep your investment portfolio before spending it. Here’san easy shortcut, subtract your age from 100 and use that number as the percentage of stock funds to own in your retirement portfolio. In general, the longer your horizon the more aggressive you can afford to be.
The way to build your wealth is to start saving and investing as much as you can as early as possible. But there’s no shame in starting small. Putting aside N10,000 a month is better than nothing. And if you’re starting late, don’t stress about it, just get motivated to start right now.
Taking care of finances plays an important role in our lives and deserves sizable attention. Budgeting, saving, and accounting for your debts are disciplines that should be learned early. If done correctly, they will set you up for financial freedom.