The Money, Honey: Investing ~ You need a Plan!
Everyone would agree that when it comes to investing in the stock market, just randomly dumping money into a stock without a plan is not a good idea. You might hit it on the nail once in a while, but for the most part, that won’t get you to retirement or a good college for your kids or any of the things you’re saving for for your future.
Last time we talked about doing a bit of research, buying at least one stock that pays a dividend, going into your portfolio and re-balancing your stocks at least once or perhaps twice a year, and gambling with a small percentage of your portfolio so that you feel you’re taking a little bit of a risk for that electric feeling you might not get with more conservative investing.
Well, here’s another part of your financial plan: make sure you decide on a percentage of your income that you are comfortable setting aside for investing and then stick to that. Let’s say, for example, that you feel you can invest 10% of your paycheck each week or month (depending on how often you are paid). Now, give this some serious thought, because I’m going to ask you to make a commitment to this and stick to it, no matter what. Don’t decide that that vacation to Hawaii takes precedent over your investment plan. Instead, set aside a percentage of your income for vacations and luxury expenditures (say, 5%) so that you can save toward those costs, and then you should be able to stick to the plan for any and every budgeted item. In this economic climate, it makes good sense to adhere to a plan and not go renegade financially. That way, if anything does go askew with your job, you will be more prepared than if you just fly by the seat of your pants.
Another part of the plan is to reward yourself for good behavior. Build it into your budget plan. That way you won’t be tempted to cheat. Put a certain amount of money out of each paycheck aside for just plain fun. Let’s say that you set aside $25-$50 that you give to yourself to do as you please: go out to dinner, go to a movie, save for that iPad, whatever strikes your fancy. Now obviously this won’t get you to that chateau in France next summer. This is not what this amount of money is for. In order to have money for that kind of expense, you’ll have to do an actual budget item that puts aside more money that $25-$50 per paycheck. No, this is just fun money, meant to make life more joyous for you. And whatever you do, don’t frown when you’re spending it. Put on a big grin and ENJOY!
The last thing I would encourage you to do as you’re parceling out these budget items is to set aside some money for giving. You can never give enough of your money away; I am convinced of that. There is something rewarding about the act of giving that comes back to you many times over, not always monetarily but definitely emotionally and spiritually.
In Jacques Ellul’s classic book “Money and Power,” he tells us that money has a firm hold on many people, and the way to “demagnetize” it is to give it away. In our culture, money takes on more meaning than it often deserves. So don’t let your investments or your money rule you; they belong to you, not vice versa.
And that’s a plan you can easily live with.