Managing personal finance is considered one of the most critical areas of your life, and you should always know how much you have. Why? Because you can easily slip and spend more than you should or it can be the opposite – saving so much you don’t have the time to enjoy the money you made. It’s best to come up with a financial plan that suits your lifestyle and your earnings to not go from one extreme to another.
Many people avoid this topic, or the topic quickly spikes arguments in the family because it’s a touchy thing. It’s personal. You have to face what society calls “success”. You have to face your mistakes or mishaps. Maybe you had to borrow money, but you are ashamed to admit it so you’d instead get into a fight. Perhaps you earn more than enough, but you don’t want anyone to take advantage of you. Finance is much about the psyche as it is about surviving.
Today, we will touch on everything needed – investing as a part of your money-saving plan (investing in your future, in your goals, etc.), and saving as a logical step that goes along with investing. This is how you can improve your financial life.
Money personality
Money personality is a real term in psychology, and it mirrors the way you were taught as a child or rather built a construct around money that makes you behave a certain way around it. There are generally five types of your relationship with money and how you deal with it. You may be an investor, big spender, saver, shopper or debtor.
A quick read that could give you a better and realistic insight into your personality would be a book How to Worry Less About Money, by John Armstrong. The book summarizes your connections to money and how you tend to compensate for what you saw in childhood from your parents or maybe something you never had, but everyone else did.
It doesn’t have to be something material – it rather manifests as overspending to compensate for your lesser satisfaction with the life you are currently living or saying you will be happy once you get rich. We are not saying money can’t make you happy, but are millions necessary for you, or your marriage is falling apart because you won’t talk enough with your partner? Once you get real with yourself, you will be able to devise your strategy and make money work for you.
Investing is saving
Stock investing became extremely popular over the years, especially in the time of the pandemic. Look at stock investing as if you were to invest in an apartment you will rent later.
This is called passive income because you will get rent money every month, but you don’t have to buy a new apartment every month. This way, you invested, and now it’s up to you whether you will save that money for retirement, your kids or some guilty pleasures.
Fortunately, in the age of technology, investing has become easier than ever. What we advise is researching your area of interest. You might want to invest in Tesla, or maybe your interest lies rather in oil. Despite a decline in consumption, oil remains an essential market asset, and you can rarely go wrong with that kind of investment. This is why experts emphasize that trading is not gambling once you open a trading account and start learning and taking advice from your broker.
You will see how much patience, analytics, and knowledge about the world economy is needed so you can build up and make stock investing your additional income. This is always useful and important. We’ve seen how much savings can be meaningful in 2020 when things are more insecure than ever, and we don’t know what 2021 will bring. That’s why it’s essential to start slowly, not go overboard but understand that you need to learn and you cannot go wrong with investing even a little bit.
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