None of us can really predict what the future has in store for us, but there are a couple of things that are certain: we all wish to stop working one day and we all wish to have enough funds to do so. While the fact is that we can never be sure that we’ll be able to enjoy the fruit of our labor when the time comes, we should still plan like we will, and simply hope for the best.
Now, there are two ways we can ensure that, one day, we have a strong financial background to fall back to and those are saving up for the future and making smart investments, again, for the future. Of course, the sooner you start planning for the future – the better because that will leave you enough time to strategize and make necessary adjustments as you go.
Saving vs. investing
Before we go deeper into exploring different ways you can save and invest money, let’s first clarify the difference between the two. Saving money involves putting aside any excess funds, as well as trying to cut down on your expenses so that you are left with more money on the side in the end. On the other hand, investing money involves committing a certain capital to an endeavor that – preferably – guarantees additional profit in the end. Now that we’ve made the difference obvious, let’s see how you can both save up and invest in a wealthier future.
When saving money is concerned, there are a couple of easy ways to do so:
Budgeting is a great way to save some bucks on the side each day. Over time, this sum will grow, leaving you with hefty savings. So, identify your mandatory expenses and after you subtract them from your income, see how much money you’re left with. Next, assess your daily monetary needs (these should extend to your next paycheck) and see if you can make any cuts in them. For example, instead of having a cup of $5 coffee every morning, drink a cup either at home or at work.
An emergency savings account
Another way to make sure you’re not overspending is to start an emergency savings account. Automating this process brings even better results as the funds you allocate to this account will be taken off of your paycheck as soon as it hits your banking account, so you can just pretend that that money never existed. This way, you’ll be guaranteed that you are generating funds in your emergency savings account which you should never tap into unless you absolutely have to.
Now, when it comes to investing, it’s important that you:
Learn more about finances
By getting a bit more familiar with the world of finances, you’ll be able to assess your financial situation better. This will allow you to make smarter and more calculated actions when it comes to investments, thus making sure you don’t end up in unnecessary debt. There are numerous resources available online, such as a useful financial dictionary, webinars and online courses that will help you expand your knowledge. Besides, as with anything in life, the more you know about the matter at hand, the easier it will be to decide on the best course of action.
Ignore current trends
Yes, by current trends, we mean cryptocurrency. One of the reasons it that here, the traditional fundamental metrics investors look for when attempting to assign the right value to an asset do not apply. This means that you can’t actually assess the situation properly, which may lead to you losing all of your funds. Next, this asset has no real long-term value, which makes investing in it not the smartest option. Finally, the SEC (Securities and Exchange Commission) can’t help you in case something goes wrong because cryptocurrencies do not fall under their jurisdiction.
So, no matter if we’re talking about saving or investing it’s important to keep in mind that the sooner you start, the greater the funds you’ll be left with in the end. However, it’s also important that you educate yourself properly before you start making any financial decisions so that you don’t end up in a financial pitfall.
Jessie Connor is a passionate writer and researcher from Brisbane, contributor at several business and lifestyle blogs, hooked on yoga and healthy living. She loves to spend her free time travelling, reading and of course – shopping!