The summer’s here and everybody’s getting physically fit. Some do sports, while others go to the gym to keep themselves healthy. The habits to be wealthy and the habits to be healthy are similar. It’s important to take steps to make our finances healthy. Here are 5 steps you can take to improve your investing fitness:
1. Have the Right Mindset:
A lot of money problems are rooted from having the wrong mindset toward finance. Upon receiving their paycheck, many people tend to prioritize bills and expenses over savings. It’s important to teach ourselves the right mindset or a “Pay Yourself First” attitude. This means, hard-earned money should be saved and invested first and expenses should just come next. This mindset will come in handy especially when you start investing.
2. Examine Your Financial Health:
It helps if you know your current financial status by doing a self-check or with the help of a financial adviser. Are you currently in huge debt? Do you have plenty of bills to pay? How much money do you have in bank? What are your insurances? This will help you determine how much you can save and what kind of investment suits you best. Knowing the condition of your financial health will also help you create a reasonable financial plan and set achievable goals.
3. Eliminate Debt:
Before you can save or invest your money, you need to get rid of debt first – student loans, credit card debt, car loans, or mortgage payment. Earn a guaranteed return on your money by paying off credit card debt that is costing you 20% interest – that’s already a guaranteed 20% on your money. One of the reasons why many cannot invest is that they are living paycheck to paycheck and they barely have any money left because of debt. Once you’ve paid off your debt, only then you’re ready to invest.
4. Take Baby Steps:
Put your goals into reality. Educate yourself about the types of investments, their risk profile, and rate of return. Make sure you learn something new about finance daily. Try new finance apps or websites. Pay yourself first. Know your needs and wants. Avoid overspending. Be disciplined. Be patient as you see your money grow. Monitor your performance regularly. Check if you’re on track. These are some small steps that you can take to help you realize your financial goals.
5. Start Now:
The best time to start investing is right now. It’s never too late; never too early. Sooner is better than later. A lot of people regret not being able to invest during their younger years or when their finances were strong and stable. To avoid this common financial mistake, open a savings account and deposit a small amount each week.
These are the consistent behaviors or attributes that contribute to investing fitness. Each step is manageable and won’t require a lot of effort and sacrifice, but can have a tremendous impact on your current financial stature.
Davenport Laroche is a leading shipping container investment agency based out of Hong Kong.