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Schools have failed to teach us how to manage money once in the real world. We’re all going to be earning money, spending money and hopefully, saving money, and yet many of us DON’T KNOW what money even really is!! It sucks, and it doesn’t help us. Want to live the rest of your life from paycheck to paycheck moaning about not having enough? Nope, NOT ME.
The education system ain’t helping, so we have to do it ourselves. And that starts with acquiring a Financial DIY Mentality. We need to learn how to invest, save and retire, so we can all live financially free ever after (see what I did there)
After reading From Millennial to Millionaire by Matthew Miller, I realised that investing is really not that difficult and is pretty simple if you follow the right steps. Investing is definitely the best way to save for retirement, and if I were American (and had a job), I’d be all over my 401k right at this moment. If you follow the exact steps to investing in your 401k, you are guaranteed to retire a millionnaire (no kidding). But if you even if you’re not there yet, you can start with acquiring that amazing DIY mentality.
Acknowledge your responsibility
Let’s face it, you’ll probably live a pretty long life. Every year more people are reaching their hundreds (crazy) and technology is just going to get better. But who’s going to finance your life until then? I wouldn’t want to rely on the government and definitely not on my poor children.
We have to start by valuing our future life. Do you want to retire on a yacht in the middle of the Caribbean or in some little cottage far from everyone? What’s your lifestyle going to look like?
I’m still in my early days of thinking about retirement, but mostly I see myself as the super nanny traveling the world buying expensive gifts for all the little ones. Who knows whether that will happen, but guess what? I have control. I get to decide how much I want to retire with because I have a DIY mentality.
And if I have one, you can get one too.
Not to put pressure on you (ok maybe a bit), but time is money. The earlier you start investing the better. Every year you procrastinate investing is another year of easy money lost. In Matthew’s book example, Adam starts investing at 35 instead of 22, like Eve. Because of this, he loses $60,720! That’s huge!
No matter whether you’re planning on investing through your job in a 401k or some other kind of investing, the sooner you start the better.
I’m starting now, still in university, and I’m educating my 16 year old brother all about it too (you better be reading this, Struan). Start with a little bit of money and watch it grow. Soon it’ll become your money baby and you’ll keep nurturing it until you become a millionaire (the perks of being a money baby mother).
Be emotionally strong
Investing is as much a psychology as it is finance. We’ve all heard the horror stories of people losing all their money and going bankrupt because of the stock market. We’ve all been warned to keep out of the market because ‘investing is risky’. Well, I more than disagree. The market returns an average of 8% every year. That’s it. Punto. Nothing else. Don’t look at the decreases and increases, stay away from the daily financial news. Have faith in your money baby.
Investing is as much a psychology as it is finance
It’s ok to get excited (I do) but don’t do anything stupid. Don’t withdraw early from your 401k or pension plan, don’t sell when you start getting scared. Cultivate that self-discipline.
I love my weekly finance magazine, MoneyWeek, but sometimes it gets too much. Every week they tell me I should buy this and sell that, that I should invest in Bitcoin but also that I shouldn’t. Too much info! Sometimes we need a break.
It wouldn’t be a Financially Mint post if I weren’t talking about Financial Education. What I love most about learning finance is that I feel in control. Once I become the Knowledgeable Finance God, no one will able to scam me, scare me or tell me what I should be doing with my money. I will know what to do and I will know how to get the money I want. I know I will retire a millionaire, because I will be in complete control of my finances and will know how to use them.
Do you also want to be in complete control? Educate yourself. Do some Money Experiments, take some finance courses, read some books and get that DIY mentality. Then we can both become Finance Gods together.
I want to thank Matthew for sponsoring this post and for sending me his thoroughly explained book on DIY Investing and 401ks. I’ve learnt a lot and so can you, the reader. So many authors put very vague recommendations when it comes to investing, but Matthew gets specific (for example, start investing with 100% in stocks or at least 90%, invest in tracker funds, etc). More books mean more financial knowledge, and we both know you can never go wrong with that.
If you’re interested in getting started on your Financial Education I’ve also created a short ebook so you can start now and for free. You can also check the Financially Educate Yourself part of my blog. Enjoy!