So, if you ever visited an investment seminar, then you certainly know what it feels like when you accidentally became a member of some secret financial cult with lots of acronyms that simply mean nothing for anyone who isn’t a part of it. ETFs, APYs, IRA… As they go through finance jargon, you suddenly discover that you forgot how to balance your bank account. Do not worry, it is absolutely normal to feel confused and helpless when you start investigating your financial condition. Nevertheless, you don’t need a finance degree to create a budget for next year.
There is no finance game plan that doesn’t involve getting a calculator and a drink.
Firstly, you need to go through all those necessary but dull procedures before you can move to more interesting activities. In order to multiply your money, you need to see what exactly happens to it. So, download some app like Mint or YNAB and link your bank accounts for a month. Be prepared to get an unpleasant surprise: how much money you spend on delivery services and uncontrolled purchases on Amazon. It may be embarrassing, but this is the only way to find money to invest.
Now comes the most exciting part – setting your goals. You shouldn’t think of something vague like “saving more” as it won’t work at all. This time, you need to use the SMART technique, which sounds too businesslike but actually works well. First, your goal should be specific. Saving $200 a month to the High Yield Savings Account at Ally or Marcus is a perfect example of a specific goal that you can reach without being rich or winning the lottery.
After you save enough money, you should think about stock market. It is useless to select some specific companies such as Tesla or Amazon, as you will panic after the first fall in its prices. Instead, you should open a brokerage account with Fidelity or Charles Schwab and buy a total market index fund. It means buying a small part of the entire economy rather than betting on one company. It may sound dull and slow, but it is historically proven to be the fastest way to get richer.
The problem is that people usually face some psychological barrier before making investments. So, don’t be afraid to lose courage and start. You should automatically transfer some money from your paycheck to investment account. It is like paying a bill, for which you will be reimbursed sooner or later. You will be shocked at the loss for several first weeks, but soon you’ll stop feeling it.