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Friday, 18 October 2013

Finding your investment money


I interrupt my ‘mini-series’ on the corrosiveness of debt to answer a question that I get asked quite often - how to I find the money to invest?  You know, this stuff.....



With the overall economy in the dumpster, salaries growing less than inflation over the long-term, and especially for high-school & college kids who may work part-time but the pay is barely enough to fund the all-important beer money, how can I possibly find the money to invest? 

Easy – you just need to pay yourself first.  And you can implement it in about 10 minutes.  Interested?  Well then read on.

This particular technique took me well into my 30s before I mastered.  (Tragic, I know.  But remember, my concept of the NITK is to share everything I’ve learned over the past 20 years in an attempt to help the younger generations).  And it is so simple – and I believe fool-proof – that you can put it into practice when you first starting earning income, whether from a paper route, a waitress job, a temp position but, most definitively, your first post-school job.

So how does one go about paying themselves first?  You do just that – you pay yourself before you pay bills, buy late night snacks, purchase that morning latte…even buy food and, yes, tragically, before you buy beer.  You see, if you don’t see the money, you won’t (and can’t) be tempted to spend the money.  In short, paying yourself first means you transfer a portion of your income (in whatever form it’s in) to another bank account – a newly-established bank account that you do not live on and that you, most definitely, don’t have a debt card or check book to draw funds from.

As I write on the NITK website, first you need to pay off your credit cards (see recent blog entry), then you need to pay yourself first…and you know what?  It doesn’t really matter how much you pay yourself.  What really, really (REALLY) matters is that you start as young as you can.  And you take this ‘new-found’ money and invest it in the greatest wealth creating vehicles of all time.

One key point I’d like to make…and that is that this really isn’t very difficult….if you’re young.  However, it does get increasingly difficult as you age.  And I’m not referring to the discipline of paying yourself first but rather the ability to build serious long-term wealth by utilizing one of the most powerful forces in nature….time.  And add to time some knowledge & discipline and you are, truly, 100% able to forget about your financial future.  You can, instead, focus on the important things in life – family, friends, hobbies, and anything else that floats your boat.

How to implement?  How much to start with?  Where to put the money?  Well, I’m not going to spoon feed you on this blog.  You need to check out NewInvestorToolKit.com to find out the details.