Learn How to Invest Money – Save, But At What Cost?

Save your money. We are all very familiar with this saying. However, at the end of the day what is the true purpose of saving? Why do you save? What is your main objective when saving? Most individuals will admit to saving now in order to spend at a later date. They save to spend. But what true value-add does that create? Honestly it is nothing. Shouldn’t saving bring on stability, safety and security?

Once upon a time I was a save slave. I saved a portion of my pay check each pay period and continued on with this routine for a few years. I admit that saving does build discipline but it also develops a mental block in your paradigm. What I mean by this is sooner or later you will lose sight of your true purpose of why you are saving and start saving without focus, objective or cause. Simply put, save for the sake of saving.

In the investment arena, saving means not investing. Let me digress. If you are saving now, then you are not spending now and ultimately that equates to not “spending” your money on investment vehicles to improve and increase your financial position.

Do not retire your money by putting it into your savings account. Put your money to work in your quest in reaching financial freedom. Saving is an integral component of your investment strategies alongside your financial plan, but do not save for the sake of saving. If that is the case then you will just temporarily save your money to then go ahead and spend it later on. Save with cause, spend with purpose.

Some great sound advice can be found in the 2007 Consumer Reports Ultimate Money Guide (III) – Investing and Goals, it states that the steps to a golden financial future are as follows:

• Mind your spending: Create a spending plan to track monthly spending. If spending exceeds income, find ways to cut spending.
• Weigh your dreams: Jot down major financial goals and figure out how much is needed at specific times.
• Shave and save: Cut back on expenses and save each month in appropriate accounts in order to achieve goals.
• Know the deals: Know the pros and cons of each account: 529, 401(k)/Roth 401(k), and IRA/Roth IRA.
• Rainy day money: Plan for the uncertainty before it happens. Set aside three to six month’s worth of asset to cover the unexpected events.
• Ditch the debt: Use low-rate credit cards and pay off balance every month

Remember – save with cause, spend with purpose.