I was attending a wedding of a student of mine when a group of her family walked over to the table where I was enjoying the bride’s company. As they approached, she commented, “Oh, I know what this is about, Janine. You’re to settle a bet!” You can imagine the nerves I had then.
As the man in the lead (I believe he was the bride’s brother) stopped by my chair and the other seven folks clustered around, he asked me point blank, “Janine Bolon? Hi, we need you to settle a bet.” Uh oh, I thought. “How may I be of service?” was what actually came out of my mouth. He then began to state the problem.
It seems that there was a bit of conflict in the group about the best way to save money (a.k.a. invest it). Should you keep it in a CD, should you keep it in Bonds, should you save enough to buy rental properties, or should you keep it in a money market fund, etc. Basically, all these questions were excellent, but each individual of the group had their own reasons for supporting each choice. After a six-minute introduction to the problem, who was in favor of which choice and what each person thought my answer would be, the bride’s brother turned to me and says, “So, what do you think? Who is right?”
After I put down my fork (the chocolate cake was to die for, and while they were talking I was eating!), I calmly asked, “Why are you saving money?” For a moment I was met with dead silence and then three of the folks around the brother said (almost in unison)”We’re saving money because you said so!”
My dear frugal friend, when it comes to saving your money and how it should be handled never take someone’s advice just because they “say so.” I felt like I had really failed these people at the wedding party. They were following the 60/40 principle without thinking about what they were doing. They now have several thousands of dollars saved up and they were arguing about how they were to invest it with family members rather than INVESTIGATING the options available to them. Each person’s needs are different. Each person has a different financial situation as well as risk tolerance. Arguing about the “one” right answer is absurd! There is no “one” correct answer. Each situation calls for a different tactic. Each person will require a slightly different strategy.
The point is simply this. No one cares more about your money than you do. Because no one cares as much about your money, you will have to be the one who does the research, collects the data and evaluates the risk. Then, you will have to make a choice. That decision is what most folks dread. Why? They fear failure. Well, guess what? I haven’t met a millionaire yet that received a positive return on every single investment they ever made. You will make mistakes with your money. Accept that fact and you will be much less stressed. Accept the fact that some investments do well while others don’t. The key is to make sure that the money you invest won’t cause you to skip the house payment for three months because the investment return didn’t pan out like you expected.
Here are some pointers when it comes to saving money:
- First and foremost, why are you saving money? Do you want to be so wealthy you can buy an island when you’re 55? Do you want to have your own recording studio? Or do you wish to travel the world? By answering this question first, you’ll be guided on what options you will want to investigate when it comes to making your money work for you.
- What are the goals you have for the money you are saving? Many of you have short-term and long-term savings accounts. Well, your goals for each account will determine what you do with that cash. It wouldn’t hurt to have a dollar figure allocated to each goal, either. This will give you a benchmark at which to aim.
- Education, education, education. You must teach yourself what is a viable return on the money you wish to invest. Don’t take anyone’s word for something. Check out multiple sources on different funds and avenues. Ask around, but then, after all the data has been collected, make a choice and don’t agonize over it. You’ve done the best that you could at educating yourself.
Saving money requires a certain frame of mind that allows you to visualize what you want in the future. You also have to learn to face the fear you have of investing and do it anyway. Educate yourself as much as you can, make a choice and move on. Sometimes you’ll win big and sometimes you won’t, but the point is you’ll be moving forward and you won’t be standing around arguing about what is “right” with your relatives at the next wedding.