Will Your Money Go or Grow?

Everyone appreciates money.  True... money can't buy everything but it can buy a lot of things that we desire and it makes life easier. In order to get your money to grow, you must put the right principles in place. Let's look at three methods people use with their money (spending money excessively, saving excessively, and investing).

Excessive spenders have a consumer mentality. Before money is placed in their hands, it is already gone. Excessive spenders enjoy life today at the expense of tomorrow. Their mindset of, "That's what money is for - to spend it!" and, "I have money, so I must immediately go out and buy," keeps them in a cycle of debt and lack. Often the excessive spender's personality is set in motion by insecurities. They need to have what everyone else has or to show off equals their self worth; because inwardly they are spiritually and/or emotionally lacking.  Immaturity does not cause you to prepare for the future, financially. While money is meant to be used and there is nothing wrong with enjoying life, or having nice things, having a mindset like the excessive spender is not responsible, healthy or well-balanced.

Excessive saving is another method that people apply with their money. In this case money represents a security net. They are saving because they don't feel secure. So, every time they spend some money it seems like some of their security is spent. They are often upset and angry when a dime has to be spent on something that they feel is not a need. Excessive savers somehow think that they are going to be rich by saving. This behavior is motivated by fear or greed. Many times the thing that they have feared the most comes upon them and wipes out their entire savings. While saving is an excellent practice, many become over-the-edge with their savings rituals, and get into the area of greed. We must have a well balanced plan with regard to growing our finances and just saving is not enough.

The third method people apply with their money is investing. Investing requires a paradigm shift from the traditional ways of thinking about spending and growing money. Investing requires you to put your money into something [an investment] that has a strong potential for a return. This can be risky. Many people choose not to go this route due to the fear of losing their money. However, sound investing is the best way to get your money to grow. Shrewd investors understand that their money needs to be in circulation in order to bring in a return. They know that good, sound investing will cause their money to work for them, so they won't have to work for their money. Investors are willing to delay gratification today to enjoy a more fulfilling tomorrow and they weigh the risk of losing money with the knowledge and willingness to let it go so that it can grow. The right moves today will improve their state of living in the future and investing is the tool that will cause your money to grow.

 Think of it this way: Investors are buyers of things that appreciate, while spenders squander on things that depreciate. Gain the knowledge and the courage to maintain a healthy balance of saving, spending and investing, so that your financial situation can also be healthy and increase.

Before you invest, you should save 3 months worth of expenses in the bank, or something fairly liquid (so you will have access to these funds if needed). Then, use the remainder for investing. A good guideline is to take the money that you have set aside for investing and break it up into thirds. Use each third for a) safe, b) moderate and c) riskier investments. Begin to invest in sound investments (things that in all probability will bring you a return). Some investment vehicles are mutual funds, stocks, bonds, REITS, commodities, business ventures, and real estate, to name a few.

There is an abundance of information and resources to help you on this path to becoming a better investor. Use the tools that are available to you to make wise decisions with your finances. By the way... make sure you enjoy yourself, and buy some things that you like, but don't go overboard!

Happy Investing!

Allen Forbes