Money Musings đź’ What stopped me from investing
Only half the people in the U.S. invest - and women tend to invest 40% less than men, on average.
These numbers are even lower for communities of color. In 2019 only 34% of Black people and 24% of Latinos owned stocks, compared to 61% of white people.
The problem is many fold, but the end result is that many people do not have money available to invest. It’s not something that’s reasonable or feasible for most.
It turns out investing is a privilege. If you have that privilege, you want to use it and have your money grow for you - exponentially. 🌱🌱
Here are the things that kept me from getting started even when I had the money to invest…
1. INVESTING CULTURE.
Things are getting better (more slowly than I would like) but the investing world is still dominated by older white men. Despite my finance degree and finance background, it still felt inaccessible to me.
Yet I learned that my super simple, unsexy way of investing beat out even the people who sounded super confident about investing.
Spoiler alert - there is no correlation between sounding confident and knowing anything about investing. And I’ve noticed people tend to talk a lot about their wins and are pretty quiet about their losses.
2. FEAR.
I was afraid of losing the money I worked hard to save. I saw that people lost a lot of money in the Great Recession and I didn’t want that to happen to me.
Yes, there’s risk, but if you invest for the long-term you have time to wait out the decreases in the market. You aren’t at the mercy of the market because you have the power to wait.
Over the last 20, 30, 50 years, the market has returned over 8%. And that’s including the dips we saw in 2007 and more recently with the pandemic.
That’s why you hear me say (over and over) to invest for the long-term.
3. WAITING UNTIL I KNEW EVERYTHING.
This one is a biggie. Yes, we want to understand what we are investing in but there is SO much information out there.
There are even entire TV channels dedicated to talking about investing 24/7.
Another spoiler alert - I don’t watch them. You don't need to.
If I waited until I knew everything, I never would have started. Get some education, then take action. We learn at ton by doing.
Is investing on your mind? Are you looking to learn more? Hit reply and let me know.
PS: If you are ready to invest, read chapters 7 and 8 of Financial Adulting for everything you need to know to get started!
MONEY MOVE OF THE WEEK
TAX SEASON PREP: STEP #3 - MAKE A PLAN TO PAY OR USE YOUR REFUND.
We’re moving right along towards that tax deadline (reminder, it’s April 18th this year!). So far in this series... you made your list and decided how you’ll file. Guess what happens next?
We find out if we owe money in taxes OR if we are getting a refund.
While you’d probably much rather get money back, a refund means we paid too much in taxes throughout the year and if we owe taxes it means we didn’t pay enough.
Regardless if you file an extension (see common tax terms here!), you still have to pay the taxes you owe by the original tax deadline of April 18th this year. Bummer, I know.
The good news is, you still have a few weeks to get the money together and if you don’t, there are payment options available via the IRS.
Now (in advance) is a great time to make a plan for where the money is going to come from. And if it feels like a scramble, make note because next year we’ll work on making a plan for next year.
If you’re receiving a refund, you’ll also want to have a plan for your return before it hits your account. Why? When we don't have a plan, it’s easy for the money to go all kinds of funky places we didn’t intend.
YOU GOTTA SEE THIS
THE 80/20 SPENDING RULE.
Have you ever heard someone say that they follow the 80/20 meal plan? They aim to eat healthy foods (however they define them) 80% of the time and then the remaining 20% is left for treats or cheats. 🍬
As you know, I believe food and money are similar. That’s why I created a program (and book) called The 30-Day Money Cleanse.
Restricting dieting doesn't work, just like restrictive budgeting doesn’t work. Plus, where’s the fun in it?
Instead, we can take the 80/20 meal plan and apply it to our spending. Meaning we aim to spend intentionally and pretty frugally 80% of the time, and leave 20% for treats or extras.
We can take this further and build room in our budget for the unplanned, the impulse decision or the things that come up, so it aligns.
J and I had a meal plan for the week and it was going great (the 80%). One night, a work thing came up and the cooking just didn’t happen. We ended up ordering an extra takeout meal (the 20%).
When something like this happens there can be a tendency to give up the plan for the rest of the week and feel like we failed, YET we were successful in our plan most of the time. That's significant!
It’s much better to get back to the plan when you can rather than throw it out the window.
your weekly money wins
You all made some major money moves this week 👏👏👏 Huge congrats and keep them coming! 🥳🥳🥳
Remember, no win is too small to share! Plus, submitting a win not only celebrates your hard work, it will serve as motivation for others who have similar goals! A win-win.
Martha: Negotiated and received a title change/promotion and 12% raise! The best part is I will still be eligible for the annual performance-based raises in July, so I should get another 3-5% raise on top of that!
Tiffanyma: Paid off an additional 5k on my student loans since last December, and also managed to save 5k in my emergency fund!
Harriet: Negotiated with multiple car dealers to figure out trading in my current car for a new car. I'm not done yet but I made some progress!
RachelG: Talked about money with a good friend - was our first time swapping tips!