We totally get it — seeing those digits rise in your bank account is quite fulfilling. It does make sense that having more money makes you feel secure.
However, you have to admit that having more money is not all that there is; other than having more money, there are also other goals you should make for yourself.
So even if you are uncomfortable with the idea of investing, here are some things you should look out for or the reasons why more money is not everything:
- Building up an emergency fund.
Other than garnering more and more in your savings account, you should never forget also to have an “emergency fund.” The idea behind this is to set aside some money which you can use in case of emergencies or other unforeseeable events — hospitalization, losing a job, etc. — without touching your savings.
Financial experts suggest that you should have at least 3 to 6 months worth of your salary. This may be quite challenging because this means living below your means, but your future self will definitely thank you for it.
To make sure you do not get tempted to spend it on non-emergency things, you should make a list of the only times or instances you can use it.
- Investing in a house
While renting is an option to consider, investing in a house becomes a viable one as well when you are in a steady job with good pay and are looking to settle somewhere permanently. It’s all in calculations; with the location and potential of the property, duration of stay (in years), and other factors into consideration, buying a house might cost less than renting.
In the end, you have a property that is not only a place to live in but is also your asset and part of your net worth. After years of renting, obviously, you will not have such security. Note that this is not exactly the case in all situation, though. Check out this calculator which can help you decide between investing in real estate or renting.
- Setting a debt repayment plan.
Paying off debt is not as easy as you first thought before you borrowed money. Bombarded by calls and letters from the collecting agency? Cringing at the sight of your debt statements? These are the instances when to set a debt repayment plan proves to be helpful and efficient. Gather all your statements and compute the overall total of your debts.
Make a concrete plan for the following months or years (depending on how much your debt is) that is feasible, and make sure to follow it strictly. Try writing it in your planner — from a list of your debts and how much you are getting from your monthly paycheck, to which debts you are planning to pay first and how much you are paying them for each month.
Write ways to remind yourself of your goal to be debt-free in times when temptation is great.
- Planning for a vacation.
“All work and no play make Jack a dull boy,” and you are no exception. Sure, savings and investments are much more important and will pay off greater in the future, but that does not mean you should not allow some of your salary for some self-indulgence.
So if you are not exactly in a bad place financially, it would do you good to plan a vacation for yourself (or with friends/family/significant other). Your financial state matters, but give yourself a break from time to time from all the stress and pressure; these two can take the great toll on your work performance, thinking capacity, and decision-making skills.
Other than levelling down your stress, vacations can be motivating for you to actually save and invest more in the future. Also, it is better that you have a planned one and actually allotting money for it during the preceding months rather than getting some from
- Planning for retirement.
Let’s admit it — you are not young forever. You will eventually have to leave your work for retirement. You also need to admit that government subsidies like your pension and Social Security are uncertain and most probably will not be enough to support you.
That is why it is better than you make sure you retire secured and without a hassle. Other than the continuous decreasing of the gap between workers and beneficiaries, you also have to consider other emergencies that will not be, if not wholly, covered by the government (e.g. big medical expenses, financial problems of children, etc.)
- Rewarding yourself with something you can buy.
While you have heard countless advice that to be stoic or selfless when it comes to financial matters is the way to go, it is actually more harmful than helpful to not treat yourself from time to time. Psychological studies show that giving yourself “treats” from time to time is effective to motivate you to work but also in changing your habits. It’s basic classical conditioning; if you condition yourself to reward yourself for when you do something that deserves it, you will be more motivated to keep on doing it.
Rewards can be expensive sometimes like that branded bag you have always wanted or that car you have been saving up for; just make sure that you set aside a separate money for this, to make it a part of your regularly planned budget and to not overdo it!
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