The Right Balance between Saving and Investing

If you’re trying to become financially independent, one of the most difficult lessons you’ll need to learn will be how to save and invest your money. Whether you’ve just graduated from college or you’re a high school leaver who’s looking for work, it’s more than likely that you’re tired of hearing that you shouldn’t be spending all the money you get in your wage packet.

Despite the reason that people usually use for telling you this – that it’s important to have money saved for a proverbial rainy day – there’s perhaps a more enticing reason why you shouldn’t spend everything: investment.

Investing Has the Potential to Increase Your Income

One of the things that the rich have learnt over the centuries is how to make money work for them. Money isn’t a static thing, it’s more fluid, and if you know how, you can use the money that you have to make more for you. Thankfully, in today’s day and age, you don’t need to be a rich investment banker or landowner to be able to afford to invest some of your money.

If you have an interest in current and foreign affairs, an ecn account will help you to turn your passion for worldly goings-on into profit. With direct access to the foreign exchange market, you’d be able to dip your toes in the water of the currency markets. If you’re nervous about losing money, set up a trial account and you can practice before going into live markets.

Saving As a Back Up

While you’re investing, it’s essential that you put away some extra money from your wage packet. Doing so will allow you to stay on your feet if you even make a poor investment, and it will also give you a great sense of pride to see your overall worth increase month on month. Additionally, when you start making money from your investments, you can immediately begin to save a percentage of that, too. This means that as you invest more, you’ll save more, and so on.

It’s important to have perspective with your savings however, and if you try to save too much in any one time you’ll be disappointed when you don’t achieve your goals. Be realistic. It’s also essential that you consider your method of saving. If you put your money into a fixed-period savings account, you won’t be able to access or spend the money you’ve put away.

Achieving the Right Balance

If you try to overdo it on the savings front, you’ll find that you’re demotivated. Many suggest that 10-15 percent saving out of your wage is a good number, but in reality, you’re probably going to be able to put away around 5-10 percent. It’s essential that you don’t become a fiscal scrooge. Spending money isn’t something to be looked down on – it’s all part of what it means to live in a consumer society.

However, try to be responsible. It’s not boring to save money; it’s actually exciting. What you save is all ultimately going to get invested and raise your overall earnings.