Starting Small: 3 Simple Steps to Saving and Investing

Do you like to talk to your Uber driver or sit in silent mode?

 

To be honest, I'm not a chatty Cathy, but my best friend is.

After chatting up our driver, he asked what we did. After saying, "I'm a finance coach," he explained his situation. Living month to month, coming up short on money, all while doing his best to help his family. It was tough to listen to, and I really did feel for him as you could hear how the topic of money was anxiety-producing.

Here's the advice I gave my Uber Driver (that you can use too):

1. Airplane Rules Apply in Finance Too

I get it—we all have different obligations, but it's important to remember that when it comes to personal finance, we will be better help to others if we help ourselves first. This means we HAVE to prioritize our own financial wellness before helping those around us.

Think about it like this: When you're on an airplane, the flight attendants always tell you to put your own oxygen mask on first before helping others. The same rule applies to money. If your finances aren't in order, it’s hard to effectively support those around you. Prioritizing your financial health ensures that you can be a stable, reliable resource for your family and friends.

2. Make Saving More Than a Habit—Make It Automatic!

Saving a certain amount every month is a great habit. But having a certain amount come out of your checking and into your High Yield Savings Account (HYSA) each month? That's when you'll see some magic start to happen!

Automation takes the guesswork and effort out of saving. By setting up an automatic transfer, you're making sure that a portion of your income is always being saved, no matter what. This not only builds your savings but also creates a cushion for unexpected expenses. It’s like setting your financial future on autopilot.

Example: The Power of Automation

Let’s say you automate a $200 monthly transfer into a HYSA. Over a year, that's $2,400 saved without lifting a finger. Add in the interest from the HYSA, and you're seeing your money grow with minimal effort.

3. It's OK to Start Small

Our driver started to look into a program hosted by a very prominent personal finance personality (his name rhymes with Mave Samsey) and immediately felt discouraged because $1,000 felt like a HUGE goal, even though it was listed as a 'baby step.' So, our recommendation—change the goals to something that is reasonable. If $1,000 feels too big, start by saving $200.

Breaking Down Big Goals

Saving $1,000 might feel overwhelming, especially if you're living paycheck to paycheck. Instead of focusing on the end goal, break it down into smaller, more manageable pieces. Start with $200. Once you hit that, aim for another $200. Before you know it, you’ll have reached that $1,000 milestone without the stress.

An Example:

Think of saving money like training for a marathon. You wouldn't try to run 26.2 miles on your first day of training. Instead, you'd start with shorter distances and gradually increase your mileage. Similarly, starting with smaller savings goals builds your financial endurance and confidence.

Applying These Tips to Your Financial Situation

How can you apply these tips to your financial situation?

1. Prioritize Your Financial Health: Assess your financial status and make sure you're secure before extending help to others. Create a budget that reflects your priorities and allows for savings.

2. Automate Your Savings: Set up an automatic transfer from your checking account to your HYSA. Start with an amount that feels comfortable and gradually increase it as you can.

3. Set Realistic Goals: Break down your savings goals into smaller, achievable steps. Celebrate each milestone to stay motivated and on track.

Imagine you're planting a garden. You start with a few seeds and nurture them. Over time, those seeds grow into a flourishing garden. Your financial goals work the same way—start small, tend to them regularly, and watch them grow.

The Importance of Financial Education

Understanding the basics of money, saving, investing, and personal finance can demystify the process and reduce anxiety. Knowledge empowers you to make informed decisions that align with your goals.

Investing Basics

Investing can seem daunting, but it doesn’t have to be. Start with understanding the basics:

• Compound Interest: The interest on your investment earns interest, leading to exponential growth over time.
• Diversification: Spread your investments across different asset classes to manage risk.
• Index Funds and ETFs: These are low-cost ways to invest in a broad market index, offering diversification and simplicity.

Real-Life Success Story!

Take DJ, one of my clients. He started small with her savings, automating $100 a month into her HYSA. Over time, he increased it to $200. He then took the next step and began investing in index funds inside his employer's 401k plan. After 6 months, DJ made such a habit of saving and investing that he saved 20x the cost of the Holistic Financial Coaching program! Today, DJ is on his way to be able to buy his first investment property, made a career change to something he loves (not tolerates) and is growing an investment portfolio so his financial future is secured --all by starting small and being consistent. 

Conclusion: Embrace Your Financial Journey

Your relationship with money is a journey, not a destination. By shifting your mindset and taking practical steps towards saving and investing, you can transform your financial future. Remember, it’s not about how much money you have—it’s about how you think about and manage it.

Ready to dive deeper into your financial journey? Click [HERE] to learn more about my signature 1:1 Holistic Financial Coaching program and how it can help you achieve your financial goals with confidence, clarity and some fun too!