Dollars and Sense

Many of you may not know this about me, but I am a banker by trade. As such, the last 2 years of economic uncertainty have given me pause to think about the value of savings and investments in our lives. Some of us may be just finishing up school, others may be just beginning their careers. Some of you probably have some money, and others not as much. Some of you may have solid jobs, while others have been disenfranchised with the current job market. But something that's been on my mind for the past several years is how people can take control of their finances during uncertain times. To me, there are just a handful of questions that need to be answered:

1) When should I start saving and investing? The only answer to this question is early and often. Some of us may only be able to save $50 a month, while others may save thousands with each paycheck. But no matter your age, position, or income level, it is always a good idea to save money and have some leftover funds for emergencies. In the 12 years I have been helping people with money, the only customers that complain about finances are the ones without savings and investments. Those who have saved make life a little bit easier on themselves.

2) What should I invest in? Lots of choices of there. Some like stocks and mutual funds, some real estate, and some bonds and CDs. But it's always a sound policy to buy and invest in what you know. So for example, if you are a patron of the IPhone, IPad, IPod, etc..., you might find purchasing Apple stock to be comfortable for you. Or if you have a good idea about your local real estate market, maybe rental properties are your thing. And for some, maybe your parents were cautious and invested in safe investments like CDs. Whatever vehicle you choose, it's best to stick with Warren Buffett's mantra of "Invest in what you know", so that you aren't adversely impacted by the associated risks.

3) Why should I start now? It may seem like you have an infinite amount of time in front of you, but that is exactly why you shouldn't procrastinate saving now. If you allow time to work for you between the ages of 25 and 60, time compounds on itself and grows your pot of money. If you wait until age 35, you significantly limit your savings and investment compounding advantage. The harder you on yourself right now in terms of saving money, the easier life will be on you later.

I have heard it said, "The love of money is the root of all evil" and there may be a degree of truth in it. But I've always preferred "The lack of money is the root of all evil" because it promotes base sentiments like fear, greed, envy, and hate. So short story long, save now, save often, invest in what you know, and don't stop until you die.

Sabin