I Stands for Invest

SIMPLE Personal Finance Series

GROW YOUR INCOME By in Yourself

Investing in yourself means that you invest more than just money in ways that will increase your ability to earn more money and build greater wealth. These include:

  1. Invest in Your Know How

  2. Invest Your Time

  3. Invest Your Energies

  4. Invest Your Risk-Taking

  5. Invest Your Talents

When most people think of investing, the stock market might come to mind. Or perhaps government bonds, rental property, rare coin collections, or even, arguably, classic muscle cars. In the context of “I Stands for Invest,” this does not involve investing to increase a portfolio or net worth.

Instead, “invest” is all about making yourself a better moneymaker. You will invest in yourself differently from how others may invest in themselves. This investing, like the stock market, includes the hope of earning a high return on the investment. However, unlike the types of investments mentioned above, investing in yourself will also involve investing your time, your talents, your efforts and energy, and your other resources to turning yourself into a better money generating unit.

So, how can you invest in yourself so you can begin generating more money?

Invest in Your Know How

The obvious investment here is in education. The returns on most 4-year college degrees are astronomical. Seriously, where else can you invest $40,000 (that’s the median cost of a 4-year degree at a state university of college, according to CollegeData), and have it return about $1,000,000 over the next 45 years? Even over the 20 years following graduation, college degrees typically return between 9% and 21% annually. That does not mean, however, that all education is created equal. Degrees vary in value over time. Tuition varies by school, and the name of the school on your college diploma matters when it comes to landing a better paying job.

Another way to invest money in yourself, if you are already employed, is to pay for continuing education opportunities that will make you a more attractive employee. Additionally, studying for and passing certifications can add value to your services and can lead to a raise or a better paying job offer.

The obvious investment here is in education. The returns on typical 4-year college degrees are astronomical. Where else can you invest $40,000 (that is the median cost of a 4-year degree at a state university or college, according to CollegeData), and have it return about $1,000,000 over the next 45 years? Even over the 20 years following graduation, college degrees typically return between 9% and 21% annually. That does not mean, however, that all degrees are created equal. Degrees vary in value over time. Tuition varies by school, and the name of the school on your college diploma might matter when it comes to landing a better paying job.

Beyond your formal education, another way to invest money in yourself is to pay for continuing education opportunities (if already employed) that will make you a more attractive employee. Additionally, studying for and passing certification programs can add value to your services and can lead to a raise or a better paying job offer.

Invest Your Time

Your time is among the most valuable assets you will ever have. Regardless of all else, life itself limits your time. Whether you get 15 years or 105, time is still a finite resource. So, how are you investing your time in your abilities to increase your abilities to get more of what you want in life? If any of your goals require financial resources, then using your time to generate additional income should come near the top of your priorities.

If the question seems overwhelming, consider what you do with your “free” time. Watching television or movies, no matter how popular, funny, or enlightening they may be will virtually never increase your income. This is more than theory. Only one out of three high-income earners watches more than one hour of television a day, compared to three out of four of the rest of the US population.

So how can you invest your time in yourself?

Get up early and do some reading, connect with your friends and your network of potential supporters, or just meditate or do some brainstorming about ideas to make progress on your goals. One other way to invest your time in improving your finances is to spend time with others who have successfully achieved goals similar to your own, or who have made the same commitment. This does not mean you must become a snob or an elitist. However, you are most similar to those with whom you spend the most time. You tend to talk about the same topics, like the same entertainment, eat at the same restaurants, and participate in the same activities. When it comes to your time and those with whom you spend it, you should be asking yourself, “Are they motivating me to become the better person I want to be?” “Better” does not have to relate to a higher income. Nor do you have to shun old friends for new ones. However, finding a mentor or a group of like-minded individuals can have a very positive impact on your progress towards your goals. Find a great read on the power of peers at Entrepreneur.

Invest Your Energies

What are you doing with your energy to invest in yourself? Some activities require more energy (and its accompanying will power) than others. Each, though, will help.

Use your energies to write down your personal, financial and professional goals. Share your goals with a friend, a family member or a mentor with the understanding that you want them to help you be accountable for reaching the goals.

Create and regularly update a daily To Do list. Just 20% of the general population regularly uses a To Do list, while 80% of the wealthy do so. Such a habit must account for much of the outcome differences between the two populations. Do you know what you need to do today to get closer to your goals? If not, it appears you would benefit from viewing your To Do list daily.

While the To Do list helps you know WHAT you need to do today, you will likely benefit from learning HOW to do the various activities. Reading books and listening to audiobooks on your commute, during trips, or during any other “downtime” is one of the best ways to build your How To abilities. Find out which books other people with goals similar to your own are reading. You will likely see patterns emerge in their stories that you can implement yourself.

Finally, use your energies to create more energy. Physical fitness can promote financial fitness. Exercise and stay fit. Count your calories. Floss your teeth. Take care of yourself physically. When you value your health, you invest in it. The financially successful know it is more difficult to reach financial goals when preventable medical worries, expenses, and emergencies sidetrack them.

Invest Your Risk-Taking

Risk-taking can refer to starting or running your own business. It can refer to maxing out your 401(k) or an Individual Retirement Plan, even when the economy goes sour. Risk-taking can involve any activity with the potential to negatively affect your life. However, risk-taking should not involve running headlong into a brick wall. It should involve some research, a clear understanding of what is at stake should the endeavor turn out poorly, and a healthy dose of good sense.

Have you ever wanted to start your own full-time or even part-time business? Maybe you need a few hundred dollars in supplies, or a several thousand dollars in equipment, or just some marketing money to get started?

Business ownership is one of the best and most common ways to build wealth. While risky, it explains why so many Millennials are starting up successful businesses. It is the same reason that has explained this phenomenon over the generations. Young people generally feel they have less to risk than those who have established jobs, own their home, and have a family to support. Additionally, young people are less likely to have incurred large financial obligations (debts).

Regardless, there are successful entrepreneurs in all age groups. Perhaps now is your time.

Invest Your Talents

Finally, invest your talents in your future. Talents differ from energies. Your talents are your abilities and skills that are above average when compared to those around you. When you think of talents, do you immediately think of musical, artistic or athletic talents and abilities? Talents go far behind these highly visible abilities. Talents might involve organizing your home or your files, typing or word processing, software design, making friends and even keeping in touch with them. Talents might include making ice cream, creating recipes, or knowing secrets to keeping household things clean. Talents might involve creative writing, technical writing, fixing cars, fixing appliances, driving long distances, driving defensively or staying positive in tough times. They might even involve public speaking, doing math or building Lego creations.

When it comes to talents, there are generally two guarantees: 1) you have a talent that either nobody else has or that others have in much less quantity or quality, and 2) there is a way to turn that talent into a money-making opportunity or to use it in support of a money-making opportunity. Invest in that talent to improve upon it and put it to work for you.

“I” stands for Invest. Make sure you are investing all that you are, have, and can do in pursuit of your life goals and priorities.

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S stands for Spend
I stands for Invest
M stands for Management
P stands for Plan
L stands for Limit
E stands for Eliminate