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Staff Writer at Debt Reduction Services

Investing is one pillar of healthy finances.

Grow Your Income by Investing in Your Self

SIMPLE Personal Finances Series

In 2016, I began my series of blogs on SIMPLE finances: Spend, Invest, Manage, Plan, Limit and Eliminate.

Today’s topic addresses the second part: Invest

When most people think of investing, the stock market might come to mind. Or perhaps government bonds, real estate, rare coin collections, or, unfortunately, in the case of some of my younger and more hormonally charged friends, classic muscle cars. I am actually not going to be discussing the principle of making purchases with the hope of those purchases directly providing higher returns in the form of interest earned or asset appreciation. Well, not exactly.

For the purposes of this series of SIMPLE finances, “invest” is all about making yourself a better money maker. Investing in yourself may differ from how others invest in themselves. This investing may very well include shelling out some money with the hopes of a high return on investment. But, it could also involve investing our time, our talents, our efforts and energy, and our other resources to turning ourselves into a better “money generating unit” (yes, that’s my own term, harking back to 1970s Saturday Night Live “parental units” from the Coneheads sketches).

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

1. 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.

2. Invest Your Time

Invest your free time to help you achieve your goals.Speaking of time, how are you investing it in your abilities to generate more income?

That may seem like a tough question, but simply 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 improve your chances of increasing your income. That would explain why two out of three high-income earners watch less than one hour of television a day, compared to just one in four of the rest of us.

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, it should be obvious that we are most similar to those with whom we spend the most time. We tend to talk about the same topics, like the same entertainment, and participate in the same activities. When it comes to our time and those with whom we spend it, we should be asking ourselves, “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 we 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 our progress towards our goals. Here’s a great read on the power of peers from Entrepreneur.

3. Invest Your Energies

What are you doing with your energy to invest in yourself?

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 keep updated a daily to-do list. Again, why do 80% of the wealthy do this compared to less than 20% of the rest of us? Because it is an effective way to do what needs to be done.

And how will you know what needs to be done? Reading books and listening to audiobooks on your commute, during trips, or during any other “downtime” is one of the best ways. Find books on what other people have done to achieve goals similar to your own. You’ll likely see patterns emerge in their stories that you can follow yourself.

Finally, use your energies to create more energy. 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 also know that it is much more difficult to reach financial goals if they are sidetracked by preventable medical worries, expenses, and emergencies.

4. Invest Your Risk-Taking

Here, risk-taking means starting and/or running your own business venture, large or small. 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. It can also be risky, no doubt, but there is a reason why we read of so many young Millennials starting up stunningly 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 of us who are, well, not so young. They are less likely to own a home that they might lose. They are less likely to be supporting a family. And they are less likely to have incurred large financial obligations.

Still, there are successful entrepreneurs in all age groups. Perhaps this is your time.

You can build wealth by investing in your own business.

5. Invest Your Talents

Finally, invest your talents in your future. This is not the same thing as your energies. Your talents are your abilities and skills that are above average when compared to those around you. Don’t just think about musical, artistic or athletic talents and skills, either. Your talents might involve organizing your home or your files, typing or word processing, software design, making friends and keeping in touch with them, making ice cream, creating recipes, knowing secrets to keeping household things clean, creative writing, technical writing, fixing cars, fixing appliances, driving long distances, defensive driving, staying positive in tough times, public speaking, doing math, building Lego creations, and more. Two guarantees: 1) you have a talent that others don’t have, 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.

Thanks for sticking with me through this long post. SIMPLE investing, Part 2 of 6 down, 4 to go!

Head on to Part 3: “M” is for Management

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All the best,

Todd Christensen
Director of Education
www.debtreductionservices.org/Education

 

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