Your “why” for investing is one of the most overlooked, yet so important, pieces of your investing journey. Why? Great question!
There’s a lot of technical aspects to investing, but we can get hung up on those and forget about what’s going to keep us pushing toward our goals.
Striking a Balance Between Technical and Emotional
Many people get stuck on what the highest return on their money would be. It’s important to make sure your money is invested properly. However, I can tell you from experience, it’s better to get started and focus elsewhere.
Also, there’s always a new “hot” investment or strategy out there to get your emotions stirred up chasing an “opportunity.” If you’re grounded in solid investing principles and know the reasons for each investment, you’ll be so much more successful.
Why Your “Why” Matters for Investing
In short, your “why” is what fuels your investment journey. If you don’t have clear conviction around what you’re working toward, you’ll be less motivated to save and invest. Knowing why you’re investing makes everything much easier.
Begin With the End in Mind
I’m a huge fan of the concept of “Begin with the End in Mind” from the book The 7 Habits of Highly Effective People. Try to think about what you’re going to use this money for. Who’s going to need this money?
In other words, what do you want this money to provide? I know this may seem like a simple question, but it really matters a lot.
Self-reflection: Identifying Your Own Why
For me, my biggest why is to be able to live life on my own terms. My whole life I’ve had financial limitations, limitations on my time, and limitations on my own creativity. I want to be able to have the flexibility and freedom to do pretty much whatever I want on a daily basis. For me that’s primarily going to be spending more time with my wife and son, helping others, traveling the world, and trolling officers online (probably not the last one, but it does sound fun).
Getting a Little Personal
I don’t want to get all mushy or whatever, but I think it’s really helpful to understand what shaped my priorities so maybe you can shape and define your own. My mother passed away at a fairly young age of 55. My dad wasn’t really around much when I was a kid because he was always working (he’s a good person, just didn’t see me much). I’ve had some of my best ideas squashed, ignored, or stolen by others throughout my military career.
I know I don’t want those things for my own family. I know how short life can be, so I’m not wasting it.
Not a Victim
However, I’m not a victim. I’m taking things into my own hands and shaping my own destiny. I’m investing in order to reshape the future. Instead of focusing on what I don’t want, here’s what I’m investing for and working toward.
- My wife loves being a dental assistant and I want to support her career in our next chapter. I really enjoyed being a stay-at-home and work-from-home dad during the Covid lockdown. I want to get back to that. We just worked better as a team and as a family that way.
- My son is a really creative, smart, and funny person. I can’t wait to see him grow into the man he’s meant to be. I want the flexibility and financial stability to support him in anything he wants to do – wherever he wants to do it. Many of you know what it’s like to invite family and friends to your special moments in the military and they either can’t or won’t be there. I want to always be there for my son’s special moments.
- I know my time on earth is limited. I really try to live my life like today is my last chance to make an impact on the world. I want to help as many people as possible and leave a legacy of empowering others to go out and do the same. You might argue money isn’t needed for that, but the reality is that it certainly does help give me more time and resources to become a better helper. I can’t give if I don’t have anything to give.
These are the things that drive me. Now, let’s talk about you.
How to Uncover Your Own “Why” for Investing
Human beings are actually pretty bad at predicting what will make us happy. However, we can all look back and think about what “lights you up” in life. Think to what conditions led to the most joy, laughter, and fulfillment?
Also, try to imagine all the things you can’t do which you’ve always wanted to try or get back to. What type of person do you want to become and be known as?
Asking these deeper questions (and yes, it seems hokey or corny) will help you uncover your “why” for investing. It’s okay to dream a little bit here. The cool things about dreams is that sometimes you can turn them into reality.
For the Parents
If you’re a parent, you may just want a better life for your kids than you had growing up. I think we all do, but how are you going to do that?
How much money will that take?
Do you need to change jobs, lifestyle, or location to make that happen?
How long do you need to build up the money to do all those things?
Uncovering these details will help you figure out the true purpose of your money. As you get clear about what you need the money to do for you, it’s much easier to stop spending money on something else.
Reframe the Way You Measure Money
Another powerful way to do this is to think about money decisions in terms of what else you’re giving up. This really helped me when I was working to quit smoking. I had quit several times before, but never kept away for long. I’d always end up smoking again or switching to occasional cigars or something.
However, after I reframed smoking in terms of days with my son I was giving up over my lifetime, I was able to quit pretty easily. I haven’t touched any tobacco or nicotine (not even patches or vapes) products since. That’s been about 6 years ago now.
Applying to Money Decisions
You can do the same thing with money decisions. For me, I know every dollar I save today, I’ll be one day closer to being 100% financially independent. This makes it much easier to say no to buying some cool new gadget or going out to eat.
You can look at things in terms of other goals too. For instance, my wife and I have been saving to buy her a new vehicle. Using this, I can easily reframe our decision to spend extra on vacation this year. If our vacation costs us X, we’ll have to delay buying a new vehicle by Y months. If this doesn’t seem worth it, then we don’t do it. (We spent the extra on vacations!)
Putting Your Why into Action
I know you’re probably just wondering how to get started and skip the mushy, emotional stuff. However, if you skimmed to this part, you really need to go back and read everything and get clear on your why.
Regardless, you still need to put this into practice. I’m a big fan of picking something small and letting things build from there. You don’t need to totally upend your whole lifestyle.
Paying Down Debt
I’m not a big fan of debt anymore. Becoming debt free has opened up a bunch of financial opportunities for us. Now we can redirect debt payments toward buying vehicles in cash, going on vacations we never had as a child, giving to people who need help, and saving for the future.
Just look at a loan statement and see how much interest you’re paying a month. What else could you do with that money? Probably a lot of cool stuff.
Using Envelopes to Make Investing a Game
My wife and I trick ourselves into saving more by having a “fun money” envelope to put extra cash leftover from our grocery or entertainment budget. We can use this money however we want, but it usually ends up being money we can use to have a big barbecue with friends or take our family out to the movies or something.
If you can make saving and investing money more fun, you’ll be more likely to actually do it. If you know exactly why you’re saving and investing, this makes for a powerful combination.
Staying Motivated for Long Haul Invsting
I have to continually remind myself why I’m working so hard right now. It’s because I can see the future. No, not literally, I haven’t had that much coffee today. I guess what I’m saying is I can imagine and dream about what the “future me” will look like. That future me is going to need money – lots of it too.
The good thing is I’m on track to meet those goals – I just have to keep going. It gets really tough some days (working two jobs, etc.). However, I owe it to my family and myself to make it happen. I hope this gives you something to think about as you get clear on why you should invest in the first place.