The start of my personal finance journey
Before I started working full-time, I never had an interest in investing or personal finance.
It was only after I graduated from university and started earning an income that I began reading up and learning about investing and personal finance.
Like a new kid on the block, I dabbled in all sorts of investments, from stocks, to crypto.
From active trading to long term investing.
In the beginning, dipping your toes into the stock market felt exciting. I felt a kid going to the arcade for the first time.
Naturally, the excitement means that we want to be actively involved.
And that’s where the trouble begins.
From personal experience, and from reading many books on this topic, I've found the best way for beginners to start saving and investing is by automating their finances.
Turning human weakness into strength
The truth is, majority of us struggle with the willpower or discipline needed to consistently manage our spending.
Failure to track expenses, spending more than we earn, or even getting into overdraft on our bank or credit card account are some of the common occurrences.
It’s no secret that strategies like dollar cost averaging (DCA) – the act of investing on a periodic basis, have been proven to build wealth.
But why do people still find it difficult to build wealth?
That’s because they rely solely on self-discipline and willpower.
If we leave it to self-discipline, it’s highly likely that we’ll end up spending the money that was supposed to be used for investments.
Humans are weak.
We each have our own impulses, making decisions based on how we feel in the moment. It’s these feelings and emotions that hinder us from achieving our financial goals.
The best way to reach our financial goals is to eliminate the need for willpower. We can do this by using automation.
Get started
If, like me, your objective with each paycheck is to invest 30% in the stock market and save 15% for a holiday.
Automate these allocations.
By setting up your brokerage automatically buy stocks amounting transfer 40% of your salary into index funds and 15% into high-yield savings account as soon as your salary arrives, you eliminate the temptation to overspend.
This 'out of sight, out of mind' approach makes saving and investing seamless.
P.S. – If you’d like to connect, I am spending a lot more time on Twitter/X these days. Follow me over there for more investing and personal finance gems.