Money Smarts Blog

Complete this financial to do list before you start investing

Jun 28, 2018 || Elizabeth Vancamp

young couple reading financial to do list

My husband and I recently discussed the possibility of starting to invest our money to prepare for the future. Despite learning all about investing and its regulations in some of my MBA courses, I had no idea how realistic it was for us to consider it.

Thanks to careful budgeting, we’re fortunate enough to have some money left over each month after expenses, and we’ve been storing it away in a savings account. But we’re ready to take some of that money and invest it for a bigger return in the future. So, where do people like us begin?

Pay off high interest debt

It only makes sense to pay off your high interest debt to free up more income for investing. The less debt you have, the more money you have after expenses each month to invest, which adds up to a higher return.

This one will be tough for my husband and me because we both have car payments and student loans, but it will feel great to not only pay off the debt but also have a larger chunk of money to invest. Start with this step if you have money left over after bills each month.

Establish an emergency fund

If you haven’t done so already, establish how much money you’d like to have in your emergency fund (3-6 months of expenses is a good place to start) and get saving! We just recently hit our goal for our emergency fund after years of almost saving enough, then actually having an emergency happen.

So now we can take the money we were stowing away in the savings account and put it toward investments. If you want to invest, you’ll definitely want to establish and achieve your savings goal first so that all your extra income can go toward investing without the fear of racking up more debt if an emergency does come up.

Follow a budget and identify needs vs. wants

Are you like us and, despite having a budget, stink at sticking to it? If we could limit deviations from our budget (and stop buying things we don’t need), we would have a whole lot of extra money each month to pay down debt, go on vacation, or (you guessed it) invest.

So, we’ve decided that if something we want doesn’t really add value to our lives or will be so short lived that buying it won’t be worth it in the long run, we won’t spend money on it. It’s going to be a hard habit to break (farewell, daily coffeehouse brew!), but it’ll be worth it. Do you have some wants that you could cut out to give you more money to invest?

Gain a better idea of how investing works

My husband is very intrigued by investing so he has some knowledge of how it works and has identified a few funds that we might benefit from, but now it’s my turn to educate myself.

Experts suggest learning the basics about how investing works before starting the process so you understand what you’re getting yourself into. I suggest checking out some investing books from the library or reaching out to an investment professional to learn more about what to expect when investing and to identify what direction you’d like to go in with your investments.

Be on the same page about investing

If you’re in a relationship and you have shared money like my husband and I do, you’re going to need to come to an agreement about how much you’ll invest each month, which funds you’re going to invest in, and whether you’ll use a financial advisor or not.

My husband and I have only gotten as far as agreeing that we’d like to start investing and that we need to tighten our budget, so we have a ways to go, but we’re communicating about it and finding common ground. You’ll need to do the same thing with your partner if this is a shared financial decision.

Helpful tip: if you and your partner decide you only have a small amount of money to invest, don’t assume you can’t start investing! Look into low minimum funds, which can require an investment as little as $100 each month.

Decide if you want investment guidance

I like the idea of having an expert educating and supporting us as we make investment decisions because, even after educating ourselves about how investing works, at the end of the day, we’re not experts. We don’t understand the intricacies of the investment world, and you might not either, but a financial advisor does.

Financial advisors’ expertise will bring you peace of mind about this new step in your financial journey. Many financial institutions offer assistance with investing, including IHMVCU. IHMVCU Investment Services can provide education about investment options and planning for your future. Plus, there’s a financial advisor on staff to help guide you through your investment decisions.

I used to view investing as something my parents and grandparents did, but I never realized that it was within reach for my husband and me, but it definitely is. Although we still have some work to do before we start investing, I’m excited to begin this journey and see where it takes us financially (is this what it feels like to be a grown up?).

Do you have any tips for investing novices? Please share your advice with all of us who are just dipping our toes into this whole investing thing!

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