Let me first start off by saying this is not financial advice, and I was formally trained as a financial educator in a short program about 3 years back, but with the continuous growth of the FinTalk community and the changes in the economy, I prefer to go by the title of financial literacy advocate and not a financial advisor or financial services specialist.
If you want an expert opinion, there are so many of those people online and business journalists that you can follow. I like a few and I will link them below.
Anna Palomino (https://instagram.com/annathemoneycoach?igshid=MDM4ZDc5MmU=)
Kalilah Reynolds (https://instagram.com/kalilahrey?igshid=MDM4ZDc5MmU=)
Learn Grow Invest (https://instagram.com/learngrowinvest?igshid=MDM4ZDc5MmU=)
JMMB Group (https://instagram.com/jmmbgroup?igshid=MDM4ZDc5MmU=)
Okay, let's get into it :)
When I first started learning more about investing and finance in general about 3 years ago, I knew more than my peers, which was a little scary. The idea of risk was a no-no, but as covid hit shortly after, things changed a lot with their mindset. I had many people asking me for consultations to learn how to budget and list their options based on the level of risk they will take. I had the sessions, and they reported good feedback, but something always didn't feel too right for me because I wasn’t taking all of my advice. I provided them with templates, app & product recommendations and preach frugal living, but I contradicted it myself. It took me about early last year to do it myself consistently. At that point, I was earning over 3 times what my dad made monthly in freelance and short-term contracts, but I had nothing to show for it. I wasn’t strict with my budget and I saved to spend. But all of that stopped in 2022. I automated transfers to accounts I didn’t have debit cards for, like bonds and certificates of deposits, and opened high-yielding saving accounts to accept my payments. While the growth was slow, it was consistent and prevented me from radically spending. I started budgeting and tracking my spending, that meant I had to start allocate amounts per category of life and have a buffer for each. That gave me the idea for a cushion fund instead of an emergency fund. Having the two separately made a whole difference. My cushion fund was more like having a little money in a debit account that is selectly accessible for sudden things that are important but not dire must haves, like an actual emergency. For example, pretty recently my shoe heel broke while I was walking on the street and I held my broken heel and hopped to the nearest shoe vendor and bought a new shoe so I didn't have to go home barefoot. Important, yes, but not worth denting my emergency fund, so it came from my cushion fund.
Now this is what it is. For investing my money, I first invested in understanding the terms for myself so I could choose the best options for myself and just roll with whatever a financial advisor says. I have individual goals of things I want to buy at peculiar times of the year. Thinking of that, having something that regenerates additional income/interest so when I don’t feel like working, I’m not doomed. I want an emergency fund that fights against inflation if I can't work or lose a stream of income. Now I buy stocks and use the dividends to fund my cushion fund and my emergency fund, alongside this I have a certificate of deposit for each specific saving goal acting like sinking funds I can't borrow from and I take part in bonds to fuel my emergency fund. My 9 to 5 then becomes what I used to make lump sum payments for all three options, then I use the remaining to budget for expenses and my freelance income takes care of wants and pensions.
That is what I do, but I want to do a little more. Not sure what yet, but I want to do it. After all, there is no ceiling with this economy. I encourage you to invest in education and start investing in yourself, especially if you are young because what blessings we have at this time is time. The time to recover from a dip in the economy, the time to invent something that can become the next big thing, and the time to accumulate the compounded rewards.
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