Who Wants to be a Millionaire? Let's Stop ‘Saving’ All of Our Money for a Rainy Day
It’s that time of year again. When you dredge up your financial records and tax sheets and do your best to figure out a spending plan for the coming year that includes enough money for groceries, rent, and a bit to put away in savings for that emergency rainy day fund. Because things like worldwide pandemics happen, and saving money is the smartest way to ensure you have a bright and prosperous future, right?
Not quite. You’ve likely been taught from day one that there are only two ways to handle money: spend it or save it. But there’s a better, smarter way to use your money that can actually multiply your profits and give you more financial freedom to do those things you actually want to do like finally book that tropical vacation you’ve been dreaming about since 2015. What’s this money handling secret that will help you redefine your relationship with money?
Investing. I know you probably just thought of endless rows of cubicles and men in suits running around frantically checking stock market prices like their lives depend on it. But the stock landscape actually looks a lot different now with online portfolios and dozens of easy ways to invest.
Why make the switch from a saving mindset to an investing mindset?
For so long the narrative has been, “I'm so glad that my mother or grandmother taught me how to save money and put money away for a rainy day.” Simply saving money is outdated and saving alone is a money mistake that likely won’t get you to your financial goals. Should women have money saved for an emergency? Abso-freaking-lutely. But investing is the secret sauce to money maximization. The modern mindset is ‘becoming a millionaire is easy’. Investing consistently over 20+ years, allows that millionaire status to become a reality for women.
I cannot wait for the day in the future when young women can proudly say: “I'm so glad my mom/grandmother/aunt/sister/cousin taught me how to invest and make money work for me!”
Here are just a few of the many reasons that all women should start investing and making the most out of their money:
1. Money sitting in a savings account is money lost due to inflation
The average global annual inflation is around 3%, so if you're not gaining 3% interest on your money, you’re actually losing money in the long-term. The purchasing power of your money is decreasing. That means you’re going to have to work even harder and put away 3% more money to actually be able to afford those vacations, nights out, and wedding gifts that you’re saving for. Think about how many groceries you could buy for $40 in 2010 versus 2020, it’s a big difference. Your money has to be able to keep up with rising costs, so investing -- not saving -- is the only way to match inflating costs and keep that moolah growing.
2. Investing doesn't discriminate.
I don’t have to tell you that racial and gender inequalities exist in our society. The gender pay gap and the fact that only around 7% of companies have women occupying the highest available, highest paying roles, is enough evidence that there are some major issues with gender equality in the business world that often extend out to other parts of our country’s infrastructure. Luckily for everyone, the stock market doesn’t care who you are. The stock market allows people of all genders and races to take advantage of compound interest and grow their money so they can level the "rainy day fund" playing field and take control of their finances. The rest of the world might try to hold you back, but the stock market is a place where everyone has an equal shot at making money and building their wealth, one investment at a time.
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3. Investing allows women to reach retirement age with the same amount of money as men.
Thanks to that awesome gender pay gap I was telling you about -- you know, the one where men are making almost 20% more annually than women of all races -- women retire with about 1/3 less money than men who work the same jobs for the same amount of time. That means that women have to work twice as hard to make sure they have enough money to support themselves after retirement. Investing is a great way to start building up wealth to carry you through those years after retirement, without the stress of having to crunch numbers and cut corners to keep up your lifestyle.
Investing can sound really intimidating as it is often foreign to women who have been raised in the “saving v. spending” mindset. Women often disqualify themselves from investing because they believe they aren’t rich enough or smart enough to make investing work for them. But the truth is, it doesn’t matter if you have $5 or $1,000 when you start investing. Anyone has access to start building wealth and there are plenty of resources to help teach you how to make the most out of your money.
So stop hoarding all of your nickels and dimes in mason jars and only hiding away money in a rainy day fund. Instead, use your money to start making more money every day. Because investing and building wealth isn’t just for old white dudes. It’s for you, and me, and everyone who wants to make smarter money moves and invest in themselves and their future.
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