If you’re anything like me, then hindsight is 20/20. And this is especially true when we think about finances and all of the things we should have done in the past. But, instead of beating ourselves up about the financial mistakes we made way back when, we should start investing in our future selves. Therefore, there is no time like the present to start investing in yourself.
1. Invest in Your Future
When I first start to think about investing in myself, I automatically lean towards investing in my future. When I was younger, I thought I had all the time in the world. But we all know that is a fallacy. My older, and hopefully, wiser self knows better than that now.
There is no better way to invest in yourself than to invest in your financial future by opening investment accounts. The 3 most common types of accounts, outside of a workplace, you could choose to open are:
- Roth IRA
- Traditional IRA
- Investment Account
Each one will depend upon your specific situation and whichever one makes the most sense. For me, I chose to open a Roth IRA with Betterment to get started. I chose them because they are a well-known robo-advisor with low fees. Plus, they do all of the rebalancing for me. Which is something I wanted when I first started out? It is simply not something I was comfortable with doing on my own.
And, as a self-employed entrepreneur, a Roth IRA made the most sense for me from a tax perspective. With a Roth IRA, you can invest after-tax money. This means that when it is pulled out during retirement, it won’t be taxed again. I like this idea because it is easier for me to pay the taxes on the money now versus when I retire and don’t have any income. Plus, the tax rate statistically goes up, so I would be paying more taxes on the same money in the long run if I put it into a Traditional IRA.
But, there is a limit as to how much you can invest in a Roth IRA annually. For 2020, the most you can contribute is $6,000, or $7,000 if you are 50 or older.
Another Investment Account
On top of opening a Roth IRA, I also decided recently to open an investment account with Acorns. This is an account that helps you invest in yourself by rounding up spare change. This is a great idea for those of us that typically might have a more difficult time putting money away.
I chose to just get the Acorns Lite account to begin with, as opposed to the Acorns Personal account. The difference is the cost and type of account. Acorns Lite costs me $1 per month, whereas Acorns Personal would be $3 per month. Not a huge difference, but since I already have a Roth IRA, I just wanted an investment account instead. If you choose to go the Acorns Personal account direction, you have access to their investment account as well as a retirement account option.
They, like Betterment, diversify and rebalance your portfolio for you.
2. Keep Tabs on Your Net Worth
Creating some investment accounts for your future self is a great place to start. But, you might also want to consider keeping tabs on your net worth regularly to see how things are going and growing. When I was trying to get out of debt a few years ago, I ran across Personal Capital and loved it. In fact, I still use this awesome platform today to check in on my net worth.
Personal Capital can be used on your PC or as an app on your phone. I use it both ways because it is so streamlined and simple to use.
Initially, you will have to set up and connect all of your accounts within the platform. That is the most time-consuming part. But, after that initial setup is done, it will be easy to see how much you owe on everything. Plus, it will show you how much your total net worth is. I love this because I like to see my net worth grow every month.
Whether I am working to get out of debt or building my nest egg, as long as there is positive movement towards my total net worth I feel accomplished. So checking my Personal Capital account is something I do every month to keep myself on track. That has really helped me invest in my future financial self.These are 3 of the best ways to start investing in yourself today! Click To Tweet
3. Life Insurance
While not everybody is thrilled about discussing life insurance, it is just one of those topics that shouldn’t be ignored. This is especially true with what is going on in our world today. In fact, my spouse and I have discussed life insurance for a couple of years now but just never got around to it. I already had a policy from when my children were born many years ago. But, it really needed to be revisited due to a lot of life changes. And my spouse didn’t have a life insurance policy at all, which is a bit concerning.
So, we’ve finally pulled the trigger and are beginning the process. There are many different ways you can go with a life insurance policy. And each one will be determined based on your unique situation. However, a good place to start looking for a simple term policy is Bestow life insurance.
Bestow can be accessed on your PC or as an app on your phone. With them, you just have to answer a few simple questions and they will let you know how much your premium would be in about 5 minutes. Life insurance is a great option for simple 10 to 20-year term policies that are a little more budget-friendly to get you started. However, if you are looking for longer-term options, they don’t offer those yet but are working on it.
No matter who you choose to go with, getting a life insurance policy can only help your family out in the future should something happen to you. And that is a huge part of investing in your future!
Investing in Yourself Summary
Overall, there are a few different ways you can begin to invest in yourself today. Some of my favorite ways are:
- Open investment accounts
- Regularly check your net worth
- Get a good life insurance policy
If you start doing all of these things, then your future self will be greatly appreciate of your financial foresight. And you can’t go wrong there!
What are some of the best ways you have found to invest in yourself?