Financial Planning | Jul 4, 2010 | 1 Comment

Independence Day and Your Life—8 Ways To Declare Your Independence Now

Today Is Your Day . . .

Today is July 4th, which is Independence Day in the United States. As you may know, it’s the day when our country declared its independence from England. But today can be somewhat symbolic no matter where you live. Today is a day when you can declare your independence from life as usual, mistake-driven investing and the thought of doing things tomorrow—a day which never comes.

In the spirit of the day, I thought I’d share with you 8 things to do to bring about an improvement in your life, from a financial perspective. No matter how many investing mistakes you’ve made, how many times you’ve put things off or how many dreams you’ve had, today is the day to draw a line in the sand and go forward—much like the new Americans did in the 1700s against all odds.

Declaration One: I Will Be Quick to Discover and Slower To Act

Many investors lose money simply because they act too soon. The idea behind this declaration isn’t to wait years before acting on something (unless that’s the right move). Instead, it’s about relaxing and doing all of your homework first.

The world is full of opportunity. If you “miss out” on one thing, you’ll be ahead of the curve for something else. If something is so “hot” that you must act quicker than you’re comfortable with, it’s better to just miss out and move on.

Declaration Two: I Will Read a Good Book This Month

Do yourself a favor and read a good book this month. The topic is up to you: investing, trading, financial figure biography, economy, etc.

What’s something you wish you knew more about? Go find a good book on Amazon.com and read it.

Declaration Three: I Will Put Aside Money Each Month for Investing

If you’re currently sustaining life, chances are you can afford to put something away—even if it’s $5.

Don’t discount being able to “only save $5 a month.” What’s more important is the action. By putting aside money each month, you’re constructing a good habit.

Each month put what money you can into an investment-based account of some kind. You don’t need to immediately invest the money, but you do want to put it away.

By the way, you can follow my $300 monthly investment series on this site.

Declaration Four: I Will Find At Least One Expense to Reduce or Cut

This is a big one. I wrote an article days ago about how I reduced my monthly expenses by $464, which now goes into an investment account.

You don’t need to do a complete overhaul today. Start small by finding just a single expense you can cut or reduce this month. And then take that money and put it into your investment account each month.

Examples: eat out one less time per month, reduce cable TV bill by one plan level, stop buying a few splurge items at the grocery store, drive less to save gas money, use public transportation one day a week, etc.

Declaration Five: I Will Not Invest In Anything On My Own Unless I Can Devote Some Time Each Week To That Investment

Investors kill themselves by trying to use “set it and forget it” investing practices. You just can’t do that. While some investments take less time than others, all of them require at least some maintenance.

For example, if you own stock in a company, try to spend a little time each week or even a few minutes every day checking up on the company.

If you can’t do this, you really need to find someone else to manage your money for you.

Declaration Six: I Will Look Beyond Today and Consider Tomorrow

Many of us get so involved with getting by today that we really forget to plan for tomorrow. Tomorrow will take care of itself right?

The problem comes when we fail to do any planning at all. We don’t invest in tomorrow at all, so our lives become a series of “todays.”

By doing many of the declarations in this article, you’re actually considering tomorrow and planning for it.

Declaration Seven: I Will Make the Most of What I Have and Be Positive

Stress and desires can kill you. Don’t fret about what you don’t have. Instead, be glad for what you have and make the most of it.

Hate your job? Find ways to make it as enjoyable as possible. Treat it like the best job in the world and start grooming yourself for a better job.

By being positive and proactive, you’ll be in a much better position to actually improve your life. Change begins with you.

Declaration Eight: I Will Guard My Capital

I saved the best for last. This is the cardinal rule. Don’t be loose with your money. I don’t know how many times I’ve head “It’s just $10 dollars” or something similar this week. It’s not “just” anything. That’s money you’ve earned one way or another and it’s not to be foolishly lost.

People are often shocked when they finally learn how much money they’ve truly wasted and more importantly, how much that money would have grown over time. Treat your money with respect and don’t give it away. You put in a lot of work to get it so why lose it in an instant?

Let me just leave you with this. Let’s say I go to a coffee shop 3 times a week and get my favorite drink. It costs me $5 per drink, which is $15 per week or $60 per month. For many, $5 here and there will fly under the “this is too costly” radar. If instead I had invested that money at a 9% return each year, in 10 years I’d have almost $12,000. If I really needed the coffee to survive, I could buy a pound of their coffee for about $10 and be good for a couple weeks. Remember, every dollar, yen, euro or whatever counts.

Do you have an idea for a declaration? I’d love to hear it. To me, the key to success in anything is small steps. If you try to tackle everything at once, you’re likely to get overwhelmed and fail—if you even start in the first place.