Four Steps to Investing for Your Future - Smart Money Chicks (2024)

Investing can seem scary and confusing. In fact is can be so scary that it becomes easy to avoid investing because it brings up so many uncomfortable feelings. We know that we should start but find it easier to avoid the issue than to take action. So how do you get over those feelings and begin investing for your future?
Below is a four step plan for you to eliminate the fear and get started saving for your future.

1. When you are doing something new it naturally comes with fear. Without having a good enough reason for starting the new activity you will continue to avoid it. Instead of hiding discover why you want to build a financially secure future. Create a detailed vision of exactly what you want from life. What do you want to do and have? What does your retirement look like? Do you want to travel? Spoil your kids and grandkids? Be able to donate more to charity? Get specific with what you want to do, the more details the better. Understanding what you want to gain can help you move beyond the initial fear; otherwise the reason for investing is all hypothetical and you have no reason to move beyond that fear.
2. Once you know what you want, you need to determine exactly what it is going to require financially for you to make this happen. Let’s say you want to purchase a beach house during retirement. Research what it would cost to do that today in your desired location, then add on for inflation. Maybe it is something simpler to figure out such as having $50,000 a year to live off of in retirement. Whatever your goal is try to put as accurate a dollar amount to it as possible. (Yet don’t stress about having the perfect number as your life and everything around you will adjust as you grow older. This is simply an estimate to get you headed the right direction.)
3. The next step is to figure out exactly how much money you need to save to achieve your goal. Luckily you don’t have to be a math whiz to figure this out. There are plenty of good financial calculators on the web. Simply type in retirement calculator and lots of options will pop up. One that I like because of its simplicity is the Bankrate retirement nest egg calculator. It allows you to play with a variety of factors all on one page to figure out how much you need to save!
4. Now that you know why you want to save and how much you need to save hopefully you are more motivated and ready to get started investing. The easiest way to get started is to participate in your 401k. You can start with a small percentage contribution and slowly increase the amount until you reach your desired savings amount. This allows you to get used to living on less than you make each year and saving more. If you don’t have access to a 401K you can begin to save with an IRA on your own. While it is more complicated to get started without the use of a 401K, it is not as hard as you may think and it is worth the extra effort. For help with detailed step by step help on you can visit the Smart Step How to Invest series designed for beginners that have as little as $25 to $50 a month to get started investing with.

Now that you have overcome the investing fear and are investing, sit back and enjoy watching your dreams become a reality!

Andrea Travillian has loved personal finance from an early age; her first stock purchase was in 6th grade! Deciding to make a career of it she got her BBA and MBA in finance. She currently covers personal finance topics including investing, debt and money emotions on her site Take a Smart Step.