Over the years, I’ve been taught to put away a percent of your salary to “Invest in your future”. I started my first post-college job back in 1991 and I started saving 6-10% of my income. I was investing in the future. When I got married, we both began to contribute. Over time, that savings grew and we reinvested and planned for the future. Then, somewhere around 2010, the unthinkable happened, the stock markets declined and our long invested nest egg took a significant hit.
Since then I’ve thought a lot about “investment” in the future. I’m still a strong believer in putting away a percentage of your income each month to save for the future and the unexpected. Yet, I’ve developed an alternative investment plan that I’m starting to recommend to those just starting out.
A New Approach
If your goal is to set 6% aside for the future, take 1% of that and invest it in you – right now. The calculations are easy – for $30K in salary it’s $300. For $100K the number is $1000 per year.
Instead of putting that money into stocks or a savings account, invest it in training, books and coaching. By focusing on investing in your personal development, I believe you may find your career progressing faster than it might have without that additional focus on self improvement. Promotions may come sooner than anticipated and along the way you are likely gaining experience more rapidly than your peers.
The goal with this strategy is to push your personal development forward faster. Larger raises, quicker promotions and more diverse opportunities could put you in a better financial position. Over time, even though only 5% will be going into savings accounts, the absolute value has the potential to be higher.
Shifting from Investment to Invest In
As I continued to think about this shift, I moved to the dictionary to understand the true meaning of the word “investment”. The simple definition is that an Investment is the outlay of money usually for income or profit. This is definitely a straightforward financial transaction.
However, if you dive in and look at the idea of “investing in”, you find more insight into how investment could be used as a strong component of personal development with definitions like those below:
- To use money for (something) in order to earn more money
- To spend money for building or improving something
- To give (time or effort) in order to do something or make something
- To spend money on something useful or helpful to oneself
Summary
As I look back over my career (and my large bookshelf), I’ve done a blend of both strategies – putting money in investment accounts while still investing in my development through books, conferences, and continuing education classes.
I find it interesting that we think about investment by putting money away. In actuality it might be a better plan to re-invest a portion of the savings into your own personal development. Investing time and money in your personal development might just be the best form of investment for the future.