Charlotte Cowles* says there are some simple ways to evaluate which self-investments are worth your money.
I feel caught between what people seem to consider “investing” in myself versus saving money for the future. I’m 27 and I feel like everyone is constantly telling me to do things that cost money now but will “pay off” down the road — buy expensive clothes that will last longer, take a business class because it’ll help my career, go to fancy exercise classes because they’re good for me. I’m wondering where the buck stops. When do I get a return on this stuff, and at what point am I actually hurting my future by not saving anything (which I’m not)?
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I, too, have been swept up in the idea that if I just “invested” more in classes and products and various other self-improvements then I’d become a more elevated version of myself.
But that’s not really how things work.
These mind games are part of being human.
We’re all stuck in an endless line of questioning about what we might regret versus what we’ll be grateful for doing — risk versus potential reward.
And while nobody gets it “right”, it is possible to make the process a little less haphazard.
Ideally, you want these self-investments to be part of a larger plan.
We may all be flailing toward an uncertain future, but you can still make some educated guesses about yours.
For example: It will definitely pay off to save some money.
“Before you can grow your future, you need to protect that future,” says financial therapist Amanda Clayman.
“It also sounds like you’re feeling pulled out of balance by all these ‘good’ investments, which you’re making at the expense of other things you need to take care of in your financial life.”
So, do your future self a favour and free your brain space from these decisions by automating them.
If you’re not used to saving anything, start small — say, put away 5 per cent of every paycheque.
Once that feels normal, ratchet yourself up to 6 per cent, and then 7 per cent, and so on.
Eventually, you want to be putting somewhere between 10 to 15 per cent of your paycheque into your retirement savings — especially when you’re young, because the power of compound interest is on your side.
At the same time, you also want to save some money for emergencies, and I recommend automating that, too.
Your goal is to have enough cash squirrelled away in a savings account — preferably one that you can’t easily see or access, so you won’t be tempted to “borrow” from it — that you could stay afloat for a few months if you lost your job.
I know that socking away all this money sounds boring and wasteful while you’re trying to jumpstart your professional life, but remember: “Saving for the long term is its own form of self-investment,” says Clayman.
It also sounds like you’re uneasy with your current habits — “wondering where the buck stops” — and saving more will make you feel more confident with your financial choices in general.
Which brings me to your next point: How can you be better equipped to decide which self-investments are “worth it”?
Clayman points out that you already have a pretty good tool at your disposal: your intuition.
“The most important piece of it is listening to that little voice that says, ‘You know, this seems a little reckless to me. I feel overextended. I feel like I’m taking on too much risk’,” she says.
Clayman also suggests creating a more structured spending plan.
“When you have a specific amount that you’ve budgeted for these self-investments, it gives you a framework for what you can reasonably afford, and that can be a real strength,” she says.
“We tend to surround ourselves with those who tell us what we want to hear — ‘Yeah, you should buy that! You deserve it.’”
“But I really believe that money points us toward ways that we need to grow as people.”
“And if you have a good handle on what exactly your resources are, then you can tailor your decisions to them instead of the other way around.”
I always find budgets really abstract, so here’s a trick I’ve learned to make them more concrete.
Whenever I’ve had to make one, I’ve looked through my past spending to figure out where the money could come from.
If I were you, I’d look at your past year of spending (it doesn’t need to be perfect — maybe just scroll through your credit or debit card accounts) and highlight all the charges you’d classify as “self-investments”.
Which ones do you feel best about?
Which ones could you have skipped?
Add up what you spent on the ones that were most helpful and see if you can afford to spend the same amount on similar things this year — in addition to saving money, because now you’re doing that, too.
You’ll need to be more judicious, to be sure.
But that’ll help give you context for what seems worthy of your money and how much it costs.
And remember, even when all of this does start to pay off, there will always be more.
And that’s a good thing!
Striving gives you an edge.
But you want it to feel sustainable and interesting, not like one long, never-ending maths calculation about what might increase your market value.
It should also increase your options, not feel like something you’re forced to do.
The minute you feel trapped or pressured into spending money on something, pay attention — that feeling is telling you something important.
* Charlotte Cowles is a columnist at The Cut. She tweets at @charlottecowles.
This article first appeared at www.thecut.com.
