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If You’re Strapped For Cash, Investing Isn’t The Solution

While many people might argue that investing is the best way to get out of the rat race and turn your life around, this isn’t the case for everyone in the world. And, if you’re already strapped for cash and barely scraping by in the first place, then investing is by no means an immediate solution that will alleviate any of your troubles. Sadly, people and many enticing titles love to toss around the word like it’s an easy feat accessible to everyone when the difference is staggering.

So, to go against the grain, we’d like to emphasize that investing isn’t always the solution, and this truth becomes more apparent with people who are less fortunate and are struggling to get by day-to-day. Sure, it’s a very trendy concept that a lot of people feel will turn their life around, but the real world is ruthless and unforgiving. We need to put things into perspective and acknowledge that we have different starting points.

Different Circumstances Lead To Different Opportunities

It’s an understood fact that the world is unfair, some people will have worse circumstances and have a family dependent on them the second they enter the world, and others are better off with assets they can inherit from their successful parents. The latter could be breezing by the entirety of this global pandemic, while the former only has the new batch of stimulus checks as a fallback. As a result, different circumstances will lead to different opportunities in life, and investing at a young age is but one of those opportunities.

  • Investing Requires A Capital: Number one, investing requires capital, and when comparing the fortunate and less fortunate, we can immediately see that it’s not smart for those with less to utilize investing when they don’t have much to start. If the average rate of return of the stock market adjusted for inflation sits around 7%, a fortunate individual could invest their $100,000 in savings and expect $7,000 in returns annually. However, a less fortunate individual with only $500 to spare will only receive $35 after the same amount of time.
  • Knowing Your Current Priorities: Number two, a more fortunate individual who comes from a relatively affluent background can afford to risk, fail, and build themselves back up. However, a less fortunate individual who has current obligations and responsibilities such as family cannot afford to risk and lose because that will put them out on the streets. We must acknowledge and understand our current priorities because these will ultimately define our capacity to move or the need to be risk aversive.

The Reality: You Work And Build Yourself

woman working

Here’s the hard truth; if you fall under the same category of being less fortunate or have your hands tied to current obligations, then you’ll have to work hard and build from the ground up. Yes, financial gurus will keep shoving the idea of investing your way to success, but not everyone can afford to, nor is it the wisest financial decision in your situation. We all start somewhere, and being realistic is a crucial aspect of getting where you want in life.

#1 Begin With A Career

You’ll see that people find it commonplace to slander or downplay 9 to 5 jobs because you’re wasting away at the desk, but building your career and attaining a steady active income is nothing to undervalue. A career keeps you moving, pays the bills, and lets you gather experience that will help you expand into future ventures and opportunities.

  • Equip Yourself With Skills: Time is of the essence, and you must use the free time you get by equipping yourself with skills that can help you advance further in your career. Of course, when the Lady Of Luck does shine opportunity your way, choosing to stay in that career is your choice. However, the skills you develop over time will remain with you wherever you go in life, which means you’re never starting from scratch if you hit a blunder because your experience will not betray you.

#2 Accumulate And Compound Your Assets

The best advice for people who don’t have much is to actively save their extra money and to live below their means. Instead of succumbing to the trap of lifestyle inflation, cut down your expenses and practice content. You don’t need all of the fanciest gadgets, and your current car will last you longer with proper vehicle maintenance. Think of the long-term and let those savings accumulate and compound in the future.

  • Always Have A Safety Net: An excellent short-term goal that we always recommend is to have a safety net ready in your high-yield savings account. Your goal is to have at least 3-months’ worth of expenditures inside your account on top of the compensating balance, so you have something to fall back on if things don’t go your way. In doing so, the money will give you enough time to work things through and keep you from living out on the streets during hard times.

Success Is A Slow Burner

In conclusion, we want to remind everyone that success is a slow burner, and despite the many overnight success stories that get featured on social media, most people must bide their time to reach their goals. Don’t be driven by emotions and sudden trends because these are only fleeting episodes of momentary happiness. Set your sights on the future and work your way up.

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