Financial Lessons from Aesop’s Fable: The Ant and the Grasshopper

Are you an ant or a grasshopper? Well, you all might have read this famous Aesop fable about “the ant and the grasshopper.” This fable has moral implications for people of all ages and these virtues come in handy for financial planning as well. So, if you are managing your finances, you better be an ant and start planning today to create the financial future you desire. Don’t be sorry later like the grasshopper in the fable. It is not the case, that you are not working hard to save, but you need to act at the right time and make some important decisions when opportunity knocks. When you are in thirties, you seem to care less about financial planning because you think you still have some more time to think about financial planning. This is the biggest mistake people make. So, here are a few tips for financial planning.

Assess your Life Stage

Whether you are in your late twenties or early thirties, saving even a small amount can be a game-changing decision later. Whether your aim is to retire happily or you are planning to send your children to Ivy League school, it is important to assess your current and future needs on a regular basis.  Therefore, financial planning and saving is as much important for a young professional as it is for a Gen-Xer (Generation X). It is just that the needs of these different generations are different, but the goal is same and that is to achieve financial freedom.

Magic Figure

Everyone seems to be asking this “how much is too much?” when it comes to savings.  According to financial experts and economists, you need to literally force yourself to save enough to meet your financial goals at every stage of your life. Most experts suggest a magic number of 10% of pre-tax income, which will end your financial woes. However, if you cannot make a huge change, start with 5% and slowly add up to 10% or more. So, no saving is small so long as you are getting into a discipline of saving.

Automate your Investments

Saving money to meet your current and future needs is not enough, you need to invest that amount in order to build wealth.  In his book titled “Automatic Millionaire”, David Bach suggested pre-established or automatic plans are the number one wealth building strategy. Whether it is 401k or 529 savings plan, set up an automatic investment plan, so that you can control that urge to splurge and start building wealth.

Common Sense: Key to Success in Investing

“The three great essentials to achieve anything worthwhile are: Hard work, Stick-to-itiveness, and Common sense”–Thomas A. Edison

Often termed as practical intelligence, common sense plays a major role in our success whether it is professional world or daily life. While it is easy to make every day decisions like buying furniture or getting a smartphone simply by relying on our common sense, it is difficult to trust our practical intelligence when it comes to buying stocks. Therefore, we rely on financial experts or advisors and let them plan our financial future for a simple reason that we do not want to make mistakes. In other words, we trust the education of experts over our street-smartness when it comes to planning our own financial future. However, education in finance alone cannot guarantee success. Robert Green Ingersoll said, “It is a thousand times better to have common sense without education than to have education without common sense.” Therefore, it is important that you trust your common sense when making an investment whether it is your retirement fund or a 529 plan or for that matter a real estate investment. Follow these tips for a better financial planning.

Act, Act, Act
Do not just think and read and do not wait for perfection, because after several years of education also you will never be content. Hence, you will keep waiting for the right time to start acting your plans. Remember, nothing can work until you act on your plans. So, act today and play around with a small sum of money and rely on your instinct to make a wise choice. In this process, you will learn to think on your feet and make right decisions in the least amount of time. So, if you want financial planning to work for you, you need to take part in this process actively.

Follow your Instinct
Each individual is different and every individual knows best as to what they want in life. When it comes to financial advice, use your brain and don’t just follow the advice, because it is important to understand what you have learnt and read so far in your life. After all, buying stocks is no different from buying furniture, if you follow the trends and do a little extra research. If you are investing in a stock because your friend has, you might not get the same results as expected. You know what you want from your investment and thus you should design your own financial strategy. Remember, you can make the best decision of your life, if you trust your own instinct rather than relying on advice by others. You need to create your own financial future and therefore, must have a strategy.

Stick to a Strategy
Once you have a strategy, stick to it until you get the results. If you stay the course, you are definitely going to be successful in any field whether it is investing or business. There is nothing called overnight success in investing. You might be tempted to change your plans and switch funds from one stock to another. You ought to stick to your strategy before you expect a huge gain. In that period you might fail. Making mistakes give you a chance to learn and be wiser than before. So, it is ok to stick to your financial strategy after all, you have created the strategy looking at your needs and personal goals.

Be Optimistic, not Greedy
Earning a good return is always desirable and everyone just loves to earn good dividends on stocks and increase their wealth. But, there is a thin line between being optimistic and being greedy. Greed in Investing cost you dearly especially if you are a new investor. So, never fall in the greed trap and look for the signs that you are turning greedy. When someone suggests you to buy stocks or for that matter invest in any business that offers quick earnings and easy money, do a little research about that company. Remember, there is no such thing as a free lunch. If you are presented with an offer that is too-good-to-be-true, it is like a free lunch for which you have to pay a very heavy price at some point.

“Have no fear of perfection, you will never reach it”– Salvador Dali.