Three Lessons Investing Taught Me About Money

As a woman, I had a fear of asking questions about investing because what if I ask a really dumb question.

Regardless of how many years you've been investing, there's always more to learn. What's even more interesting about this "learning process" are the lessons investing teaches about money.

Having made my first investment in January of this year I want to share the top three lessons investing has taught me about money.

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1. Learn to save and budget, and know your current financial situation

You cannot invest unless you've saved first. I’ve saved money before but I had just a little idea of what I’m saving for. I put money aside every month but the amount changed depending on how much extra money I had leftover. I’ve done this for a quite long time because I just felt better when I knew I had some amount of money in my bank account.

Before I made my first investment, I was a little worried that this is the correct decision. What if I need that money for something else? So I looked closely at my income, expenses, and savings.

The rule I follow is "never let your expenses exceed your income, and always keep your eye on where your money goes." The first one is easy because I’ve never had problems with spending more than I can earn. But the second one, honestly, I wasn’t sure where all my money goes. The best way to check this is by budgeting and creating a personal spending plan to track the money you have coming in and the money you have going out.

I realized the cost of coffee when buying it every morning. For instance, one coffee cost me 77 CZK, I bought it 20x per month, that’s 1540 CZK and that’s 18 480 CZK per year. I could use that money for investing. Small changes in your everyday expenses, like making coffee at home, are completely under your control and they can help to save money.

When I started investing, I improved the way how I save money. I divide money that I want to save into several accounts for different purposes. Before I saved money for two main purposes - emergency fund and traveling. But now I save also for investing and other short-term financial goals like Christmas gifts or moving to a new apartment.

Knowing what I save, how much I want to save, and how much I spend each month gives me a better overview of my current financial situation.