AN004: The Lush Lawn vs the Growing Garden

What you water will determine your financial future.

Come with me, as we tour two pieces of land. One is planted with grass. It’s a bit scruffy, but the owner keeps watering it, and she knows it will improve over time. The other parcel used to be 100% grass, but this owner recently transformed half of the space into a garden. By putting this land to work, she’s been able to harvest fresh vegetables and enjoy beautiful flowers.

Grass and garden, side by side. Two very different purposes.

Expanded Possibilities

Shifting to a financial metaphor, the grass is your savings account. You feed it — ideally, regularly — and it provides financial stability when the world goes topsy-turvy (like in times of a pandemic, or a job loss…or both). But in our current era, interest rates are very low — so your savings account balance will remain about as flat as a Midwestern backyard. After you’ve stashed 3-6 months of living expenses as a contingency fund, and established a plan to pay down any debt, you need to start planting a garden.

An investment account is that garden: the place where money can grow. You’ll need to do some research to find the right choices that will do well. There also will be a bit of tending and weeding along the way. Yet just as a regular garden can be tended without a PhD in agricultural science, an investment account can be launched easily and simply, then develop over time.

Avoid the Weeds

Women often raise three objections about why they haven’t planted this investment garden. They are intimidated by the process and don’t know where to start; they assume they lack the necessary funds; or they tell themselves it’s the wrong time — either too late, or too early. All three of these beliefs conspire to keep women from harvesting a much richer financial future.

Your investment garden begins by avoiding the details — the weeds — which can distract you from your larger goal. First focus on what you’d like this money to do for you, and by when. Financial planners often break the timeframes into three broad categories: short-term goals require less than 2 years to accomplish; intermediate-term goals require 2-10 years; long-term goals require more than 10 years and often center around retirement. 

Look at your own life and think about financial goals you might enjoy. A goal can be any experience that you want to ensure has room (and resourcing) in your future life. Perhaps it’s to buy a new (or bigger) home. Maybe you want to pay for a child’s education (or return to graduate school yourself), buy a new car, or take that dream vacation. By sketching your goals, it becomes easier to plan and plant the resources you’ll need at harvest time.

Plant, Grow, and Harvest

In future issues, we’ll dig into types of investments (seed choices), timing (when to plant or harvest), diversification and rebalancing (crop rotation), and more.

For now, understand that financial planning is as unique as you are. Yes, there are general guidelines and strategies. The motivation, however, springs from a commitment to creating the future you desire. Once the fear and avoidance subsides, you’ll also find a sense of deep satisfaction as you plant, grow, and harvest.

To get started, sketch out your goals for your harvest. Saving and investing are much easier if you’re clear on a specific why, beyond a generalized goal of “I want to have some money stashed away.” Jot down a few ballpark figures as your initial garden plan.

I’ll be back next week to show how to get those seeds in the ground. Until then, remember: A small growing garden beats out that lush green lawn every time.