As part of any financial plan, you need a plan for saving and investing, right? These things go right along with principles like “you cannot spend more than you make” and “save for a rainy day”. Unfortunately, I have not always followed these principles.


When I first started working, I signed up for my company 401K as soon as I was eligible. However, I did not save as much as I could and I certainly did not have a systematic savings plan. Life was pretty simple: make more, spend more…bad idea! Over the years, we were able to curb our spending and get plans in place that helped us save and invest regularly. Below are some of the lessons I learned about saving and investing.


Understand your spending and have a prioritized, automated plan for saving.

Once we had a handle on our spending and a plan for giving, we could tell how much was available for saving. Our top three priorities for saving include (in order):

  • Emergency Funds – we keep about 6 months’ expenses available for emergencies.
  • Retirement – we save at least 15% automatically each month for retirement (401K + IRA, Roth when possible).
  • College – we set an amount for each child and used a college savings calculator to determine how much we need each month.

Save for a rainy day.

It took me a while to realize the importance of emergency savings. We’ve all probably had someone in our family talk about saving for a “rainy day”. For me, it was my mother who told me my grandfather always suggested keeping six months’ salary in savings. This was one important lesson I learned about money from my family.

Decide in advance what to do with any surplus.

We allocate any surplus to save for things like a car, a dream vacation, home improvements, extra giving, etc.

You get to decide what is important for your family. The key is to decide in advance and establish a systematic savings plan for your priorities.



I need to start by saying that I am not a financial advisor. All I can do is share what we have done and what works for us. I encourage you to seek out a competent financial advisor to get investment advice and learn all you can about investing.

Don’t invest in anything you don’t fully understand.

Keep it simple.

Here are the basic steps we take to investing:

  1. Decide what
  2. Decide where
  3. Invest
  4. Review and update

Decide what.

First, we decide the purpose for investing and the goals for the money. For example, we may be investing for retirement or college. Retirement investments will generally have a long time horizon (more than 20 years). During that time, we want our investments to grow as much as possible so we are positioned to draw adequate income in retirement. College investments for our teenage children need to be available in a short timeframe so we want the money safe and easily accessible.

Decide where with input from a professional.

Once we know the purpose for the money, we need to consider the type of investments available to help meet our goals. This is where a financial advisor can be invaluable to help you evaluate different alternatives, plan for taxes, understand risks and check alignment with your goals. Using college savings for our older children as an example, we typically look for an investment that will have limited risk of loss (money market or maybe bonds) since we will need the money to be available in a few years. For retirement, we have a longer time horizon before we need the money, so we put the majority of that in the stock market and leverage tax favored plans like 401K and IRA (Roth, when possible).


Once we know what and where, we use the input from our advisors and money goals to implement the plan. Everyone has different levels of discipline in this area. For me, it pays to automate as much as I can so it just happens.

Review and Update.

Even though we try to automate as much as possible, that does not mean we “set it and forget it.” We review the performance of our investments regularly and make adjustments necessary to remove poor performers, reconsider risks and improve diversification.

I regularly read books, websites, podcasts and subscribe to some newsletters to improve my knowledge of personal finance and investing. In addition, I periodically consult financial advisors to review our plans and get other inputs and professional advice to refine our plans.

Learn from your mistakes and keep at it.

Have I made mistakes? You bet! I have pulled money out of the market too soon. I have held poor performing investments too long. I have purchased investments I do not fully understand. And, most embarrassing, I have spent more than I made. I have learned from these mistakes and changed behaviors to become a better saver and investor helping increase out net worth.

One thing is certain…if you regularly save and invest, you will make progress toward your financial goals. Slow and steady wins the race…remember the tortoise and the hare…which are you?

Useful Resources

Here are some resources I have found useful in my continuing growth and development as a saver and investor.

This is a continuation of the series outlining key elements of our financial plan. Check out the other articles:

Join us on FaceBook and let us know your tips for saving and investing.

Do You Save Like a Tortoise or a Hare?
Tagged on: