How Growing Your Finances Is Like Gardening

My spouse and I have gained quite a bit of experience planting bushes, trees and flowers over the years. Our two biggest experiences were in planting thousands of pine seedlings from the state nursery on our 40 acre farm (in our younger years)and planting around 3000 spring flowering bulbs on our current 6 acres. In between we have planted everything from rose bushes to azalea bushes to fruit and nut trees to vegetable plants and grass. We planted, tended and harvested from a vegetable garden even when we rented a quadraplex. I came from a long line of farmers, who always had gardens.

I understand that plants thrive or wither depending on how you care for them. So do finances.

If you give the same care to you finances that you give your garden, both should grow. Below are some items that need to be done for each.

Pick the right environment.

You wouldn’t think of planting your day lily in the middle of an interstate, so don’t think of planting your finances in a hostile environment.

If you and your spouse or family disagree on saving, spending or investing one party may inadvertently sabotage the efforts of the other. If your country has laws that allow seizure of personal property or laws that encourage excessive taxation, you will have trouble growing your finances.

Use good stock.

If you take the time to decide what to want plant and pick the right type of place in which to plant, you should plant good stock – get the best example that you can so that it has the best chance of growing well for you.

It is the same with your finances, whether with credit, savings or investments, use the most reputable institution offering the best plans that you can find. Don’t use a high interest, annual fee credit card without redeeming qualities. Don’t get a loan from a shady institution that will charge high interest rates and go out of business in a short time. Don’t invest in a Bernie Madoff type scheme. Invest your time and money in institutions and investments that have ongoing value.

Diversify.

Most people don’t want to fill their yard with all the same kind of plant. Most gardens and landscapes are best with a variety of plantings. One plant may do well in the sun, others in the shade. Some plants will do great in dry rocky soil, while others require rich, damp loam.

It’s the same way with finances. Don’t put all of your eggs in one basket, as the old saying goes. Spread your investments out over different kinds of products, to increase chances that overall, your net worth will grow, even when parts of it go down. Some asset types do better during inflationary years, some do better in recessions. Pick the right mix of savings, stocks, bonds and other asset types to suit your needs, goals, and your stage of life.

Limit your selections within each category.

If you were to buy one of each kind of plant in the spring catalog (like every kind of rose bush offered), you will have a lot of competition in your landscape between the various plants – not only for ground, sun and water, but also for your time, knowledge and attention.

If you invest in too many financial assets of different types, they will also compete for your time, knowledge and attention. Too diverse of an asset base causes you to spend more time and effort in managing and tracking your portfolio. It is typically better to have a few quality investments within each allocation category, instead of having to track and follow tens or hundreds of different stocks or bonds.

Prepare the soil.

Most patches of soil don’t come with all the right kinds of things to get the best plant growth. Before planting anything, you should add appropriate soil amendments – like gypsum or sand (to loosen clay soil), peat or limestone (to change the acidity level of the soil), or top soil or potting soil (to provide a better start) and fertilizer.

To prepare your ‘soil’ for growing your finances you can do several things, such as:

  • Learn about different financial institutions, types of assets and investing methods.
  • Discuss and agree on financial goals within your family.
  • Understand your money psychology and learn how to manage any quirks that might impede growth.
  • Set expectations – to let others in your life understand where your priorities lay.

Feed and water.

Plants grow better with fertilizer and require water to tap into the earth’s nutrients.

Your finances will grow better with ongoing additions and also require monitoring to make sure they are on track. Paying yourself first ensures that you actually put aside for saving and investing. Automatic payroll transfers to your bank or financial institution make this very easy. Track your finances using one of the many tools available now, from spreadsheets, to Quicken to Mint.com online.

Prune for growth.

Some plants require pruning to ensure the next years crop of flowers or fruit. Other plants require that weak branches or limbs be trimmed off so that ice or wind damage won’t drop and injure the entire plant. Still others, such as western red cedar, are ground hogs and will stretch out their limbs so that nothing else can grow nearby. All require pruning for growth, just as your investments and debts do.

You can trim off losing investments to free up the money to buy investments that will grow. Prune down debt to make way for savings to build. Sell off assets in the over allocated sectors of your portfolio and buy new ones in the under allocated ones to keep your intended asset allocation in balance to reach your goals

Protect from harms way.

Deer, squirrels, insect infestations and other hazards can invade and harm your plantings. You must be watchful to protect your tree or bush before it is irrevocably damaged.

You should be on guard against high taxes, inflation or investment fees and expenses which could erode your finances. Consult appropriate financial planners, advisers and tax accountants to find the best ways to manage your resources to minimize the damage from governments, institutions and the overall economy.

Plan for growth over time.

Unless you want to spend a fortune to buy large specimens of plants and trees, you need to plan your landscaping for growth over time. It takes time for plants, trees and shrubs to reach full size, start small and enjoy the growth.

It also takes time to grow your finances. Just start small and enjoy the growth. Many calculators exist on the internet to show that saving for retirement requires very large savings per month if you wait until later in life, yet require much smaller amounts the younger you start. So squeeze a few bucks out of your check each week to put towards savings – and put it somewhere it will grow.

How do you make your garden or portfolio thrive and grow?


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