Why I May Not Be Investing in 2025
As I wrap up this year, I am thinking more about my financial goals for 2025. One of those goals is to prioritize saving over investing (outside of a 401k). I’ll walk you through my thinking process. Let's start with where I am right now on my financial journey. I currently have around $6K in my company 401K, roughly $2.5K in credit card debt, and around $8K in student loans. That puts my net worth at about -$4,500. I am not overly concerned about this number as the student loan debt is being paid off little by little and I have a low interest rate. Also, the credit card debt should be paid off within the next two months. But when I look at my net worth, something is missing from the equation, I have ZERO savings.
Anyone who has no savings can tell you that it is not a good feeling. I always wonder what would happen if there was an emergency. I would have to either sell my investments or go into debt, two things I would prefer not to do. So this is why I want to prioritize saving money in 2025. But why not also invest? Not investing means I can put more money into savings and build up a bigger cushion. Most financial gurus would probably look at me and say, “You should invest and save at the same time”. They are probably right, I “should” do that. On paper, that may be the best decision to make if I want to build wealth. However, I would rather have the peace of mind of having a large emergency fund. In Morgan Housel’s book, The Psychology of Money, he talks about how it is important to make money decisions that give you better sleep at night rather than what may seem logical and more profitable (Page 115). At the moment, saving and investing at the same time is probably a better way to build wealth. But I would sleep better at night if I had more money in savings.
I am not saying that I will never invest. My goal is to save a specific amount of money that gives me a good enough safety net to fall back on. Once I reach that point, I can get back to investing at some point in 2025. This is my current thinking process. Maybe not the most logical, but I can be at peace with it.
Something to think about as you go into 2025, are there any money decisions that you have made because others told you to, but didn’t sit right with you?
