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If you have a big goal on your radar—like changing careers, improving your health or rehabbing your finances—getting there might require you to invest in yourself. Spending money in the short term may be a tough pill to swallow, but it could lead to long-lasting rewards that far outweigh the costs. Let's clarify what it means to invest in yourself, and when it might make sense to do so.
What Is Investing in Yourself?
When you make a financial investment, like buying into the stock market, the goal is to come out with more money than when you started. You're investing in potential returns that may or may not materialize. That's inherently risky, but taking no action at all has risks of its own. If you never invest in a 401(k), for example, you may not have a nest egg come retirement. Investing in yourself isn't so different. It's when you spend money on yourself to help you achieve your goals.
You might invest in yourself by:
Occasions When You May Invest in Yourself
Everyone has different goals, but here are some situations when you might consider investing in yourself:
- Going back to school: Pursuing a new degree could open the door to a more fulfilling career. Your current employer might even cover some of the costs. Before going back to school, compare different programs to see what makes the most sense for your budget and goals. It's also wise to research average earnings for the job you hope to get. That can help you determine if going back to school is worth the cost and time commitment.
- Pursuing therapy: Mental health therapy can cost anywhere from $65 to over $250 per session, according to GoodTherapy. Your rate may be lower if your insurance covers it, and many therapists work on a sliding scale to provide lower rates. Making this investment can help you manage stress, work through past traumas and ultimately live your best life. It may even pay for itself if it gives you the confidence to advocate for yourself in the workplace and increase your income.
- Taking a course or getting a certification: There may be an educational course or professional certification program you've been thinking about. These often require an upfront investment, but it could strengthen your skillset—and your resume. That may give you a leg up in a competitive job market, or give you leverage to ask for a raise.
- Working with a coach: Getting one-on-one support and guidance can apply to your physical health, mental health, professional life, finances and more—there are coaches for just about everything. The right one can hold you accountable to your goals and provide action steps to help you get there.
- Joining a health club: That might mean joining a gym, enrolling at a yoga or Pilates studio, or buying a subscription to an online fitness group. You may even choose to work with a personal trainer or nutritionist. Money spent on your physical health can be well worth it in the long run.
- Starting a business: If you've got an idea you think could be successful, investing in yourself might mean putting money into a new business. That may involve using personal savings, home equity or a personal loan to get things off the ground.
- Relocating: Making a big move costs money, but it could lead to more opportunities and a better quality of life—especially if you relocate to a less expensive city. Moving somewhere that's close to family and friends might also be good for your mental health.
3 Things to Consider When Investing in Yourself
1. What's Your Desired or Expected Outcome?
What is it you hope to get in the long run? Investing in yourself—or anything, for that matter—doesn't mean you're guaranteed to reach your goal. Think about what you can realistically expect. For example, if you're contemplating going back to school, look at the job market for your desired field. If you're starting a new business, do some market research and create a business plan. You want to have reasonable expectations when investing in yourself.
2. Will You Need to Go Into Debt to Pay for It?
If the answer is yes, that doesn't necessarily mean it's a bad idea—but it does mean you should approach this decision with much more caution. No matter what your goal is, evaluate your financial health before investing in yourself. Revisit your budget to see how much extra income you have left over each month after your bills are paid. Is it possible to save up for your investment by using a sinking fund, for instance?
If you do need to take on debt, be sure you can afford the monthly payments going forward. And don't forget to think outside the box. For example, if you're working with a one-on-one coach, maybe you can set up an interest-free monthly payment plan.
3. Is the Cost Worth the Expected Return?
When all is said and done, is your total investment worth what you hope to get out of it? After doing some research, you may decide that taking out student loans and putting in the time to earn a new college degree won't necessarily improve your job prospects. The opposite may also be true. Putting a portion of your personal savings toward a new business might feel energizing to you—and you may feel okay with the possibility of losing that money if things don't work out. The main takeaway is to determine for yourself what's worth your time and money.
The Bottom Line
Investing in yourself means using your resources to better yourself and improve your quality of life. That might mean working with a financial advisor or credit counselor to pay down debt or help you save for retirement. Investing in yourself can also involve microsteps. For example, maybe you hire a cleaning company to tidy your home so you can spend your weekends recharging. In the end, it's about taking care of you.