Mrs. Frugal and I just got back from a birthday party for a friend of ours this evening. We sat next to someone who is an executive at a large garden plant wholesaler. Mrs. F. and the executive had a long talk about plants and her fight to keep ours alive.
At the beginning of the summer, Mrs. Frugal and I put some plants into the patio outside our unit. At first, we marveled at the beauty of the patio. Gone were the weeds and dried up bushes. They had been replaced by a combination of annuals and heartier shrubs. Soon, though, the plants started to struggle. Snails invaded, only to be followed by a torrential heat wave (this week, the thermometer topped out at 105 or so). In addition, our patio gets less than an hour of sunlight a day.
Being that I think lots about finances, I began to put plants and money together. Here are some thoughts:
A Good Foundation is Key
We knew our soil wasn’t very healthy. When we began to plant our plants, we mixed 2 large bags of fresh soil into the existing plot. What we learned tonight was that we should have replaced as much as 75% of the dirt with new mulch*. We probably replaced about 15% of the old dirt.
In the same way that good dirt is key to provide the nutrients to plants, a good foundation in your relationship is going to be key to growing your finances as a couple. If there are a number of other issues that need to be worked out, it may be difficult to talk about money. (This goes to my primary law about money: Money is a magnifier. If you have a difficult life/relationship/etc., more money will most likely make things worse. If things are good, it may make things go smoother.)
Choosing the Right Plants is Important
Plants are like the assets in your accounts. You want to choose things that will thrive depending on the amount of attention and cost you want to devote to them. Most plants like sunlight. Some like shade. Some need lots of water, others need hardly any water at all.
Likewise, when it comes to investing, you should choose investments that are appropriate to your needs. Low cost index funds almost always make more sense for individual investors than buying individual stocks. If your idea of financial gardening is to plant something and hope it’s still around in three months if you forget to water it, index funds are probably the right investment for you. They don’t need to be tended to frequently and they don’t cost a whole lot.
Diversification is Necessary for Beauty
You wouldn’t want a garden full of one type of flower. Neither should your investments be all stocks of the same category. As boring as they are, bonds should be held in order to reduce the fluctuations in prices. Bonds will reduce extreme swings in the value of your entire investment portfolio if your stocks or stock mutual funds lose significant value.
This post is a bit simple, but many of us need to be reminded that investing in low cost funds on a consistent basis is the best avenue to providing the best chance of getting ahead.
*Note: I don’t know if “mulch” is the right word for dirt. Mrs. Frugal is the gardener, not me.
{ 2 comments… read them below or add one }
Mulch is really a layer of something that goes on top of the soil. Can be anything, including barks, cardboard, grass, shredded plastic, etc. Sometimes the mulch can be mixed into the soil.
Love your Frugal blog! Thanks!
keep blooming, mrs. F. !