3 Things You Must Do Before You Start Investing

As an investor with eight years of experience, looking back at my journey, I made quite a few rookie mistakes when I first started. If I could go back and start from scratch, there are definitely things I would do differently. Today, I want to talk about the most crucial first step: getting your financial house in order before investing.

🚨 A Surprising Statistic

Nearly 40% of adults can't cover a $400 emergency without borrowing money. When your car breaks down, your boiler explodes, or you suddenly need medical care and you don't have cash set aside—you'll be forced to pull money out of your investments at potentially the worst possible time.

This is exactly why, if I were starting from scratch today, I wouldn't open an investment account or buy any stocks until I got the basics right.

😰 Why You Shouldn't Skip This Step

It's easy to feel rushed when you see people around you with six or seven-figure portfolios. YouTube is full of videos showing off incredible gains. So in your desperation to catch up:

You start throwing money from not just your income but your savings too
You end up investing with money you can't afford to lose

When you do this, if the market dips even slightly, it's so easy to panic, sell too early, and end up in a worse place than when you started.

✅ 3 Things You Must Do Before Investing

1️⃣ Clear High-Interest Debt

Pay off credit cards, store cards, and personal loans first. Investing while carrying high-interest debt is like filling a hot water bottle with a hole in it.

Water = Your money
Hot water bottle = Your investment account
Hole = Your debts

Credit cards often have interest rates between 20-40%, sometimes even higher. Meanwhile, the average stock market return over the past 100 years has been around 8-10% annually based on the S&P 500. No matter how much you invest, the debt interest eats away at your money faster than your investments can grow.

2️⃣ Build an Emergency Fund

Save at least 3-6 months of essential expenses in a high-yield savings account that's easy to access.

"But I want to start investing right away!" you might think. However, this step is essential on your road to financial freedom. With an emergency fund:

You can sleep soundly at night
You can make better decisions when you're ready to invest

3️⃣ Stabilize Your Income and Spending

Know exactly how much you can invest each month without putting yourself under pressure. When your basic financial needs are covered:

You can stay calm during market dips
You can resist the urge to sell
You can let time do the heavy lifting for your investments

💡 The Right Mindset

If you're paying off debt or building your emergency buffer, don't see it as "delaying your investing journey." Think of it as Level 1 of your wealth-building plan.

Once your financial foundation is solid, you can start investing with confidence and actually stay invested long enough to see real results. Don't rush. The time you spend building your foundation will ultimately lead to greater returns.