What to invest in and what to leave out

Simple tips on what to invest in and what purchases you can probably go without if you want to create the right spending habits.

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There’s a lot of advice for women on how to build wealth and a lot of temptation to buy things to make your life more efficient, much of which can often lead to some erratic purchasing decisions.

New research from Ubank indicates that 60 per cent of Australians have no savings plan and one out of three people are living paycheck to paycheck.

More interestingly, 45 per cent of Australians spend most of their money on items or experiences that make them happy.

This trend indicates that while most people understand the benefits of savings, they cannot resist the temptation of immediate gratification.

So saying that you should save and invest $400 per month into a fund so you can have over $100,000 in 10 years doesn’t do much to motivate most people.

We now live in a world where new technologies are constantly being introduced every second and that’s the reality we should work with.

We have to be pragmatic with ourselves and our own environment. And we’re here to lay out some workable guidelines for managing your spending and investing.

Start investing

Yes, you can learn about investing in capital markets or properties or even startups. There is no shortage of investable assets to include in your portfolio. But many of us are not familiar with such complex financial manoeuvring.

Enter microsavings or microinvesting apps such as Digit, Raiz or Carrot. They automatically grab your small change and re-allocate it to exchange traded funds (ETFs).

This way, you start investing without even knowing it. Investing in ETFs is a great way to get started for newbies as it automatically diversifies your investment to reduce risks with more or less similar returns over time.

Make sure you put some into your savings account and some into trading funds. Using apps to automatically do this for you every month is the easiest way to start building your wealth.

Create the right spending habits

This is the most challenging task for all of us. How do we control our own impulses? The thing about spending is that they don’t feel like much at the time and we tend to justify our decisions on the spot.

Oh, I would probably want to stay in and not go out if my room was snugglier so I will spend $25 on these succulents and $50 on these candles. I’ll make up for that from the money I save on alcohol / going out.’ But all of these purchases can start adding up.

The key is in making a small habitual change to avoid overindulging. If you spend a lot on snacks or UberEats, make or buy healthy snacks in advance for the week every Sunday.

This way, your fridge is always stocked and you are less tempted to constantly order in or dine out.

If you spend a lot on little things (cute slippers, cozy blankets, etc.), it might be that you are not content with your sleep.

People get antsy when they are not getting the rest they need and try to fill it with materials.

So instead of buying a bunch of random things, first invest in items such as humidifier or a thermostat to ensure that your room is at ideal sleep temperature.

You should also pick a mattress that doesn’t trap your body heat so you sleep more soundly and wake up more refreshed.

Once you have the basics down, see how your body feels and evaluate whether you really need all those bells and whistles.

In the end, it’s about identifying what you spend most on and understanding the why. So you can more easily figure out what you need to readjust.

There are savings/budgeting apps that track all your credit card and bank accounts to monitor your spending patterns. Get to know yourself and then focus on one or two small changes as a start.

This Financy article has been produced in partnership with Ecosa.

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