Higher learnings

Sep 10, 2020

For the past 6 months our lives have been very different to anything we've ever experienced or even dreamt about! Most of this time hasn't been enjoyable at all as we have been stuck at home and unable to do many of the things we'd really like to do - eating out, travel etc. However there have been upsides - people have been able to spend more time with their families (I'll call this a good thing!), not have to spend hours in traffic and also realise that some of the things that they were previously spending money on were really unnecessary. Personally, I like nice clothes but its taken 6 months of staying home and actually wearing all these clothes for me to realise that I have way too much.

Part of this journey has not only forced us to re-evaluate where our money is going, but also to put this money to better use. Many people have become much more interested in savings and investment products  (Franc has doubled in the last 2 months!) and have started contributing to their own nest eggs. They have diverted much of their previous excess spending into investment accounts that can earn them a healthy return and protect them from the next rainy day.

At Franc, we were very surprised to see so many university students start investing on the platform. When I was a student, investing was not exactly top of mind - it was rather about spending what I had! But it seems the students of today are much smarter than I was - given that many of them are receiving the same allowance as they would have been if classes were on site, they are not finding ways to spend it, but rather how to make this money work for their future selves. If the youth can have the wherewithal and discipline do it (and they should! - read this), then we should all be able to.

If you have started to put money away during lockdown, try keep it going as much as possible. Avoid going back to any previous bad habits that may derail you from your investment plan. Obviously you have a life to live but make sure that you draw up a budget and stick to it. Here is a guideline for you if you don't have one yet. Make sure that any spoils come out of the "wants" category and that the 20% (minimum) is going towards investing and/or clearing debt. Don't be too tempted to start splurging on pent up restaurant visits or unbudgeted travel!

If the past few months have been a battle and you have racked up lots of debt to survive - look to try clear this (if and when you can) before you start investing. It's always better to try start off with a clean slate and paying off debt gives you a guaranteed return.

If lockdown hasn't been able to change your mindset yet on paying yourself first, it's not too late. As the quote adapted from a Chinese proverb goes - the best time to start investing was 20 years ago, the next best time is now.

Sebastian Patel

Sebastian is COO of Franc and an investment actuary with more than 15 years of financial services experience.

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