Saving is just delayed spending

If you have a savings account (with money in it), pat yourself on the back. You’re doing better than a lot of people! But you’re not there yet. To truly get ahead financially, there’s a further step you need to take.

Say for example that you’re saving for a holiday. You might have a few grand in your savings account. You’re looking in your bank’s app at your balance and feeling pretty good about it. And you should! You’ve showed discipline. But you’re not getting ahead financially. All those holiday savings are just dollars you’re going to spend in six months instead of today. Once you get back from your holiday you’ll be in the same financial position you were in before you started saving for it.

So it’s time to take some of that excellent discipline you’re showing through your holiday savings and channel it into something a bit more long-lasting. You need to start investing! Investing is kinda like saving, but with a much longer timeframe and usually better returns. Savings accounts won’t pay you much interest these days. The stock market will, over time, outperform a savings account. The past week has looked scary, but to be honest that means shares are on sale right now. It’s a really good time to start your investing journey while there are bargains to be had.

By all means continue to direct some money to your holiday savings account. But direct an equal amount into a low-cost index fund that you’ll build over the next decade or decades. You’ll be surprised how it grows over time!

In 2020, investing is no longer the domain of gurus. Platforms like Sharesies (not the only option, but it’s the one I’m familiar with) make investing in the stock market much like doing everyday internet banking, i.e. anyone can do it!

You can start with as little as a few dollars. So next time you’re admiring the size of your savings account, by all means enjoy it. But don’t forget it’ll all be gone pretty soon once you hit the thing you’re saving towards. You need a longer-term plan.

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