"In my first year out of university, I flatted with university students, which unintentionally helped me spend like a student.
"I saved a significant chunk of my income."
Simran Kaur, founder, Girls That Invest.
Money. It's the driving factor behind many life choices, but is it the be-all and end-all?
'Me and My Money' is a regular feature that investigates Kiwi attitudes towards money and what drives the choices they make.
Newshub spoke to the founder of the Girls That Invest podcast, Simran Kaur, about the tricky balance between saving hard for the future and splurging on tech equipment.
Having burned through all of her savings ($20,000) while at university, Kaur is a big fan of investing in the share market, which she says helped her save a deposit for a first home.
Upon leaving university, Kaur lived with a group of students. This helped her 'spend like a student', enabling her to save a big chunk of her income.
1. Are you a saver or a spender?
I always joke about working in extremes, so I'd say both.
Some months, I'll wait two-to-three months before deciding on a $13 shirt. In others, I'll easily drop $2000 to $3000 on tech equipment for my side hustles.
I've had role models who were both spenders and savers and couldn’t decide which option was better. I’m still trying to find a balance between looking out for my future self and enjoying the present.
I'm trying to practice financial minimalism, which involves only purchasing things that bring value, and that I need. It’s satisfying not to own too many material possessions.
2. What's been your biggest financial lesson, success or failure?
My biggest financial successes are saving for a first home by the age of 23, and running a six-figure business by 24.
Money was such a taboo topic growing up, which is why we speak about the importance of financial independence on our podcast. It can dictate stress levels, health outcomes, relationships and the ability to walk away from harmful situations.
My biggest financial failure was when I wasted around $20,000 from one of my side hustles (an ecommerce business), while at university. At that stage, it was the most money I had made in my life. I spent all of it on frivolous things, like fine dining and online shopping.
By the end of the year, I had $5000 left. Instead of saving it, I ended up traveling overseas.
3. What do you know about money now that you wish you'd known sooner?
That the world of investing isn't as daunting as it's made out to be.
It's not just for a certain gender, race or income. The first time I was introduced to investing, I dismissed it on the spot.
Once I took a Certificate in Financial Markets (US) for my own personal learning, I was almost mad at how such a simple concept had been overcomplicated for the average person.
With the help of micro investing platforms, people can invest in a low cost, passive index fund (which Warren Buffet regards as a good starting point for beginner investors) with as little as $1.
4. Give an example of a recent purchase you consider was value for money
I recently bought a 'ring' WiFi doorbell for $199.
Whenever someone comes near my door or rings the doorbell when no one is home, it alerts my phone with video footage. The app even lets me converse with someone at the door - handy if I'm not at home.
I really love technology: it's the one thing I splurge on the most.
5. What's your preferred form of investment and why?
As I'm comfortable with risk, I absolutely love shares.
Due to the lower barrier of entry and liquidity, I particularly like investing in Exchange Traded Funds (ETFs), based on index funds.
I like that I have full control of what I invest in and can increase how much I put into my investing portfolio.
Investing in the stock market helped me purchase my first home. Kiwis have a love affair with property, but we forget that to start property investing, the barrier is much higher than other forms of investment.
For many millennials and Gen Z, it's just not feasible to grow money in real estate straight away.
In saying that, I love doing up my home. I'm looking into purchasing my next one shortly.
6. Three tips you would give to novice share investors?
Firstly, to simply get started.
It's important for people to dismiss the idea that they're not smart enough or clever enough to understand it. Concepts such as why the share market fluctuates and how to make money through stocks are simple and can be learned.
Secondly, to understand that investing in stocks can be risky in the short-term, but is much less so over the long-term. Every crash, including the GFC and more recently, volatility due to COVID-19, has recovered. This doesn’t mean past performance guarantees future success. But it puts to rest the idea that share investing is like gambling.
Thirdly, to diversify. If someone invested only in hotel and airline stocks, they'd not be very happy in 2020. But if they also had tech stocks, like Microsoft and Zoom, the risk would balance out.
According to Warren Buffet, the best way to diversify is through low cost, passive index funds like the S&P 500 (the top 500 companies in the US, e.g. Apple, Amazon, Google), or the NZX 50 (the top 50 companies in New Zealand, e.g. Air New Zealand, The Warehouse Group).
7. What's your best saving tip?
To wait a few days before buying something I want.
If I forget about it, I clearly didn’t need it. If it's still on my mind, it's something that's likely to add value to my life.
This strategy has helped me to avoid splurging on things. The wait also helps me appreciate the item more.
8. The best money advice someone's ever given you?
To avoid lifestyle creep.
This is the concept that the more a person earns, the more they spend: they don't save and invest any more than before.
The idea is for people to always spend less than they earn and invest the rest. At university, I remember reading about how a lecturer explained to his students not to go out and buy a flashy car with their first paycheck, but to continue 'living like a student' for the first few years.
In my first year out of university, I flatted with university students, which unintentionally helped me spend like a student.
I saved a significant chunk of my income. It was the best piece of advice I've ever been given.
The views expressed in this article are personal and are not professional financial advice.
