Nearly half of millennials who took part in a recent US study believe you need at least $1,000 of spare cash to start investing. Almost 20% of them think you need $20,000. That’s a whopping pile of savings to squirrel away before you can start to get your money working for you... It’s no wonder we have such low rates of investing in NZ.

The thing is, all those people are wrong.

Even if you don’t have a stash of cash (how many people do?), there’s nothing stopping you from putting good financial habits in place today. Not only will it help you stockpile money faster, but it’ll also ensure that when you have ‘real’ money to invest, you’ll know what you’re doing.

At our recent event with Hnry, we gathered a list of ways people can get ready to start investing, even when they don’t feel ready. Check them out:

1. Get an emergency fund, and lock yourself out of it.

Most agree that saving 3-6 months of salary is wise, but it’s also daunting. Just like investing, an emergency fund doesn’t have to be something that is one-and-done. You can start your emergency fund with enough to cover common emergencies - like your car breaking down or a large power bill - events that as little as $500-1,000 will cover.

Yes, losing your job or getting sick can also happen, so once you have your basic buffer, keep contributing to it and (and this is the important part) LOCK IT AWAY in a bank account. One tip we learned from the folks at Hnry is to ask the bank to only let you withdraw money by physically going into a branch. All those ‘financial emergencies’ (aka new shoes) are usually not dire enough to justify the faff of going to a bank, so your emergency fund remains safely locked away.

2. Think about your money in percentages, not dollars. 

This is especially true if your income is inconsistent. Committing to putting $20, $50, or $100 a week aside may be an impossible dream when you’re not sure how much you’ll earn. But putting 1%, 2% or 5% of your income aside feels far more reasonable. Hnry makes this super easy for self-employed people, and the rest of us can set up a regular payment and ignore it until the next pay rise. 

The great thing about thinking of money as a percentage is that as your income rises the dollar amount you invest also does (which means you can lifestyle creep all you want AFTER you put away the same percentage of that new pay packet). Which brings us to number 3...

3. Pay yourself first.

Think of it as income tax; you never see it, you never miss it, and you never have to wonder why you have no money left to invest. Set up a regular payment to go into an investment account like Hatch. Start small (like 1% of your income) so you don’t wind up dipping into your emergency fund. It’s easy to increase it but much harder to get over the feeling of failure when you over-commit and have to get your money out in a hurry. You can start doing this before you even know anything about investing, it’ll just start stockpiling quietly while you carry on with life.

4. Your biggest barrier is your own emotions.

Face your fears head-on. Just like it’s a terrible idea to avoid your bank account balance out of fear of what’s in there (or not!), it’s a bad idea to let fears get in the way of growing your wealth. Whatever they are, from losing everything to sounding dumb, to the sheer amount of research you think you need to do… face them head-on. There are heaps of people committed to democratising investing, a tonne of plain English podcasts, blogs, videos, books. Pick your poison and find your tribe. You’ll be surprised how accessible good information is.

5. Stop thinking ‘either, or’, and start thinking ‘and’.

KiwiSaver, shares, property and managed funds can ALL be a part of your investment portfolio... and you can spend money now AND grow your wealth, in fact, these can go hand in hand. Hatch has a bunch of brands we all give money to on the daily - Apple, Amazon, Lululemon, Nike, Levis, Netflix, Disney. If you know a brand well and buy their stuff, why not also give yourself the potential profit off your purchases?

6. Get clear on your life goals.

Why are you are investing? Holidays? Early retirement? Time off with your kids? Knowing when you need your money back in your hand will help you decide the best place to put it. A general rule is: 5 years or less should be in ‘low risk’ investments i.e. savings accounts or term deposits… More than that and you may be shooting yourself in the foot by not putting it to better use. You work hard for that money, why leave it languishing when it can be working hard to help you achieve your life goals?

7. Learn by doing.

A lot of investors start with small amounts to get comfortable watching their money go up and down. Take that small, regular payment into your investment account and start actually investing it. What’s the worst-case on a $100 investment? A week later, it may be worth less. The next week, it may be worth more. That whole time, you are learning to get comfortable with how the share markets fluctuate, what makes them go up and down and what makes you want to panic and sell up. Keep doing it and before you know it, you have an investment portfolio worth well over the $1,000 you thought you needed to get started.