What is the biggest problem when it comes to investing? Many people find it a good idea on paper, but struggle with one area: how to get the money to invest in the first place.
This can happen because of the idea that you need a lot to start (when you can actually start investing with little money), but also because it is easy to underestimate just how much they actually have. Namely, how much they spend on small things.
And it’s not their fault, either. Small amounts here and there can pile up without them realising it.
So how about we reverse this behavior to gather money instead of spending it? That’s where the Iban Money Challenges come in.
Think about it: how nice would it be to find yourself with money that is available to build your financial growth without having to make huge sacrifices? Let’s see how you can do it, and even have some fun in the process.
#1 - The Daily Target Challenge
One of the simplest ways to go about this philosophy. Much like those small expenses that you may be doing everyday, you can add an extra one dedicated to get your investing funds.
This can be a very effective way to start, because you don’t actually feel like you are giving up anything. Let’s say your starting amount is something as simple as €1 a day.
Seems easy, right? You most likely can find this lying around somewhere in your wallet or around the house.
But as with anything, it piles up.
Before you know it, this small action can make it that at the end of the year, you have €365 set aside without that much of an effort.
And it can get better: from this small action, if you were to put this towards investments at the end of every month, and considering a projected 2.5% interest rate, after 5 years this could mean almost €2000. And since you don’t really feel it in your day to day, it can feel like a surprise windfall at the end of the year! How far just one euro can go, right?
#2 The Cost Behind The Price Challenge
Would you eat a car?
Seems like a strange question, but consider this: everything you buy has a price. That price is clearly set as a number, and you know exactly what you pay to get it.
But are you aware of what it is costing you?
Let’s say you have your heart set on a car you need to buy. Not right now, but in the mid term. You’ve browsed around and found a sensible model that suits your needs for around €12,000.
Since your current car is still pulling its weight, you decide that this could be a good estimate to keep in mind in terms of how much you want to spend.
Now imagine that from time to time, between take-out and going out to eat, you spend around €50 per week.
That means you would spend around €200 over the course of a month. Congratulations, you just ate more than 1.5% of your car.
A simple thought shift on what your expenses represent can help you understand what you are actually giving up every time to choose to spend money, which gives you an extra layer of awareness.
This doesn’t mean you cut all expenses to the bare minimum - just that you can better make conscious decisions regarding your money management.
#3 The +1 Investing Tax Challenge
Every time you spend money, you end up paying tax (most times, anyway).
In many instances, that tax is included right in the price, so you end up not actually thinking about it.
The price is the price, as far as your wallet is concerned.
It’s time to put this working for you.
How? Easy: just make it that everything you buy, you pay €1 extra. And you’ve guessed it, this “extra tax” is a great way to have your spending work for you by putting it towards your investments.
Not only do you have a new way to gather funds, this can also keep your small expenses in check.
After all, you may think twice about spending €1 if this means ending up paying double, even if it goes to your pocket.
What else can you do?
There are countless other challenges you can find or create to make it possible for you to invest.
The secret is to make it as automatic as possible, so you don’t really need to worry about finding another place in your budget.
And remember, enlisting friends to take these with you can make it even more fun. So if you know someone that can benefit from them, don’t forget to share this article with them.