Should You Invest or Pay Off Debt First? Here’s What You Need to Know
Do you know what’s sexy? Investing. But do you know what’s sexier (IMO) being consumer debt free.
Investing used to be ring fenced for the super wealthy but in the last few years it’s become much more accessible for us mere mortals. Robo investors have made the process much cheaper, easier and without the need to meet a stuffy wealth manager that would help invest your fortune for you.
These days we can’t get away from people talking about their investments and it feels like everyone is ‘at it’. But when is the right (and wrong) time to invest?
If you’ve arrived at Financielle ready to progress on your money journey you may have had your interest peaked by the concept of investing… great news! We’re doing our job properly. Bad news, it might not be the right time.
We encourage focusing on achieving one thing at a time, keeping laser focus on one goal can help remove the overwhelm and the need to constantly compare. If you’re dabbling in consumer debt, maxing out your credit limit, flirting with Klarna and living paycheck to paycheck it might not make sense to begin your investing journey.
When creating a Financielle budget the aim is to create an ‘excess’ this is the money that’s left over when you get your income, take away your fixed expenses, flexible expenses and sinking funds. The money left over is meant to go to your goals and things that grow.
Having all your financial ducks in a row can prove beneficial as Investments don’t have guaranteed returns, you could get back less than what you put in. If you’re in debt you have to pay it back therefore it’s good to understand what’s the more pressing goal here?
If you’re in debt, it means you’ve been relying on credit to fill the expenditure gaps i.e. you had more going out than there was coming in. If you’re looking to invest, where do you envisage the excess cash will come from to enter your Warren Buffet era?
As tempting as it is, we’d encourage you to build up strong financial foundations like becoming consumer debt free and having an emergency fund before delving into the world of investing.
If you want to kickstart your debt free journey, head to the Financielle app now to get started.
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