LISTEN | Balance spending habits with smart investing – finance expert

The impulse spender. The cautious thrill-seeker. The aspiring wealth-builder. The highly disciplined investor.

These are some of the spending personalities that tell you how you approach money.

Research shows that how we spend our money reflects our financial habits in more ways than we think.

How we approach spending also influences our ability to make the most of life’s opportunities, says Steven Amey, personal finance expert and head of intermediated distribution at Ashburton Investments.

Amey helps us understand these personalities and says each one can include growing your personal wealth over time.

By balancing your spending habits with smart investing, you can enjoy today and build the wealth you’ll thank yourself for tomorrow.

—  Steven Amey, personal finance expert

He says an impulse spender is one who loves the excitement of finding a great deal and never wants to miss out on the latest trends.

“FOMO [fear of missing out] is their middle name. [Their] energy and enthusiasm can work in their favour, so it’s a good idea to channel some of that energy into building a financial future. The impulse spender would benefit from setting up a small monthly debit order into a flexible savings account or unit trust and using a portion of this fund for an annual Black Friday splurge. The key is to save around 60% of this accumulated wealth every year,” says Amey.

“Instead of spending all their money on the latest gadgets, impulse spenders should consider investing in trending sectors such as green energy, tech, crypto, infrastructure and the like, through exchange-traded funds [ETFs] or unit trusts. Even a few hundred rand a month can grow impressively through compound interest. Everyone wins by enjoying the delight of shopping and the financial security of saving.”

He says even though the cautious thrill-seeker loves excitement, they never jump blind.

“They do their research first and take calculated risks. This mix [is] a powerful combination that can be used to build a portfolio that offers both safety and adventure. The cautious thrill-seeker is likely to be saving already and understands the benefits of compound interest.

“It is advisable for this type of spender to keep saving regularly and reinvesting their returns to benefit from compounding. Investment options that are ideally suited to this personality type include well-diversified portfolios, combined with more speculative assets such as venture capital, private equity and green technology.”

Amey says an aspiring wealth-builder is a “disciplined saver and [a] diligent shopper who prioritises wealth creation”.

“They prefer saving over spending and see the bigger financial picture. [They] should keep their focus on long-term goals like retirement and investing for higher ticket purchases. They can also use tax-free savings accounts to boost returns while lowering their tax bills.

“The highly disciplined investor is highly organised, cautious and already in control of their financial journey.

“Planning is second nature to them. They have mastered discipline, but it may be time to take calculated risks,” says Amey.

“[They are] likely to invest towards longer-term investment objectives, have a retirement plan and an emergency fund. They may, however, need to be encouraged to explore new, more adventurous opportunities, such as venture capital, private equity, collectables, or even gold.”

Amey says, “The best deal this Black Friday is a stronger financial future”, no matter your spending personality.

“By balancing your spending habits with smart investing, you can enjoy today and build the wealth you’ll thank yourself for tomorrow. Just remember to talk to an accredited financial advisor before making an investment decision.”

Niresh Gopichand, Atlas Finance risk director, says Black Friday should also be about planning ahead.

“With a strategic mindset, you can leverage these savings to ease the pressure of the festive season and the infamous Janu-worry. Think of it as not just buying for now, but securing peace of mind for the months ahead.”

Gopichand gives tips on how to turn Black Friday into a financial win:

Set a budget and stick to it: Start with a clear spending plan. Knowing how much you can afford to spend will keep you from falling into unnecessary debt. Use apps or tools to track your spending in real time.

Think ahead – gift now, save later: Use Black Friday deals to buy Christmas gifts early, which helps avoid the festive season rush and inflated prices. Plan your purchases based on sales trends and lists of items you know loved ones will need.

Score school supplies early: Grab stationery, uniforms or even tech at a fraction of the price.

Leverage cashback and rewards: Look for retailers offering cashback deals or loyalty points. These can provide value long after Black Friday is over, helping with future expenses.

Avoid emotional spending: Don’t let the excitement of deals trick you into buying things you don’t need. Make a list and stick to it. Emotional spending leads to regret – stay practical.

Combine discounts for maximum savings: Black Friday offers can often be stacked with coupons or loyalty programmes. Take advantage of these opportunities to reduce your costs further, especially on high-ticket items such as electronics.

Sowetan