Save & Splurge: Spendvesting Is Changing Personal Finance For Gen Z

Save & Splurge: How Spendvesting Is Changing Personal Finance For Gen Z

There is a new Gen Z personal finance term in the market – Spendvesting. It is all about making money, saving money, and spending it. Mindfully, of course. We are breaking down everything about spendvesting here.

Gen Z’s New Personal Finance Strategy

Indian millennials and Gen Z now prefer to save, invest, and then spend towards their lifestyle and travel goals – a new personal finance strategy, aptly named ‘spendvesting’,  according to a recent report. This strategy allows Indians to save a considerable 20% on all their lifestyle spending, adds the report.

What’s this strategy you ask? It is called Spendvesting. Emerged in the early 2020s, spendvesting is a response to the shortcomings of traditional methods. This personal finance strategy promotes recurring investments in assets such as mutual funds and digital gold. The report notes that 50% of Indian spendvestors are in the 26 to 34 age group, showcasing the strategy’s resonance with millennials and Gen Zs. 

How Does Spendvesting Work?

Spendvesting blends saving and spending, prioritising dream experiences and financial security.

Here’s how spendvesting works:

Prioritise saving: According to this strategy, you must set aside a portion of your income towards long-term goals such as retirement or a down payment on a house.

Allocate funds for desired experiences: You should allocate specific amounts for lifestyle aspirations and travel adventures. The report says that travel is the preferred category for spendvesting enthusiasts, while gadgets and shopping are also major spending categories for them.

Spendvesting As A Strategy

Micro-investing – Allocate a tiny portion of your income so that you can invest in instruments like mutual funds.

Goal-oriented investing – This isn’t about building a retirement fund. Here, you define specific future desires, like a new gadget, a weekend getaway, or a down payment on a car.

Compound interest magic – The magic of compound interest works wonders and quietly grows your investment over time. The more consistent you are, the bigger the payoff when the dream purchase day arrives.

How To Do Spendvesting Like A Pro?

Here’s a guide to implement your personalised spendvesting strategy:

  • Define your goals: You will have different spending goals like travelling to an exotic place, buying a new gadget, going on a shopping spree, etc., Create a list and start investing for the purchase.
  • Set your investment amount: Based on your goal amount, risk profile, and investment horizon, you can use the SIP calculator to see how much you need to invest every month. Start small, and gradually increase as your comfort level and financial situation allows.
  • Build a portfolio that suits your goals: Invest in those investment instruments that suit your goals, risk tolerance, and investment horizon.
  • Automate transfers: When you invest in any investment instrument, make sure you are setting up automatic deductions every month. This helps you invest every month without any worry.

How Spendvesting Could Be Beneficial To You?

  • Spendvesting addresses the modern consumer’s desire for financial security and lifestyle fulfilment.
  • Unlike credit cards and BNPL (Buy Now Pay Later) models, spendvesting encourages responsible spending and avoids the risk of falling into debt.
  • Spendvesting encourages early and regular investment. This can lead to long-term financial security.
  • By allowing individuals to allocate funds towards desired experiences, spendvesting reduces feelings of deprivation and promotes a sense of balance and achievement.

In Conclusion…

Spendvesting is a great personal finance strategy, as it doesn’t deprive individuals of the joy of doing things they love. Unlike some financial advice, which asks you to give up your lattes and avocado toasts, spendvesting is about investing regularly so that you can spend mindfully. Spendvesting helps change the perspective that investing is about sacrificing the joys of your life and reinforces the belief that it is rather about living a happy life, while also preparing for a happier future. 

It’s time to not just invest, but spendvest and fulfill your dreams.