Help, what do I do with my spare cash?

Women with CentsBlog, Investment

Help! I am a single parent working part time earning 30k annually and studying part time. I own my car, I own my home, I have no debt and I have three months of emergency savings in a high interest account. It’s not all sunshine and lollypops though, I do suffer from anxiety and depression. So how should I best invest any spare cash I have each month and how should I invest my future savings? 

First of all, wow! You’ve achieved so much already. No debt, own your home and car, you’re studying, raising kids and you already have emergency savings built up. That’s a fantastic start – well done! Now, let’s talk next steps…

1. First, take care of now

In terms of next steps for you, I would suggest continuing to focus on making yourself as “self-sustainable” as possible.  

Under the circumstances, I think you consider building up your emergency savings to 6-12 months’ worth. The reason for this is that if you were unable to work due to health reasons, you would be able to take some time off and not have to worry about cash flow. Online savings accounts are usually a good place for emergency savings due to quick access and low risk, comparison sites such as Finder and Mozo can help you find the latest competitive offers. 

Be sure to review your existing life insurances (including in super) and if you don’t already have it, look at taking out an Income protection policy as this can also help if you’re unable to work due to health reasons. It is important to note that if you don’t already have income protection and were to apply for it now you may not be covered for mental health if you have a history of it, and this is where that added emergency buffer can help. It’s worth talking to a financial adviser to understand your options. They can talk to you about Trauma insurance as well which can help if you are diagnosed with a critical illness (policies differ on what is covered and what is not). 

2. Then, prepare for your future!

Once your now is taken care of, start to think about what you want your life to look like moving forward.  
Start by setting yourself some financial goals . If your future education is going to cost you some money, set a savings goal for that.   
Then you can start to educate yourself around investments. Investment is the key to growth, but all investment carries risk, so it’s important to diversify, seek out some formal financial advice and don’t invest what you can’t afford to lose. We have some great articles that can help.
It’s also important to start thinking about your super and your retirement. Do you have enough for retirement? Can you look at contributing more now to reap the benefits of compounding?  

I highly recommend taking up our Making Cents of Money program at this point – it is completely self paced and will help you establish goals that align with your values, gain a better understanding of life insurance, super and investing (among other things) and really empower you to take the next steps.
Last but not least – don’t be afraid to spend a little money on treating yourself. You’ve achieved so much, so what’s life if we can’t enjoy it! 

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The information provided by Women with Cents is general in nature. It doesn’t take into account your objectives, personal financial situation or needs. Think of it as educational material in which to help you make more-informed decisions. We recommend you obtain financial, tax and credit advice specific to your situation before making any investments or financial decisions.

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