How to get rich in 2024
Last year was defined by unapologetic ‘doom spending’. Compounded by the cost-of-living crisis, younger people felt a hopelessness over the idea of ever being able to afford the sorts of investments — homes, pensions, holiday houses, savings accounts — previous generations could. But, 2024 is already seeing the onset of a new more financially responsible era.
In 2024, chaotically sharing how many feel-good snacks and £4 flat whites you’d splurged on in a single Saturday, or the unaffordable new fashion collab you’d bought into while barely being able to cover your rent was in. Now, the internet generation is creating TikToks vowing to be radically outspoken about their financial goals and their intention to eschew plans in favour of saving. Overspending is out and ‘loud budgeting’ has emerged as a buzzword.
It’s a trend which chimes with the mission of Female Invest, a platform founded by three Danish university friends and investment enthusiasts, Emma Due Bitz, Camilla Falkenberg, and Anna-Sophie Hartvigsen, who’ve filled the gap in the market for money management advice geared towards women.
The subscription-based learning service (£9.50 per month) is empowering them to take control of their money and have the confidence to talk about their finances with peers, in the name of closing the gender wealth gap. As of October 2023, this stood at 35 per cent, increasing with age, standing at 28 per cent between the ages of 35 to 44, and rising to 42 per cent at 64, according to Women’s Budget Group.
When the company was founded in 2017, women remained largely in the dark compared to their male counterparts when it came to knowledge about investing, as stereotypes that shares and crypto were just for fin-tech bros and men in suits prevailed. “We see the financial industry being built by men, which is reflected by everything from the communication to the products, and that just means that women don’t engage with it to the same extent,” says Hartvigsen.
As the company got off the ground – no mean feat given that they had to overcome rejection from the omnipresent male-led investment companies – Hartvigsen and her team fast confirmed that it wasn’t down to lack of interest, but as they’d suspected, a failure of the sector to engage with a female audience.
A lack of female role models in the sector had previously resulted in what she calls a “confidence gap”, which sees fewer women taking control of their finances and investing. Especially as, historically, “women are always affected more by financial uncertainty and crisis than men, and are often more likely to be the ones who step away from the job and do more unpaid work at home”. Hartvigsen also points to the fact that they’ve been steered towards saving over building wealth.
The Female Invest team have succeeded in demystifying the sector and engaging an ever-growing community. “Now this very large group of women who never thought that investing or money management would be for them see other women doing this, and they also realise that they should be doing it too,” she explains. Currently, the platform has members across 100 countries aged 11 to 89, and the UK is the fastest-growing market for the live webinars, Q&As, courses and stock news it offers.
But with the gap still far from being closed, Hartvigsen wants more women to see behind the smoke and mirrors. “The one thing I wish women knew, because it’s such a well-kept secret, is that investing and managing money is not difficult. It really isn’t difficult! The basics of investing actually are very simple. Most people can learn it if they just invest time.”
Reaching a stable enough financial position to start investing might be a way off for some, but taking control of your money with the aim of building your wealth longer term is something to start doing as soon as possible. In spite of everyone still feeling the impact of the cost-of-living crisis, it’s actually the ideal time to take control of your money, according to Hartvigsen.
“The more chaos there is the world around you, the higher the demand on how you yourself manage your money,” she explains, saying 2023 was a “historically good year” for stocks and shares. “The S&P 500 (the 500 largest companies in the US, often the benchmark for investing) went up by almost 24 per cent. Inflation was around 6 per cent, which means that you actually lost a lot of purchasing power if you didn’t invest.” A cautionary tale for anyone putting it off. Time is indeed money.
“Times of uncertainty are when you should actually lean in. The most important thing to do in the beginning, is to get your personal finances in order,” she stresses.
2024 could be the year you change your fortunes for the better.
Yes, it’s tempting to avert your eyes from the total when you tap your debit card, or to avoid checking your bank balance when you know it’s probably taken a battering, but being aware of your ingoings and outgoings is the first step to growing wealth.
“Get a complete overview of your finances so that you know how much money you make and how much money you can spend every month,” says Hartvigsen. As well as traditional monthly statements, simpler solutions are offered by banks like Monzo who break down your spending in a graph and allow you to set targets. Or you can utilise a budgeting app such as Guac to get an overview of where your money is going.
It’s good to remember that getting a handle on your spending isn’t about depriving yourself, but striving to invest in the things that matter to you. “For a lot of people, I think when they do go through their bank accounts, they see that they spent a lot of money on things that actually didn’t really bring them that much joy,” says Hartvigsen.
So many of us are unwittingly paying over the odds on bills, interest on debt or subscriptions we never use. So comparing the market and cancelling any unused services will save you money without changing a thing. “With the cost of living crisis, it’s even more important to get the basics down, like having a budget, and understanding what type of debt you have, because it may be more expensive with higher interest rates,” says Hartvigsen. Consider transferring your debt to lower-interest accounts, switching to new suppliers or negotiating with your current ones if you think they could offer you a better deal. It’s not glamorous but it really makes a difference.
Also, don’t forget to look ahead at potential increases in outgoings such as a new mortgage term. “Making sure that you understand 100% why this is happening and historically how long these increases tend to last, as well as your options will help you to feel more in control,” suggests Hartvigsen.
Beyond your essential living costs, the suggested ratio of recreational spending money is 30% with 20% of your income being guided into savings or investments. To make it easier to stick to your budget and achieve saving goals try using the target function of Monzo, Guac or similar, or using a financial planner such as Female Invest’s, to learn the basics of money management from daily activities.
“People think that a budget is a bit of a guilt trip, or about shaming you for spending money on travel and food and so on. But actually, it’s more just about making a conscious choice of what makes your life better, and then guiding your money there,” explains Hartvigsen. Ask yourself: “Where’s your money going now, and then take action to change that if you see something that aligns with your values.”
Once you have set a budget, Hartvigsen says you need to make sure that you check in on your progress and whether you’re staying on track. Initially, you might want to do this weekly, then monthly once you’re more confident.
Hartvigsen points to the fact that in the best-seller ‘Rich Dad Poor Dad’ by Robert T. Kiyosaki and Sharon Lechter, “wealth is quantified as how many days you can live without earning more money. So it is dependent on how much money you spend on the lifestyle that you have”.
When you have got spare cash, Hartvigsen says saving a ‘F*** You’ fund is the best thing you can do before you start looking at investing. “If you want to leave your job, partner, house, whatever, then you can. And as a rule of thumb that should be equivalent to around three months of fixed expenses. So being able to pay for your rent, food and bills for that amount of time.”
“Start by doing your own research on the areas that you like,” says Hartvigsen. Once you have a steer on how you’re going to invest your money, it’s worth trying stock simulation to practice and hone your skills.
Female Invest will be launching theirs in early February, which is an education tool with explainers. “Using a trading simulator is a great way to learn how financial markets work, so you can get confident enough to trade real money eventually. It has real market data, so the trading experience is exactly like the real stock market.”
Investing is best approached with careful planning. Hence why Hartvigsan thinks it’s actually a superpower that women are typically shown to be more risk-averse. “Once they get started it’s suggested by research that this risk awareness makes them trade less frequently, which results in them getting better returns in the long run than men do.”
Think hard about factors such as time horizon (how long you expect to hold an investment), how high risk you want the investment to be and make a budget for your investment plan.
So where should your money go first? “I love this question, because that’s the number one question of anyone starting to invest,” says Hartvigsen. “It can feel so intimidating, but there is a very simple answer: the stock market has increased between eight and 10% per year on average, historically. And to get that return, the only thing you need to do is to buy the average market, which could be done, for example, by buying investment funds that cover the world market.”
“If you are new, don’t try to handpick the best stocks. In the beginning, choose funds or ETFs (Exchange-Traded Funds) to some that are pretty wide, maybe even a few of them,” she adds. “And then as you learn, you can start to handpick different stocks, but I would definitely start with funds and ETFs. The broader the better.” The IG app (ig.com) is a good beginner-friendly option.
The introduction of the side hustle tax might have put question marks over whether it’s worth it, but Hartvigsen believes it could still be really beneficial to your financial education and wealth. As well as the opportunity to earn additional income, she says: “Everything that you learn gives you the potential to build something that you could live off in the future. You’re building up a skill set alongside your regular job, then you can always jump over full time when the time is right.”
Don’t forget to put regular investment check-ins in your calendar to see if you’re on track, with similar regularity to your budgeting checks. Hartvigsen says she checks in “quarterly or if something big changes in the market” now that she is experienced in financial management.
And finally, if the gloom and doom headlines over the past few years have you feeling unsettled about the future, remember that knowledge gives you power. Keep reading stock and finance news and look at the past to understand trends. “Right now may feel like an unprecedented time, but it really isn’t in the stock market. It has existed 400 years, and financial markets for 1000s of years. We’ve had multiple cost-of-living crises, financial crises, stock market crashes, mortgage increases, appreciation, depreciation. And every single time we came out the other side. Historically this has been temporary.”
“Whenever there are big movements in financial markets, the risks are greater, but so are the potential returns. So instead of pulling back and not doing anything with your money, it’s the time to really lean in, because things are moving. And that’s what creates opportunity.”
