Building wealth is a relatively simple proposition. It requires us to consistently spend less than we earn.

Humans are very good consumers for the most part. We have a natural desire to spend our allocation of resources. However this preference for consumption makes it very difficult to save. Some simple tweaks to how we structure our financial lives can overcome our behavioural bias'.

Reverse cash flow

Re-frame how you save. Instead of receiving pay each month and allocating whatever is left over to a savings structure*, instead have your pay debited directly into your savings structure. Use a separate account for day to day living and set up a monthly budgeted sweep of funds from your long term savings structure to your day to day account.

*Savings structure can be a cash account, investment account or offset account (for those with a mortgage). 

We are behaviourally biased to spending our at-call money. By placing controls on the flow of funds into an easily accessible account you can accommodate your behavioural spending bias, whilst allowing wealth accumulation to take care of itself.


Phoebe requests her employer debit her monthly pay directly into her savings structure. Her after tax monthly pay is $4,000. Phoebe budgets about $3,000 per month to fund her lifestyle. Phoebe then puts in place an automated sweep of funds each month that transfers funds from the savings structure to her transaction account. Being the good spender she is, Phoebe somehow manages to spend most of her $3,000 each month. However, because she now controls the flow of funds into her spending account, without drastically altering her behaviour, Phoebe has also become an effective saver. 


What next

Cost effective investing requires asset scale. You will need to build up a pool of capital (by saving) before you begin your investment journey. For the self-motivated amongst you, for some inspiration into where you can begin your investment journey, our recent article Investing 101 is a good place to start.