Finance and memes don’t often overlap, but they did in 2017. It started when Australian real estate tycoon Tim Gurner credited frugality as the reason for his riches, saying “When I was trying to buy my first home, I wasn’t buying smashed avocado for $19 and four coffees at $4 each”.

You might remember the hot takes and tweet storms that followed, calling out the idea (and Gurner) as massively out of touch. Regardless of what you believe, it’s been an entertaining joke ever since.

But the truth is, if you’re wondering how to save, avoiding smashed avo isn’t that important – unless you’re brunching seven days a week. You’re better off ordering whatever meal you feel like, while focussing on a Big Win approach to finance.

A montage of avocado toast memes, that mock the personal finance advice of Tim Garner

The Avocado Toast vs Buying a house meme still remains popular

What is a Big Win approach? Essentially, it’s working out where you have the biggest opportunities for financial gain, and prioritising them. Penny Pinching on the other hand, is trying to save a few cents here and there, hoping it adds up.

The best way to explain it is with examples. Here are just a few big wins that will help illustrate this approach:

  • Automating your savings
  • Investing early in life
  • Paying less for your biggest expenses
  • Earning more money

With online banking, automating your savings is simple. Instead of putting money into a savings account whenever you remember, online banking lets you set up a regular transfer, and save a little each paycheck. This approach plays with your psychology – when you don’t see your weekly savings leave your account, you don’t miss it. Best of all, this method works whether you save $10 or $100 each week.

But where should this money go? Regardless of what you invest in, start today. Investing early in life takes advantage of compound interest, which makes a massive difference to how much you end up with. ASIC has a good primer on compound interest here, but here’s a quick example:

Scenario 1: If you were to invest $100 a week from age 20 to 70 at an interest rate of 7%, you’ll end up with over $2.3 million.

Scenario 2: If you were to invest $200 a week from age 45 to 70 at an interest rate of 7%, you’d wind up with just $700,000.

Both scenarios invest the same amount of money – $260,000 – over different time periods. However, by beginning your savings at 20 you’d net an additional $1.6 million, thanks to compound interest. As far as what to invest in, you could invest in stocks, exchange traded funds, or managed funds – speak to a financial advisor for individual advice.

A family that use GoGet instead of buying a second car, standing by the GoGet car

Living without a car is a big win, saving you thousands of dollars a year!

Next, you’ll want to work out what you pay the most for, and pay less for them. We don’t mean avocado, and we’re not even talking phone and power bills, unless you’re a particularly big spender. Our biggest expenses in life are typically our homes and our cars. Children are up there too, but that’s a choice bigger than money.

If you own a home, getting a lower rate on your mortgage will result in big returns over the course of the loan. A 40 year, $800,000 loan will cost $574,000 in interest at 4% per annum, or $746,000 in interest at 5% per annum, an extra $172,000 – those numbers would be even higher with higher interest rates. Shop around and negotiate with your bank to get the best deal.

Another big expense is a car. Just owning a car costs at least $7,000 a year once you include all the hidden costs. Selling your car and replacing it with public transport, active transport, and use of car share services like GoGet can save you thousands of dollars a year. By living car free and saving $300 a month, you’d end up $365,000 richer after 30 years at 7%. Living car free is easier than you might think.

Finally, earning more money is the biggest win there is. Instead of worrying about saving $1 on coffee, a pay raise or better paying job can net you tens of thousands more every year! For every additional $500 (after tax) a month you can save, you’ll end up with $609,000 after 30 years at 7%. Of course, earning more money isn’t easy, but you need to be in it to win it. You could renegotiate your salary, get a new degree or qualification, apply for a better job, or start a business or side hustle.

a woman i a new job, earning more money

Scoring a better paying job is a sure fire way to healthier personal finance

Now, you might be thinking ‘of course we can save money, but aren’t we doing this already?’ The truth is yes, but you could be saving even more focusing on the bin win approach rather than penny pinching. 

Big wins are generally passive approaches to saving, such as automatic saving, compounding interest, or reduced spending on major expenses. Penny pinching on the other hand, is a very active approach. Because, as humans, we like to be doing things, lots of people forget about big wins, and focus only on small savings.

Take the example of Tim Gurner, the original avocado millionaire. In reality, his approach didn’t line up with his advice. While he may not have been eating smashed avocado toast, he was flipping property during a real estate boom, making tens of thousands per transaction. He literally focussed on big wins in order to make his fortune.

With the big wins approach to saving, you’ll focus on what makes a real difference to your finances, rather than miniscule savings. That means you can hit the cafe on the weekend and enjoy your delicious smashed avo, confident that your finances are doing just fine.

Important: This article represents general advice only, and no financial decisions should be made solely on the information here. Visit a financial advisor to get the best advice for you and your circumstances.

Note: This article was informed by our general understanding and opinions about personal finance, but owes a lot to Ramit Sethi’s Big Wins Manifesto.

About Tim Beau Bennett

Tim is an ex-journalist and radio presenter, and has been a professional writer for over a decade. He regularly writes about technology, lifestyle, and smart cities, and has written for news site including the ABC, SBS, and Australian Financial Review.