Why Young People Should Start Investing: Overcoming Psychological Barriers and Leveraging Free Tools

When you’re paying for school, juggling student loans, and managing a limited budget, investing may seem like a luxury reserved for later in life. But, investing early can be one of the biggest power moves you can make towards long-term stability and success. As a psychologist, I often see older clients dealing with money-related stress and anxiety, and a common source is delayed financial planning. Starting to invest early, even in small amounts, can set the foundation for lasting financial and psychological well-being. But before that can happen, many young people need to overcome certain psychological barriers.

Why Invest When You’re Young?

Time is one of the most valuable assets when it comes to investing. The earlier you start, the more you benefit from the magic of compounding interest. Even small contributions made over time can grow substantially. Early investing not only builds wealth but also establishes financial discipline and resilience. Having some money set aside—even modest amounts—can alleviate the pressure of living paycheck to paycheck, creating a sense of control and confidence in your future.

Studies show that building even a small investment cushion can reduce financial anxiety and increase a sense of security and empowerment. Financial independence isn’t only about accumulating wealth; it’s about fostering a state of security and preparedness that can improve mental well-being.

But What Gets in the Way? Overcoming Common Psychological Barriers

Investing can seem like a distant goal for many young people. Let's look at some of the common mental obstacles and how to overcome them.

1. “I have loans to pay” – Debt Repayment Prioritization

Debt can feel like a mountain, making it hard to justify investing before it’s paid off. And while managing debt is essential, focusing exclusively on debt without investing misses out on the compounding growth that can help build wealth. By allocating even a small amount to investing alongside debt repayment, you can create a balanced financial strategy that’s beneficial in the long run. In my practice, I find that knowing you’re making progress in both areas—debt and investing— can reduce financial anxiety and boost confidence.

2. “I don’t have any money” – Scarcity mindset

This is a common feeling, but often, when we look closely at where our money goes, we find small expenses that add up and areas where we could cut back. Psychologically, many of us tend to spend everything we have—a concept called Parkinson’s Law, where expenses expand to match income. Without realizing it, we’re caught in a cycle of spending, convinced there’s nothing left to save. The reality is, if you start by “paying yourself first”—setting aside even a small amount for investments before other expenses—you can build wealth without feeling deprived. Paying yourself first breaks the cycle of spending everything and helps you shift from a scarcity mindset to an abundance mindset, seeing investing as an essential part of securing your future. Prioritizing yourself in this way each month helps you realize that you do have enough to start building financial independence. 

3. “It’s too complicated” - Fear of Complexity

Investing can feel intimidating, filled with jargon and the fear of making mistakes. This fear can be paralyzing, keeping many people from even trying. But today’s investing apps are designed for simplicity, allowing beginners to start small without needing in-depth knowledge. Free trading platforms, robo-advisors, and fractional shares make it easier than ever to get started without the stress of navigating complexity.

4. Instant Gratification and Short-Term Focus

Living in a world of instant gratification can make it difficult to prioritize long-term investing over immediate spending. The concept of delayed gratification—putting aside something now for greater rewards later— can feel restrictive. But investing is one of the most effective ways to build a future where you’re financially secure and free from financial worry. Over time, investing builds both discipline and resilience, helping you stay focused on long-term goals. 

How to Start Investing Using Free Tools in Canada

If the idea of investing still feels overwhelming, remember that today’s technology makes it easy to start small. Here are some simple steps to get started:

1. Start with Fractional Investing: Many platforms, such as Wealthsimple, offer fractional shares, allowing you to invest as little as $5 or $10 in larger companies. This way, you can participate in the market without needing a large sum.

   
   

2. Automate Your Contributions: Set up automatic monthly contributions, even if they’re small amounts like $25. Automation builds discipline and helps you develop a routine of investing without having to think about it. Pay yourself first by deducting the investments before you start budgeting.

   
   

3. Diversify with ETFs: Exchange-Traded Funds (ETFs) that track broad indexes are the tried and true way for growth. By spreading your investment across different stocks and bonds, you reduce your risk while gaining exposure to the market. Many ETFs have tiny management fees, and many platforms offer commission-free ETFs that can further motivate you to make these purchases.

   
   

4. Open a Tax-Free Savings Account (TFSA): In Canada, a TFSA allows you to grow your investments tax-free. Many trading apps make it easy to open a TFSA and start investing right away.

   
   

5. Use Robo-Advisors: For those uncertain about choosing individual stocks or ETFs, robo-advisors create and manage a portfolio for you based on your goals and risk tolerance. It’s a stress-free way to start investing without needing constant oversight.

   
   

Final Thoughts

Investing may sound intimidating, especially with all the financial jargon and endless advice out there. But here’s the truth: investing is one more way to give yourself options, freedom, and a sense of control over your future. It’s not about becoming a millionaire overnight or giving up every coffee or streaming subscription; it’s about making small, intentional choices that add up over time. Starting early gives you an edge, allowing your money to grow and work for you in ways that might seem small at first but become powerful over the years.

Think of investing as a way to “bet on yourself.” You’re choosing to secure a future where money doesn’t control your life—where you have the flexibility to take a break, travel, or explore a passion project without feeling financially trapped. Starting now, even with small amounts, means you’re building resilience and taking charge of your life. With accessible tools like free trading apps, commission free ETFS, and automatic purchase of fractional shares, you don’t need to wait until you “have enough.” Think of investing as a quiet form of self-care—a gift to your future self. You don’t need to have it all figured out; you just have to start. Every dollar you invest today is a way to create a life with more freedom and more choice, on your terms.