I have read a lot about financial management, both personal and for businesses, over the past few years, and I have learned a lot more by hitting walls at high speed. There are many books, and also a lot of advice online from more or less reliable sources. A lot of it is just patronising and feels like it can only apply if you are on a £4K a month salary living at home with your parents. It can be hard to find something worthwhile if you have already cut expenses to the bone and aren’t having a morning latte and lunch at the office cafeteria like the protagonist of the Latte Factor.
Still, I have found some of it valuable. Here are 3 that I have put into practice and found to be worth sharing.
Pay yourself first
If you are on a strict budget it may seem daunting and impossible and counterproductive to try to save instead of spending every single cent on something you need, but nobody knows when that money will be a life-saver. It may be the case that your income really cannot afford you to spare any money, but if you are on a decent wage it should be within your reach. You may not be trying to save up a deposit for a home or a big holiday, one or two months’ worth of salary to protect you from unforeseen circumstances is a worthwhile goal and something you need the more you live paycheck to paycheck.
If you aren’t too confident you won’t need that money soon then it’s best if you can access your savings account whenever, and not just after a sum has been saved, but it can help budget without that money if you don’t have it in your account. The way your taxes are taken before your salary comes into your account, if you have a standing order removing the savings from it as soon as you get paid then you won’t have that amount in your spending money. I then fidget with my shopping budget to make up for the difference without feeling the sacrifice.
Have investments, even if small
If your salary allows you to save, another good thing is to have investments. Some companies allow or even encourage employees to buy shares in them, which is the situation I’m in at the moment with my husband’s shares in his employer through a special scheme for employees, but there are many options starting at £10 per month. If you have no idea where to go, try to look for advice from 40yo and younger (some of it is targeted to younger people), or at least older folks that seem aware of how things are nowadays. A lot of advice I have read from my parents’ generation seems stuck in a world that doesn’t look the same way anymore and will be giving you some advice you can’t put into practice because none of the old investments they have had over the years are offered at good rates anymore.
Avoid credit cards if you can’t pay the balance in full
Anyone with a history of debt knows just how easy it is for things to spiral out of control, so I have a notice on my credit report saying I can improve it by taking out a credit card that I keep ignoring. I may consider zero or low-interest installment plans if my laptop dies and I need to replace it, but that’s as far as I’d go into getting credit after I’m still repaying my business loans despite moving on to a different career. Some advisors are really strict, discouraging mortgages as well as other kinds of loans, but I can see the rationale in wanting to buy a house after many years of bad landlords before moving to this flat. Still, while it’s tempting and in some cases necessary to spread out the cost of big-ticket items I prefer to live without accumulating interest that I have to repay.
Today’s blog post has been part of the Love Blog Challenge 2020 on the subject “Money”. Find the rest of the series here