This year has been an eye-opener for me when it comes to money. For the first time in my life, I actually feel like I have my finances sorted out. Got that whole ‘my money is working for me, I’m not working for my money‘ vibe. We don’t learn this stuff in school, our parents probably don’t know how to teach us it and it’s up to us to get our finances sorted.
Here are some easy ways to get started:
Read about money
If you grew up without money, or have gone from the employment life to self-employment, it can be a difficult concept to grasp. Try reading some books about understanding money. I recommend:
Reading about Money from other peoples perspective is incredibly useful because it encourages you to seriously think about it as a concept. Most of us grow up with the ‘I exchange my time for money’ attitude which is not necessarily how it has to work. Even if you don’t agree with the content in the books, the important thing is you’ll have actually thought about it.
Journal about money
For personal and business development, I’m a big fan of journaling, planning and goal setting. This year I’m using the daily greatness business planner (click here for a coupon code to get one yourself). Write about your financial goals, your reflections on what you’ve read, your thoughts about your attitude towards money and how it’s changed over your life – write about the people around you and their attitude, how is this rubbing off on you?
I’m using my business planner to have my income and expenses in writing each month, with regular overviews. As a self-employed person, it can be kind of hard to know what your actual yearly income is. This lack of information and understanding can cause you to live under or over your means. And no, living under your means is not always good. Do you think you’re skint but really are able to invest your money?
Know what’s going on in that bank account
My bank account used to be a dark, murky place which I hated to look at. I just didn’t want to see how little money I had and how much I was spending. I now use my bank accounts app – which helps me see exactly what’s going on in there, when I’ve been paid and when I’m approaching my overdraft.
I also use a cool Facebook chatbot called Cleo. This alerts me on Facebook messages about things like when I’ve been paid, when I’m near my overdraft etc and I can monitor the things I want to restrict money on – like my eating out budget. Cleo will tell me how much I’ve spent on eating out, whether that is higher or lower than last month. It also tells me useful data like whether my weekly spend, in general, is increasing or decreasing and how that weekly spend compares to the rest of Cleo users.
Since I’ve hit 30, I’ve obviously stopped saying dumb ass things like ‘I’ll probably be dead before 30 anyway’. I’m clearly not dead, and I have as good a chance of anybody to living to a ripe old age. I used to have this attitude that ‘I’ll never be able to afford a mortgage/pension’ and so I have done NO saving for a mortgage or pension. I didn’t have much money to put aside for these things, but looking back I really wish I had even done a little saving. Even if I’d just put away £50 a month for the last ten years – I’d have £6,000 to be able to put towards a house deposit.
I’m not going to make this mistake again. I’m not alone, only 15% of people in the UK make saving for retirement a priority. Seeing my mum retire on even a slightly healthy pension has made me realise that just a little bit of saving could help me live a very comfortable life when I’m old.
And yes, I’m saving for a mortgage too. I want to own multiple properties one day and diversify my income stream so I am less dependent on my business. I’m going to save with the governments ‘help to buy’ ISA scheme. For every bit of money I put aside, they add to it. That’s free money! If I save £12,000 of deposit – they will add £3,000.
There’s a lot of despair out there about young people not being able to afford housing or pensions etc. But stupidly, I listened to this noise rather than investigating for myself how much a mortgage and pension would actually cost me.
Don’t be dependent on one source of income
Seeing people close to me go from high earners to being on the dole has shown me how important it is to not be reliant on one income stream. My business model is very good for this, because I have multiple clients and offer multiples services. So if for some reason the social media industry crashed, I could still make money from blogs, or build websites. If I lost a couple of clients, I still have plenty more to rely on. I’m trying to expand on that this year by earning money from other places. Ideally, you’d have your business, money from property, investments in stocks and shares and a book deal – but real life isn’t always like that. It’s still a good idea to look into these things and do some projects that are a bit more small-time than that – like selling your artwork, coaching, doing training days, or blogging.
Plan for success as well as failure
Because I was so caught up in the attitude my parents gave me – ‘what happens if you lose your job?’ ‘What happens if your house burns down?’ I was using my money to plan for failure. I thought that’s all financial planning entailed. In my twenties I just didn’t think about stuff like ‘what if you’ll want to invest a lot of money when you’re 35?’, ‘what if you’ll want a five-bedroom house?’ This year I’ve been thinking about the future and my long-term prospects in a more positive light. If I want to get the things I really want, I have to start planning now. You don’t magically wake up rich and able to put down a house deposit. Wealth grows with you.
Let’s think more positively about ££££
As someone who graduated in the recession and has not really known the economy to be great, it’s easy to get stuck in a rut and think that money is just impossible to get hold of. While I don’t believe 100% in the law of attraction I do think that focusing on getting more money, rather than the money you’ll never have, is a good mindset to live with. In order to make money and control it wisely, it’s good to have an abundance mentality and realise that there is lots of it out there, so it may as well come your way. That being said, while it’s ideal to plan for both failures and wins, you won’t have any money if you keep spending it. So restrict the money you’re spending now, and you’ll automatically have more of it to invest.