Category Archives: MINDSET

millennial money mistakes

With news this week that home ownership amongst young people is the lowest it’s been in decades, you might find it interesting (or fit-of-rage-inducing) to know that your wake-up call of smashed avocado on sourdough toast with a perfectly poached egg that has been artfully placed on a plate is apparently the thing that is preventing you from buying a property.

Yep. You heard that right. The archetypal Millennial fruit (and probably an integral part of many new years’ resolutions) is being lauded as an obstruction to financial security.

Not only do the damned things seem to get ripe on the exact day that you have to get into the office early for a meeting (a meeting which will undoubtedly not involve any sort of delicious morsels to munch as Elspeth the early-riser witters on about something that doesn’t do anything to distract you from your famished state – Millennials need to eat every 2.2 hours don’t you know) and are completely inedible the next time you are actually able to contemplate not hitting the snooze button to create your Turner Prize-worthy breakfast (I jest – every Millennial is a morning person with bounding energy who, thanks to social media ramming it down our necks, knows that the key to being successful is to wake up hours before everyone else so you can beat them, obviously), but those already in the money are now telling us that you really can have too much of a good thing.

Earlier this year Australian property developer Tim Gurner did the unthinkable and told off an entire generation for spending too much money on what could be termed ‘lifestyle’ items, including brunches *gasp* and coffee *GASP*.

“When I was trying to buy my first home, I wasn’t buying smashed avocado for $19 and four coffees at $4 each. We’re at a point now where the expectations of younger people are very, very high. They want to eat out every day; they want travel to Europe every year.

“The people that own homes today worked very, very hard for it (and) saved every dollar, did everything they could to get up the property investment ladder.”

“But”, I hear you cry, “Millennials love adorning every surface in their rented flats with fresh flowers and the sorts of candles that make every room smell fabulous and con their friends into thinking they have their sh*t together. Brunches are what weekends are for. And god forbid anyone that stands in the way of a 20 or 30-something and their daily trip to [insert name of favourite coffee shop here*]”.

*I’m not being paid to advertise so, in true Millennial style, I won’t promote anything if I don’t get something out of it myself.

Tim does have a point though (an apparent oversight of heart-palpitation-inducing property prices aside).

With beloved bottomless brunches averaging £30-£40 each, spin classes costing enough to put your head in a spin and coffees/ginger bread lattes (you can tell I’m still desperately holding onto that festive feeling even though Spring is in our midst) denting our wallets on such a frequent basis I think it’s fair to say that Millennials really haven’t chosen the cheapest forms of entertainment/morning kick up the backside/hydration. Just thinking about the amount of money you spend on these items alone per year may horrify you.

We can’t deny that there are so many ways that you could put your money to better use; whether that be investing it, saving it in a high-interest account or at least buying something that has a little more longevity than something that ultimately lasts about 20 minutes (although it could last several hours, if you’re like me and somehow forget to consume liquid even when absolutely parched and its approximately five inches from your mouse-wielding hand).

And, let’s be honest, we probably shouldn’t balk at anything said by someone who, at 34, has amassed a $460 million fortune and who Ernst & Young considered their Emerging Australian Entrepreneur of the year (even if, as the article stated, he was given a bit – read AUS$34,000 and determine whether you think that’s a ‘bit’ – of a leg up by his grandfather).

Whilst it’s completely understandable for many Millennials to consider stepping onto the first rung of the property ladder out of their reach and to bemoan the actions (or lack of action) by successive governments, frequent indulgences of the Millennial persuasion will never make the situation better.

But this blog is about being able to save and make money without impacting upon the lifestyle that you want and, with that in mind, I’ve come up with 5 mistakes that you may have been making which, if changed, may allow you to indulge in a few more – to steal Gunner’s terminology – ‘lifestyle’ items:

1. Not getting financially savvy

For some godforsaken reason Pythagoras is on the curriculum and financial know-how isn’t. Now this isn’t a dig at Pythagoras (I’ve actually found it quite useful when ‘home improving’) but it is an observation that our generation have learnt a lot in school that probably isn’t as useful to us now as getting a solid understanding of terminology that gives us the ability to create a future for ourselves where money is never a concern.

That said, there’s still time to learn! It pays (literally) to get a grip of financial jargon to give you the best chance of making clever decisions with your money. I hope that this blog is starting to give you a better idea but Google is your best friend when it comes to educating yourself.

2. Not using credit cards sensibly

A few years ago, I admitted to an journalist of a well-known Radio 4 consumer programme that was interviewing me at work that I had no credit whatsoever. In my early twenties this wasn’t unusual amongst my peer group, nor was it met with an expression of shock (apart from an older colleague sitting close to me who later told me she had 15 credit cards, with a balance on all of them).

Fast forward to now and I do have a credit card. One.

I’ve spoken before about having the correct money mindset and part of this is coming round to the idea that you should only ever spend what you have already earned. That means not using credit cards to make any purchases whatsoever unless you know that you already have the money to be able to pay it off.

I’m not against the idea of credit cards altogether. The complete opposite in fact. Having and using a credit card can ensure your own money is in your account that little bit longer so that it accrues interest, has the potential to boost your credit rating and certain purchases are also doubly protected should something go wrong. But the key to sensible use of credit cards is to ensure that you never have a balance so that no interest accrues. That means paying it off in full – which you’re able to do if you don’t spend money you don’t have.

3. Living beyond your means

At the risk of sounding like a broken record, Millennials have a habit of chasing the proverbial dream of having the entire contents of beautifully decorated, vegan-friendly and Instagram-worthy cake shop and scoffing the whole damned lot.

As lovely as that sounds (apologies to those of you who have given up such glorious sugar-filled delicacies for lent), it’s completely unrealistic and will make you feel fairly sick for several days afterwards.

Metaphors aside; not living within your means can lead to severe debt and the best thing to do is to prevent it happening in the first place.

Budgeting is something that I’ll cover in more detail in future but a really useful exercise for now is to analyse your income and outgoings over the last month. That cab you decided to get on your way home from a night out with the girls just because your heels hurt; the manicure you treated yourself to; your alarmingly large phone bill. Count everything.

Not only should your income be greater than your outgoings, but to stand any chance of saving a deposit you need to be putting a large chunk of that income aside (see the 50/30/20 rule). Instead of spending throughout the month and putting the leftovers into a savings account, treat the amount you want to save as your first outgoing as soon as payday comes around.

4. Not realising the advantage of time

There are so many different points I could make here but what I want to get across is that it’s never too early to make a start on improving your financial future. In fact, the earlier the better!

I’ll be writing in more detail about investing, compound interest and pensions soon but starting to get your ducks (or bucks) in order now rather than in a year’s time really could pay off. Literally.

If you realise that you’ve been making these mistakes then don’t fret, you can do something about it. You’ve already done some of the hard work in recognising that your habits need to change.

All you need to do now is make a plan of action. After brunch.

Avocado on toast for me please.

H x

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how to save £1,000 a month

I recently explained to a friend that I was trying to save £1,000 each month and her instant reaction, as I’m sure mine would have been nine months ago, was that I must be earning far more than her to be able to even contemplate putting away this amount on a monthly basis.

However, the truth is that you don’t need to be earning a lot to be able to save a lot. You simply need to be careful with what you do with your income.

In the first steps I referred to the 50/30/20 principle – whereby 20% of your income should be saved. If you’re serious about saving, or building up an ’emergency fund’ that will give you financial freedom and the ability to choose what you actually want to do, you really need to be stashing away more than this though.

Having been completely motivated by Canna Sass of SugarMamma.TV to take control of my finances (her blog and YouTube channel are well worth a look if only to lust after her wardrobe, but she’s also a certified financial adviser), I read about what she called the ‘$1,000 Project’.

The $1,000 Project is a challenge Canna set for herself (and her readers) whereby she put money she saved, manifested and made into a savings account that was separate from her usual accounts. Once the balance on the account reached $1,000 she then invested it in long term passive income sources (i.e. ways of making money without you having to do anything…and doesn’t that sound amazing – more about this on the blog soon). Canna originally did this with the intention of buying a designer handbag with the money made from these investments but has since donated it to charity – what an inspiration!

My ultimate aim was to do just as Canna was doing and to invest the money I had saved and created myself above and beyond my salary – but to give myself some security (given the prospect that no investment is certain to provide a life-changing return) I wanted to build up my emergency fund first.

Now 1,000 Australian Dollars equates around £580 but, given my desire to achieve the financial independence I needed, I wanted to set my goals high so that I could do it as quickly as possible. £1,000 seems like a huge amount to save every month and, I’ll be honest, sometimes this wasn’t achievable but it was a nice round number to aim towards. You can set whatever goal you like, but I would say that having a large figure to aim for really does help imprint in your mind how stringent you need to be.

Although I wanted to save this amount every month, I didn’t want to compromise on the lifestyle I had already established for myself. Going out for dinner or a glass (*bottle) of wine with my friends is what keeps me sane, exercise and eating well is incredibly important to me, and I have expensive taste in clothes, shoes, handbags, jewellery, cushions, candles…you get the idea.

I therefore set about trying to find ways of doing and having what I wanted for as little as possible, or even for free! I was amazed to find that there are so many opportunities to do so. Most of these are well-documented (such as switching energy supplier or foregoing your morning coffee-shop coffee) but I wanted to share three ideas with you that you may not already have thought of.

1. Supermarket savings

Yellow stickered goods have filled my fridge for the best part of seven months. But these are not just any yellow stickered goods. These are Marks & Spencer yellow stickered goods. See what I did there?

Joking aside, finding out when your local supermarket makes reductions is an excellent way of saving money. I’m strangely proud of the number of delicious salads I’ve picked up for under a pound, the quarter-price salmon fillets I’ve delved at the bottom of the shop freezer for and the treat Indian takeaways for two that I’ve bought when they’ve been reduced to £1.49 instead of hitting Deliveroo (notice I try to go for the healthy stuff – my sister on the other hand has, on two occasions, come home with enormous cakes that have been reduced from £10 to 99p – one Galaxy one and one in the shape of a pug that said that it served 18. We ate it between the two of us within 26 hours…oops).

2. Forget gym fees

Moving on from gorging on cake to keeping fit…I haven’t paid for the gym since my change in circumstances nine months ago. I had previously been paying £25.99 a month at PureGym (which was actually a great deal for 24 hour access and all classes included, including a spin class with Katie Stones that was so good I used to drag myself out of bed at 05:45 for it) but, when reassessing my finances, couldn’t justify the fees the gyms around my new corner of London commanded.

I started looking online for different ways I could exercise for free and found that there are so many ways of doing so beyond simply going for a run or doing squats whilst brushing one’s teeth. Come back soon for a blog post dedicated to ‘frugal fitness’.

3. Become a mystery diner/shopper and product tester

I used to sit at my desk every lunchtime with a homemade salad or leftovers from the previous evening’s dinner which, as thrifty as this was, meant that I didn’t get out of the office all day and was frequently asked work-related questions or to complete tasks despite it supposedly being my lunch break.

It’s now become a running joke amongst my colleagues that I spend most of my lunchtimes reviewing different restaurants in the area around my office.

The premise behind mystery dining is that you go to a restaurant, write a review on things like the service you received, the cleanliness of the restaurant and the taste of the food and then you get reimbursed afterwards.

Not only have I been able to eat an awful lot of food for free as a result (so much so that I have, on occasions, been able to go two weeks without doing a food shop!), but I’ve found it’s an excellent way of getting some fresh air during my lunch break. Some mystery dines have also been in some fantastic restaurants and I’ve been able to treat some of my nearest and dearest to some fabulous meals as a result.

Mystery shopping works in much the same way but obviously you are buying products, as opposed to food, which you can keep afterwards.

I’ve also signed up to be a product tester through a number of different websites. Not only do you get to keep the product you’ve been sent to try but it’s a great way of finding new things that you may want to buy again without having to splurge on it first. I’ve actually been sent the best shampoo I’ve ever tried through one of these schemes (worth £28) which I would never have wanted to buy without knowing it lived up to the hype for myself.

For the ‘cost’ of writing a review, I would absolutely recommend this as a way of saving money.

I hope these ideas are of interest. I’ll be writing about each of them in more detail in the future but if you have any questions, or would like me to focus on anything in particular in these posts, please do get in touch.

Do you have at ideas as to how you can save money? I’d love to hear them in the comments below.

H x

 

 

you and your money

How do you feel about your finances? Do any of these statements reflect your own relationship with money?

“I have no idea what I’m doing! I don’t understand any of the jargon I hear other people using and it all goes over my head.”

“I’m in a lot of debt and seem to be in an endless cycle of borrowing to pay off other debt.”

“I don’t keep track of how much I’m spending and rarely look at my bank accounts. In fact, I really don’t know how much money I have.”

“I wish I had more savings and feel guilty whenever I spend money.”

I asked myself this question and found that, although I had a fairly good understanding of finance and (what I thought was) a good relationship with money – in the sense that I had no debt apart from my student loan – I wasn’t satisfied with the way I had been managing or spending my money. I had simply put the money I had earnt into the same bank accounts I had had since I was 16 (one savings and one current) with practically no interest being accumulated, I regretted quite a lot of the purchases I was making – even the amount I was spending on food – and I felt a sense of guilt and disappointment in myself that my savings weren’t at a level that I was comfortable with.

It was then that I realised that, although how much you earn obviously goes some way to assisting you with your financial goals, what you do with your money when you get it is so important.

your money mindset

Discovering what your own money mindset is will help you work out what to do with the money you already have and your future earnings.

Your attitude towards money will, naturally, be influenced by your own life experiences. These experiences could be anything from a change in circumstances to the way money was discussed within your family when you were younger (having a family who spoke openly about money could well make you feel more at ease than someone whose family never spoke about it at all, for example). That said, your money mindset is fluid. It can change simply by you wanting it to change.

To find out what your own money mindset is you’ll first need to consider how money makes you feel. For example:

Are you satisfied with your current situation? If not, what you be satisfied with? How would you feel if you were in this situation?

Does money worry you? If it does, why?

Next, consider which of these statements resonate with you:

“I save more than I spend. Planning for the future is my priority.”

“I prioritise the present rather than the future. Life is unpredictable so I might as well make sure I’m happy now.”

It’s likely that a combination of the two will be true:

“I know saving and ensuring my money is worth the equivalent amount in the future is important, but I’ll only be young once and I want to enjoy the money I earn.”

It may well be the case that the way you have managed your money to date has been influenced by this attitude. On the other hand, it may not.

You may have every intention of saving as much as you can to secure the freedom it can provide, or you may want to invest your money to ensure that it grows in line with, or above, inflation, but you may not have had the chance to work out, or you may not know, exactly how to do that.

Within this blog I will be trying to explain – in a jargon-free and easy-to-understand way – what you need to know, and I’ll be giving you some ideas as to what you should be doing with the money you’re not spending.

That said, the idea that you won’t be spending any money at all is completely unrealistic. Other than the essentials (rent, bills, food etc.) the 50/30/20 rule (which is helpful to use as a guide, as I mentioned in this post) allows for 30% of your income to be spent on so called ‘discretionary items’. In other words, you are absolutely allowed to spend money. You just need to have a strategy to ensure that the money you do spend gives you as much fulfilment as possible. Just remember that anything you don’t spend can be saved or invested though, so spending as little as possible will always help.

priorities

I’ve developed a really useful way of working out what I should spend my money on to ensure I am able to enjoy myself and live the life I want to lead whilst cutting down on the actual amount I’m spending.

The method simply requires you to choose three areas of your life which are of the utmost importance to you and to list them in order of priority.

You can take a very broad approach to this but, to get as much out of this exercise as possible, try to be as specific as you can.

Rather than writing “spending time with friends and family”, detail exactly what you want to do with them/get out of the time you spend with them (for example, “developing my relationships with family and friends by having meaningful conversations with them”). Rather than “my health”, put to paper the exact concern you find to be most important (“improving my overall fitness with a view to being about to run 5k in under 30 minutes”). I appreciate that this is really difficult though and you may have much better things to be doing with your time so the main thing is to just come up with the list. The very fact that you will be thinking about what you are doing with your money is, in itself, a step in the right direction.

This will now provide you with a focus as to how you should be spending your money. Note that this is a method that should be used alongside a saving strategy if that is your goal (I’ll be providing you with some saving strategy ideas within this blog soon).

Do not feel guilty about spending money on these three things (within reason, don’t go berserk!). If spending meaningful time with friends and family is number one on your list, don’t worry about spending money on a nice dinner or evening in the pub with your nearest and dearest if you’re able to talk and make memories. Don’t always go for the most expensive options and perhaps have one fewer drink than you usually would but don’t feel guilty about going in the first place.

However, if you do this, you must make every effort to reduce your spending on any area of your life which doesn’t feature on the list. If staying up to date with the latest fashions isn’t on that list, think twice about buying that off-the-shoulder top you spotted at full price. Instead wait for it to go into the sale before taking the plunge or just don’t get it at all.

By prioritising the things that matter to you in life you’ll prevent yourself feeling guilty for purchases that you make. Obviously this isn’t a free-pass to spend all of your money on these three things, but it’s a way of deducing where you can start to make savings without compromising the most important things in your life.

Restricting your spending to the things that really matter to you will be difficult, and will need constant re-assessment as your priorities may change on a quarterly basis, or even more regularly than that. However, I’ve found it to be an incredibly helpful way of deciding very quickly whether or not to reach for my purse and spend my hard earned money.

This isn’t about cutting everything else out completely. The ‘rule’ is simply that you need to find ways of spending less money on experiences or goods which don’t contribute to your priorities. Of course you can cut things out, but don’t feel you have to stop doing things that don’t feature on the list or buying things that don’t contribute to your priorities.

Within this blog I’ll be giving you some ideas as to how you’ll be able to do and buy the same things you’re used to even if you’re trying to kerb your spending without compromising on the lifestyle you want. Stay tuned!

H x

the first steps

DISCLAIMER – I am not a financial adviser.

However, I have become genuinely interested in ways of managing my own money over the past few months and have therefore done quite a lot of research into saving and making money.

I do not profess to have the answers to everything, but simply want to pass on the tips that I’ve found helpful.

In this blog I am going to highlight some opportunities to manage your money and I’m also hoping that I can provide a bit of an insight into the steps I have taken to ensure that I make the best financial decisions I can (again, I have no idea what your individual circumstances are so make sure you ensure these are right for you!).

reassessing my mindset 

If you think about your own finances; would you be able to hand in your notice now if you hated your job (without having another job lined up)? Would you be able to leave a bad living situation immediately if you needed to? Are you able to be as generous (either with your time or money, since time really is money), with loved ones or charitable causes for example, as you would like?

A change in circumstances made me realise that not having the security of easily-accessible savings meant that I didn’t have the freedom to make very simple life choices. I wanted to put myself in a position where I could handle the financial impact of the choices I wanted to make, or the choices of others which impacted me, and feel independently secure. Taking control of my money, at a time when I felt like I had control over very little else, also gave me some comfort and focus.

I began by writing down where all of my money was.

Bank accounts; credit cards; ISAs; gift cards; credit notes; loyalty cards; money I was owed by other people; the amount I had in a deposit scheme…everything went on the list.

I totalled this all up and was actually pleasantly surprised at the value of all of my ‘assets’ but less than a third of the total amount was ‘liquid’. I didn’t have any debt other than my student loan which, I appreciate, put me in a fortunate position; but I really didn’t feel that I was where I wanted to be in terms of my financial independence.

I wrote down my income (what was actually going into my bank account rather than pre-tax etc.) and made list (another one – I’m big on the list-making so this may be a recurring theme) of my monthly outgoings. My lifestyle was changing at the time so I wasn’t able to do this with concrete certainty but I felt that an estimate would be more useful than nothing at all.

Deducting these estimated monthly outgoings from my monthly income gave me an idea (albeit not a particularly accurate one) of what I had previously called disposable income.

This was the first change in my mindset.

This income was not disposable. This was what I had control over; what my own decisions would have an impact upon.

deciding to save

My sister has always been fantastic at saving money. When I say fantastic, I really do mean fantastic.

I had previously thought that my spending was enabling me to enjoy life and that her frugality was hampering hers to some extent. And, to some extent that was true; but I was now incredibly jealous of the security she had built for herself. I decided to take a leaf out of her book.

I was aware of the 50/30/20 rule (worth a Google if you’re interested). This was the idea that you should be spending about 50% of your earnings on the essentials (rent, bills, food etc.), about 30% on ‘discretionary’ items (eating out, clothes, gym membership etc.) and you should be saving the other 20%.

I appreciate that, for some people, this may seem totally unrealistic and unachievable, but I wanted to try as hard as I could to work towards this (or better it in terms of saving). I took the opinion that something would be better than nothing. I was already contributing the maximum amount I could into a Help to Buy ISA every month but I wanted to increase the amount I was funding my savings account with.

I have spent the past 7 months researching how to do this and I intend on sharing each of the ideas I have tried with you through this blog. Please keep coming back if you’re interested in finding out how I’ve completely overhauled my mindset and how you may do the same.

H x