Posted on: 31-03-2017 in Financial Planning
It is often said that “charity begins at home.” So does budgeting! All the financial planning in the world (whether you seek professional advice from us here at Holborn Assets or elsewhere) won’t help you unless you tackle the nitty-gritty of the small stuff.
Tackle the “small” spending issues of your life and handling the big financials of mortgages and insurance become a lot easier. So why not take a fresh look at your home financial habits? They may be grubby, but maybe it’s time to clean up.
Here are ten tips from Holborn Assets to make a positive impact right away:
Problem: You’re a sucker for retail therapy
You can’t resist the lure of an afternoon spending your hard-earned cash on what you want. But is the stuff you are buying what you really need? You know, deep down, that sometimes you’re blowing cash for the buzz alone. But what to do about it?
Solution: No need to be square – but do prepare
Put aside some cash in a separate account linked to a specific bank card. It does not matter how much you can afford to save here. It is actually much better to start low and put away what you know for certain you can afford, rather than try and treat yourself in advance with money you can’t afford! This is your treat dispenser account. Make the tiniest of starts in this area and get some ownership on your spending.
Problem: You’re putting your head in your sand with bank/credit card statements
With paperless statements now the norm, it is even easier to ignore the bad news from the bank or credit card provider. But it is really bad news? How bad? It is likely that if you simply cannot face your finances (and some of us can suffer this for ages) it means that it is fear, rather than financial failure, that is the problem.
Solution: The tiniest glimpse at the bad news won’t kill you (although that may be how it feels)
If it’s got really bad, there’s no way around this problem – but there is a way through it. You are just going to have to feel the fear and do it anyway. Say to yourself that you will examine one statement. Quickly. Just a speedy, heart-racing glance at what you have spent. Keep doing this and it gets easier every time. Then you can progress to having more thorough checking that you’re not getting charged for something you don’t recognise.
Problem: You’re always buying new gear for your new hobby …
… And then the hobby very soon stops being a hobby and turns into something you tried once. It’s happened to us all. Often we need that excitement of a spending splurge to get us started on a pastime that could very well change our life. We simply don’t know at the beginning for certain whether it will pan out. So don’t beat yourself up about the instinct. It’s quite natural.
Solution: Splash out, but splash out sensibly
When that excitement and purpose takes hold to really attack this new hobby, allow yourself to buy just one bit of kit rather than loads of it. Splash out sensibly, in other words. But don’t resist the temptation to splash out at all – just wait until you’ve got a feel for the pastime until you start committing serious cash.
Problem: You want to give to charity but you can’t afford it
We’ve probably all got a nagging suspicion that we could do better in the charity stakes. But where is the money going to come from?
Solution: Start small
Start small. Really, really small. Even if your income currently doesn’t cover your expenses – which means you are, officially, in trouble – dedicate the tiniest fraction to charity. The key here it is to FREELY give away what you can (even if it is a £1 or 10dh a month) – so that’s why starting small really helps. Some might say that, as you introduce some balance in what you keep and what you give away, you may start to find money coming in from unexpected sources. Nonsense? Maybe. But, at the very least, you might find that your attitude to money becomes more comfortable as a result of giving away something at least.
Problem: You can’t face the debts
Being in mounting debt is perhaps one of the scariest things we face as consumers. It’s a modern reality, and a nasty one because it becomes more difficult to get out of it the more you ignore it. As the debts increase, so the fear increases. It’s a vicious circle.
Solution: Remember you don’t have to face them all at once
Make the decision to make a start. A decision is a powerful thing. Make paying back what you can a priority. But you are inundated with financial priorities! That’s the whole problem! Well, there remains only one solution, and that is to make a start, even if it seems like a waste of time. And, as with many positive financial tactics, the key is not to bite off more than you can chew. A small start is 100 times better than making no start at all. But it does take courage. And remember too that you are not alone; there are many debt charities that are specifically set up to help you start getting a grip (however fragile at first) on your finances; look online.
Problem: Somebody else has always got it better
This can be a right drain on your energy. It’s only natural to compare our financial situation with other people and then immediately become dispirited. How have they got it so easy?
Solution: Get real
You don’t know whether anybody else has got it easy or not. You don’t know what sacrifices have been made to attain their financial position. So copy any good habits you can pick up. But try and stay out of the resentment game, and focus on small, positive steps of your own.
Problem: I spend a fortune on transport
You have to, right? How else are you going to get to work? If there’s no public transport where you live, you have to drive. If there is public transport and it’s expensive, what choice do you have but to fill the transport provider’s pockets?
Solution: Maybe you have to, or maybe you don’t
This is all about getting real. Accept that, yes, you may very well be doing the very best you can to keep transport costs down – in which case, great. But the key is to try and look at your transport situation with totally fresh eyes. Break all your transport needs down and see if, somewhere, you couldn’t push yourself to consider a less costly alternative despite the inconvenience. The number one option here is to work in a walk – or even a cycle – into your routine. People often find it changes their entire day to sandwich it between a little exercise at either end.
Problem: You never eat at home
Maybe you always buy a take-away. Or, if you live in a metropolitan environment (like Dubai, for example), you probably eat out a lot. That’s fine. It makes total sense, doesn’t it, to exchange your money for time – you haven’t got time to cook at home, right? But you still probably do eat at home occasionally – so make those times make sense too.
Solution: Make it easier to eat at home
Plan meals using a weekly system. Include as many days as you like of cheeky take-aways/eating out. But factor in, to begin with, a couple of sensible days where you buy some decent food beforehand and actually cook something decent. The key here is not to aim for immediate results, but to start getting some ownership. Once you get started, it will become easier. And don’t kid yourself that you’re going to eat those left-overs if you’re not going to – it’s just a waste of energy better spent on a fresh outlook.
Problem: You just chuck unwanted stuff out
Makes sense, right? You’ve had enough of something so you get rid of it. You have decided that it is simply not worth the money to bother putting it on Gumtree or on Facebook. Fine. You’re probably right. There is another way.
Solution: Give it away instead – easily
Instead of chucking unwanted stuff into the bin, think about how you could give it away. Some charities will come to your door to pick up larger items – which can work brilliantly if you’re looking to get rid of a big item of furniture. This home-collection is a commercial model that is really taking hold in the charity sector, so take advantage of it. And know that in taking just a few minutes to think about your “rubbish” you are doing a decent bit of charity which won’t actually cost you anything.
Problem: It’s the big costs like holidays, weddings and cars that break me
We can all be muddling along OK with the small stuff. Even in the bigger financial picture, your mortgage and pension and retirement planning may be ticking along nicely (and, here at Holborn Assets, we would be glad to help you in this area). But you’re finding that it is the high-ticket things that are the problem; they put a crater in your financial landscape that you are sick of (grimly and slowly) climbing out of.
Solution: Be prepared
When it comes to high-ticket purchases, you have one advantage on your side (usually): you get some warning – particularly if it is a wedding or a holiday. If this is the case, you can make a massive difference by doing some research and finding out what deals are on offer. Scour the internet, sure. But a good way to “verify” internet information is to ask people you know via social media what their own experience has been; this means you can trust their advice (probably more than some random internet review) and perhaps learn of an approach you would never have thought of alone.
But supposing you don’t get any warning of a huge financial hit? There’s only one way to deal with this, and that is to start getting ready right now. Set up a special account and do NOT link it to a debit card yet – just get saving. Then when the need for the money comes, you’ll have something in the bank. Simply transfer the lump sum into your current account rather than getting a card which might then tempt you to blow it.
With all ten tips to save money at home, don’t expect perfection from yourself! Have a crack at just one tip and see how you go. If it isn’t working, try another tip. If you are getting any progress at all with that tip, perhaps have a look at another. But remember, it may feel like a race for a survival, but a race is as much about pacing as sprinting. The habits of a lifetime are unlikely to fall away overnight. But, if you continue to move in the right direction, they will have no choice but to disappear eventually.