Category: Investments

How to Control Your Cashflow With a Bill Payment Schedule

Credit Cards: How to Make Balance Transfers Work For You

Should you Combine Pensions?

Save up to £300 per year by Changing Broadband Supplier

Investments: Why Saving is Not Enough

Water Bills: Are you Pouring Money down the Plughole?

How to Create a Budget You Can Stick to

My aim with each blog post is to help you move to a better financial future. I believe that there is not enough financial education in the national curriculum and I intend to share anything helpful that I have learned along the way. I am by no means a financial expert. None of the information on this website constitutes financial advice and is provided as general information only. This is my personal finance blog; my marketing blog is over here and I have been blogging there since 2010. I hope you have found this information useful. Thank you for reading.

Best regards,

Mike

Accommodation: 5 Ways to Reduce Your Largest Monthly Expense

This post may contain affiliate links please read our disclosure for more info.

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For most people, accommodation remains their largest monthly expense. In earlier posts, I have mentioned this point. If you haven’t read, How to Create a Budget That you can Stick to, please read it today. It naturally follows that if you can reduce your largest monthly expense you will have more freedom within your budget to save more and to invest. These are two activities that will move you closer to financial freedom. The focus of this post is to explore 5 ways that you will be able to achieve this reduction in accommodation costs.

Cutting Accommodation Costs

I have spilt this list of five ways to reduce your accommodation costs into two mini lists. The first is for homeowners and the second is for tenants / lodgers who rent accommodation. The resources that I have linked to are for the United Kingdom because that is where I live. If you are reading this post outside of the United Kingdom, there may be comparable opportunities and resources in your country too.

Homeowners

Take in a Lodger

If you have enough room, take in a lodger to live with you at your main residence. Following a UK government initiative first introduced in 1992, homeowners are permitted to earn up to £7,500 tax free as part of the rent-a-room scheme. Technically this does not reduce your accommodation cost but it does reduce your financial burden because of the additional income that the lodger provides. Click here to read more about the rent-a-room scheme.

Move to a Cheaper Area

If you are living in a desirable area, more than likely that desirability comes with fairly high accommodation costs. One possible solution that most homeowners do not think about is this one; rent out your home and move to a cheaper area.

Let me explain with some sample numbers. You are currently living in area A and your home could be rented out for £2000 per month. This is more than you are paying for your mortgage which is £1500 . If you move out of your home and rent in a cheaper area (area B) for a cost of £1400 per month, you will be reducing your accommodation cost plus receiving £2000 in rent for the house that you still own.

An added bonus is the increase in equity associated with your property during the period it is being rented out. Please note, you will need to take all necessary steps to comply with the terms of your mortgage and to ensure that your property is in suitable condition to be rented.

Tenants/ Lodgers

House Shares

Renting a self contained flat or apartment can prove expensive, particularly in desirable areas. One surefire way to reduce your accommodation cost is to move into a house share. Sharing amenities brings the costs down. This website, spareroom.co.uk caters exactly for the house share market. Once settled into a house share, you can look forward to the positive impact that it will have on your finances.

Team up and Rent

Team up with a friend also looking for accommodation and rent a place that caters to both of your needs. This opportunity is not only available for twenty-somethings, an increasing amount of people find themselves heading one parent households and this is a good opportunity for them to reduce costs too. This website provides a forum for potential flatmates to meet each other with a view to finding a place together.

Move Back Home

This is not an option that is available for everyone for a number of reasons. It could a good temporary solution for some millennials. Moving back in with your parents could allow you time to reduce your accommodation cost and to recover financially. It should not be considered as a permanent solution.

Have you managed to reduce your accommodation costs recently? Which method did you use? Let me know in the comments section below.

If you have enjoyed this post you will also like the following posts:

How to Stop Impulse Buying – 10 Ways

Can You Live off a Cash Budget For a Week?

4 Credit Cards to Repair Your Credit Score

Take This Free Financial Literacy Course Today

Cryptocurrency Exchange: This is Why I Recommend DSX

How to Control Your Cashflow With a Bill Payment Schedule

How to Boost Your Income With a Temporary Christmas Job – 4 Examples

Credit Cards: How to Make Balance Transfers Work For You

Best regards,

Mike

4 Credit Cards to Repair Your Credit Score

Personal Finance: How Should You Prepare for Brexit?

This post may contain affiliate links please read our disclosure for more info.

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For those of you not living in the UK, Brexit is a word coined to mark the Great Britain’s intention to leave the European Union. This decision was the result of a national referendum in July 2016 in which the electorate voted to ‘Leave’ or ‘Remain.’ The United Kingdom was very divided; 52% voted in favour of leaving and 48% voted to remain. Those who voted to leave did so without any real understanding of the repercussions of such a decision; they were encouraged by politicians who were economical with the truth. Now in December 2018, UK inhabitants find themselves heading towards Brexit and what looks like a self-inflicted recession.

Businesses and consumers have been heavily impacted; consumers are not spending as much as they used to and business people lack of confidence about the future. Businesses are currently less likely to invest in new equipment or staff and according to the GFK consumer confidence Index the current score for the UK is – 13. To give that some context, in December 2015 the confidence index score was +2. Significantly 2015 was the first time the index had remained positive for an entire calendar year since records began in 1974.

Prepare For Brexit

From a personal finance perspective, how can you better prepare yourself for the reality of Brexit? Below I have listed 4 practical steps you can take that will help.

Revisit Your Budget

Take a look at your current monthly budget and re-evaluate all of your expenditure. If there are opportunities to cut back – take them. For example, a lot of people have unmetered water bills even though in many cases a metered water bill will work out cheaper; read this post for information, Water Bills: Are you Pouring Money Down the Plughole? There may be other opportunities for you to cutback.

Assess Your Employer & Job Stability

In financially challenging circumstances many companies suffer and some go into administration. In the UK, we have seen this with the demise of Maplin and Toy R Us.

The task for you is to dispassionately assess how well your employer is doing and how likely/unlikely it is that you be made redundant. Do not rely on any assurances from the management team at your company; do your own independent research. If you think that you could be made redundant save more money into your emergency fund.

Reduce Discretionary Expenditure

In personal finance circles, there is a lot of discussion around how much impact cutting out daily Lattes will have on the path toward better financial health. That’s a choice that you are best placed to make. However, what is sensible is to rein the dining out occasions and perhaps replace them with entertaining friends at home. Beyond entertaining, holidays are another area that you should review. Choosing a more cost effective destination or changing an international holiday to a UK based ‘staycation’ will give you greater financial comfort. Also, do not go overboard at Christmas.

Review All of Your Financial Products

Review all of your financial products including savings, mortgages, investments and pensions. Assess the impact on Brexit in each case and evaluate whether you should continue with your current provider. If appropriate, change to better performing products with other providers to maximise your returns.

How are you preparing financially for Brexit? Let me know in the comments section below.

If you have enjoyed this post you will also like the following posts:

Take This Free Financial Literacy Course Today

Cryptocurrency Exchange: This is Why I Recommend DSX

How to Control Your Cashflow With a Bill Payment Schedule

How to Boost Your Income With a Temporary Christmas Job – 4 Examples

Credit Cards: How to Make Balance Transfers Work For You

Should you Combine Pensions?

Save up to £300 per year by Changing Broadband Supplier

Best regards,

Mike

Cryptocurrency Exchange: This is Why I Recommend DSX

This post may contain affiliate links please read our disclosure for more info.

. This video is called, Cryptocurrency Exchange: Why I Recommend DSX by Mike Pitt.

If you have read this post, Has the Cryptocurrency Bubble Burst? you will be aware of the inherent volatility within cryptocurrency markets and also the tremendous investment opportunity presented by them. Even though fortunes have already been made by some we are still very much in the early stages of crypocurrencies. In August, I took the opportunity to research and review a UK based cryptocurrency Exchange called DSX. In this video*, I explain why I am happy to recommend DSX to those considering investing in cryptocurrencies.

Cryptocurrency Exchange

There are many cryptocurrency exchanges all around the world. A quick review of Coinmarketcap.com, shows that Binance is the biggest when compared by trading volume. However, trading volume is not the only consideration when comparing Cryptocurrency Exchanges. The fees charged for transactions, deposits and withdrawals are also very important. The more transactions that you execute the more fees you have to pay. DSX has low fees compared to other exchanges that I have used. I speak about this and other considerations in the video.

* This video was first published on my YouTube channel and some of the written content was originally published on my marketing website.

Have you invested in Cryptocurrencies? Are you considering investing? Let me know in the comments section below.

If you have enjoyed this post you will also like the following posts:

How to Control Your Cashflow With a Bill Payment Schedule

How to Boost Your Income With a Temporary Christmas Job – 4 Examples

Credit Cards: How to Make Balance Transfers Work For You

Should you Combine Pensions?

Save up to £300 per year by Changing Broadband Supplier

Investments: Why Saving is Not Enough

Water Bills: Are you Pouring Money down the Plughole?

Does Your Choice of Supermarket Matter?

Save up to £300 per year by Changing Broadband Supplier

Best regards,

Mike

Should you Combine Your Pensions?

This post may contain affiliate links please read our disclosure for more info.

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Over the course of your career, you are likely to move jobs and contribute to more than one pension. Keeping track of all your separate pensions and monitoring the relative performance can be a difficult task; there’s also the often complicated fees and charges to be taken into consideration too. It is no wonder that many working adults in the UK do not stay on top of their retirement planning in general and pensions in particular.

Your Pensions and Performance

When you have tracked down your pension pots, write to the pension providers and if necessary advise them of your new address. I add this point in because whenever I have lost track of a pension it is because pension providers have been sending the annual statements to an old address. You must notify them when you move house. Once your details have been verified, when you call your pension provider they will be able to give you a statement balance for your pension. Repeat this step for each of your pension pots. Ideally you will have the balance from previous years too. This will enable you to calculate which is your best performing pension.

Exit Charges

Once you have worked out which is your best performing pension it would be great if you could simply move all of your pensions into the best performing pension and go on to live happily ever after. Well, unfortunately it is not that simple, whilst most pension providers will usually let you add to an existing pension pot free of charge the same cannot be said ot exiting an existing pension plan. You are likely to face exit charges for exiting the pension plan early. Give your pension provider a call to find out the full extent of the charges that you will face if you exit the pension plan.

What Should You do?

After your research and phone calls, you will have a better understanding of whether it is a good idea to combine all of your pension pots into one. I cannot give a generic recommendation in this case. Please also consider the investment funds that your pensions are invested in on your behalf. You could have set them up with different risk profiles; keeping separate pension pots could be a smart way to diversify your pensions portfolio and reduce investment risk. At some point as you are evaluating your pensions and deciding what to do it would be sensible to consult an independent financial adviser.

Have you tracked down a lost pension pot recently ? Have you worked out which is the best performing pension? Let me know in the comments section below. There is no need to write any specific amounts!

If you have enjoyed this post you will also like the following posts:

Investments: Why Saving is Not Enough

Water Bills: Are you Pouring Money down the Plughole?

Does Your Choice of Supermarket Matter?

How to Stop Impulse Buying – 10 Ways

Have you Found all of Your Dormant Accounts?

Can you live off a Cash Budget for a Week?

Has the Cryptocurrency Bubble Burst?

Why you Should Drive and Old Car and Pay of Your Mortgage Early

Make Money By Being Part of a Focus Group

Best regards,

Mike

Investments: Why Saving is Not Enough

This post may contain affiliate links please read our disclosure for more info.

Image credit: https://www.bankrate.com/

In a few of my blog posts on this website I have reminded you of the importance of saving 20% of your income. Saving is vitally important to give yourself a platform to build towards financial freedom but saving on its own will not be enough. Let me explain, the current rates of interest offered by most financial institutions are relatively low, in most cases they are below 1.5%. This is lower than the current rate of inflation.

Saving into an account that offers this kind of interest rate will not magically produce a large lump sum or provide a regular passive income that will enable you to become financially free. Sadly even many pension funds built up during the working lives of adults in the UK will not deliver the levels of capital growth necessary. In addition to saving you will need to make investments; investments offer the chance for your money to grow significantly in the medium to long term. It is worth stating that investments usually have more risk attached to them; there are usually greater risks and potentially greater rewards.

Investments

Below I have listed several types of investment that could potentially move you closer to financial freedom. This is not an exhaustive list so I encourage you to do your own research to discover the investment approaches that are most appropriate for you.

Property

Property is my favourite type of investment here in the UK. The purchase of a Buy to Let property was until recently a very popular investment allowing investors to benefit from capital appreciation and rental yield. Changes in the tax relief that landlords can claim , introduced to dampen the buy to let market and create opportunities for first time buyers, are having their intended effect. It is now not as easy to set up profitable buy to lets.

For investors with less available capital, property crowdfunding is a way to join other investors and pool resources to invest in properties. Property Partner is an example of a crowdfunding property company that enables smaller investors to participate in property investment without having to buy a property outright. The returns from property crowdfunding are good and it is open to investors of all levels.

Stocks and Shares

By purchasing Shares, it is possible to invest directly in the performance of one particular company. Investors who hold shares in a number of companies refer to them as Stocks. Imagine if you had invested in Amazon or Apple in the early years, the return on your investment that you would have received would have been phenomenal. Investors can benefit from the increased stock price and dividends that the company might declare and distribute.

Unit Trusts and OEICs

Investing in one particular stock can work out well if the company does well but you could also lose all of your money if the company folds. A less risky approach is to use an investment fund to invest in a range of companies. The two most popular types of investment funds are Unit Trusts and OEICs. With a Unit Trust, you purchase units of a fund that is made up of the investments of many investors. This could be a tracker fund or an actively managed fund; a fund manager makes the investment decisions for the fund.

An OEIC is very similar to a Unit Trust except that the fund is run as a company and you purchase shares instead of units. Returns are paid through regular distributions, they could be quarterly or monthly dependent on what the fund guarantees.

Exchange Traded Funds (ETFs)

Exchange Traded Funds( ETFs ) are a relatively new investment product and are similar to Unit Trusts and OEICs in that they are open ended but the difference is that they are are listed on a Stock Exchange. They also include a wider variety of assets that Unit Trusts and OEICs.

Cryptocurrencies

Cryptocurrencies are easily the most volatile of all investments that I have included on this list. It is possible to both make or lose a fortune with cryptocurrency investments in the space of a few hours or days. Many professional investors including Warren Buffet do not consider cryptocurrencies a suitable investment and believe them to be little more than a gamble. However, blockchain technology which provides the platform for cryptocurrencies via its distributed ledger system, is here to stay. To read more about cryptocurrencies, read this post, Has the Cryptocurrency Bubble Burst?

If you have the stomach for it, and can afford to lose what you invest cryptocurrencies, most notably Bitcoin could provide the significant capital growth you will need for financial freedom. Despite what some professional investors thinks cryptocurrencies have made many new billionaires and millionaires in a short space of time.

What Should you Do?

Research the investments or investment approaches that appeal to you. Have you already made some investments? What type are they? Please let me know in the comments section below.

If you have enjoyed this post you will also like the following posts:

Water Bills: Are you Pouring Money down the Plughole?

Does Your Choice of Supermarket Matter?

How to Stop Impulse Buying – 10 Ways

Have you Found all of Your Dormant Accounts?

Can you live off a Cash Budget for a Week?

Has the Cryptocurrency Bubble Burst?

Why you Should Drive and Old Car and Pay of Your Mortgage Early

Make Money By Being Part of a Focus Group

Save Hundreds on Rent Per Month By Becoming a Property Guardian

4 Obstacles you Will Face on Your Financial Journey

Make Money Now With These Two Referral Apps

Have you got the Right Money Mindset?

Best regards,

Mike

Make Money By Being Part of a Focus Group

Has the Cryptocurrency Bubble Burst?

This post may contain affiliate links please read our disclosure for more info.

Image credit: https://smartereum.com/

Unless you have been living under a rock for the past ten years, you will have heard of cryptocurrencies. Cryptocurrencies are decentralised digital currencies based on blockchain technology; a cryptocurrency enables value to be transferred from point A to point B without an intermediary; traditionally your bank or a company such as PayPal would act as the intermediary.

The value transfer is validated via a distributed ledger. Blockchain technology, which provides the technological platform for cryptoocurrencies, has the potential to disrupt many industries in addition to the financial services sector. Most people outside of the sector, associate blockchain technology with cryptocurrencies and refer to Bitcoin when thinking about cryptocurrencies.

Cryptocurrencies: Origin and Development

Bitcoin was the first cryptocurrency created. It was created by Satoshi Nakamoto in January 2009, the identity and whereabouts of Satoshi remain one of Bitcoin’s mysteries but what is clear is that Bitcoin has disrupted the financial services industry ever since. Subsequently, many other cryptocurrencies have been introduced with Ethereum being one of the most significant. For more information about how cryptocurrencies work from a technological standpoint, read this article.

A new cryptocurrency is introduced to the market via an Initial Coin Offering (ICO), a fundraising exercise similar to Initial Public Offerings (IPO). These ICOs enable new companies to finance their blockchain technology based projects. The company’s founders and development team behind each project will write a whitepaper to explain their vision and plan. Potential investors research projects, read the respective whitepapers and invest in companies via ICOs. This website show’s the current market price for the hundreds of cryptocurrencies now in existence.

Cryptocurrencies as Investments

The success of ICOs and the emergence of Bitcoin millionaires attracted many individuals motivated purely by financial gain. Bitcoin, once priced at just a few cents in United States currency ( Pre 2012) experienced a rise in price up to $19,783.06 in December of 2017. It’s current price is $6,672.98.

In a lot of cases, ICOs were launched with no intention of delivering on a project, they were money making scams; the people behind them disappeared after the process. In recent years, the vast majority of new coins are worthless. Buying cryptocurrencies is akin to gambling at a casino or at betting on a horse. Extreme price volatility is standard as is the chance that the promising coin you bought with be worthless in 12 months.

Has the Cryptocurrency Bubble Burst?

Cryptocurrencies are here to stay, it is no coincidence that the start of the current bear market coincided with an influx of institutional investors trading bitcoin futures on the Chicago Board Options Exchange and the CME Group exchange from December 2017. Many of these professional investors began ‘shorting’ bitcoin. In layman’s terms, this means they bet on the price of bitcoin going down. Large financial institutions have now investments in bitcoin, it appears that cryptocurrencies are now part of the investment landscape; they are not in a bubble. Bitcoin and other cryptocurrencies have been down before and bounced back. My guess is that this will happen again and like many I hope to be in a position where I can capitalise.

What Should You do?

First of all, do your research and if you are still keen to buy cryptocurrencies, Coinbase is a relatively safe place to start. You can sign up for Coinbase here and because I referred you, when you sign up and buy or sell $100 of bitcoin or more, we’ll both earn $10 of free bitcoin!

Have you bought any cryptocurrencies? What has been your experience? Let me know in the comments section below.

If you have enjoyed this post you will also like the following posts:

Save Hundreds on Rent Per Month By Becoming a Property Guardian

4 Obstacles you Will Face on Your Financial Journey

Make Money Now With These Two Referral Apps

Have you got the Right Money Mindset?

What to do with a Financial Windfall

Why you Should Track Your Net Worth

Best regards,

Mike

Have you saved Enough into Your Pension?

Why you Should Track Your Net Worth

This post may contain affiliate links please read our disclosure for more info.

Image credit: http://www.astrapefinance.com/

I hope those you who did not already have a monthly household budget, have now had chance to create one. If not, this post will help you, How to Create a Budget That you can Stick to. One stage on from creating a monthly budget is to create another simple spreadsheet that records your total net worth.

Calculating Your Net Worth

Net Worth can be defined as the sum of all of your assets minus your liabilities. For many of you, the thought of creating a spreadsheet with all your assets and liabilities recorded in one place might fill you with dread. If you have large student loans or credit card debts, recording your total amount of liabilities and assets might be a painful process. However, this is a necessary step to track your net worth.

Your personal net worth looks at the bigger picture, it’s not just your monthly income and outgoings. You also get the opportunity to track all of your assets as well as your liabilities. Assets include properties, savings, investment accounts, stocks and shares and businesses owned where applicable; liabilities include, mortgages, student loans, credit card debts and loans.

For the sake of simplicity it is acceptable to leave out all regular monthly expenses that are paid out of your monthly salary or wage. When thinking about net worth I always remember a quote attributed to the mathematician, Karl Pearson.

“That which is measured improves. That which is measured and reported improves exponentially.”

Karl Pearson

Improvements to Your Net Worth

This is exactly why we are doing this! Your net worth will improve. When you complete your first total net worth tracker spreadsheet, it will take some time. By the way, feel free to think of a more exciting title than Total Net Worth Tracker Spreadsheet. 🙂

When you come to update it after a month, unless you have suffered some financial calamity, your total net worth will have increased. For example, if you have made payments to student loans and or credit cards, their totals will come down slightly and your net worth will have gone up. If you are like me, you will find this incredibly motivating! As an aside, do not compare yourself to others, just track your own progress. In time, deficits will turn into surpluses. Money that was originally to pay debts can be diverted into savings accounts when those debts have been paid. Tracking your net worth is an excellent habit and will help you to transform your finances.

What Should you do Now?

Create your total net worth spreadsheet and update it each month. Here’s a downloadable spreadsheet that you can use.

Are you already tracking your net worth ? If so, what has been the improvement in the last 12 months? Let me know in the comments section below.

If you have enjoyed this post you will also like the following posts:

Are you and Your Partner Financially Compatible?

Why Choose a Gold IRA?

What are the Best Savings Accounts for Children?

How to Teach Your Children About Money

How to get Value for Money When Buying Foreign Currency

Save up to £500 Per Year With a Sim Only Mobile Phone Deal

How Much Should You Save?

10 Ways to Make Money Now

What are the Different Types of Savings Accounts?

Best regards,

Mike

Are you and Your Partner Financially Compatible?

Have you Saved Enough into Your Pension?

This post may contain affiliate links please read our disclosure for more info.

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Have you saved enough into your pension? For a large proportion of the United Kingdom population the answer is no. Most people are not saving enough for their retirement. Does your vision of retirement include freedom to travel and time to enjoy a comfortable standard of living? If we all to have the retirement that we aspire to one day, we will need to make sure that we are on track to achieve it. It is time to get serious and work out how much that will cost.

Pensions: Why Many People Are Failing

There are a lot of assumptions built into pension calculations, assumptions that are not true for many people. For example, the assumption that you will work 40 years of continuous employment with your salary continually increasing by X% and you maintaining your pension contributions at 12% of your salary for 40 years. Some of the realities of life such as redundancies, women taking time out to raise a family, individuals starting businesses, part time work, time out for studying and credit credit or student loan debts don’t exist in this Continuous Pension Saving Utopia.

I think when people realise that they are not on track to hit their pension goal, they give up and hope someone other than themselves will solve the problem. Let me be more specific, if you would like to live on a retired income of £25,000 you will need to have a pension pot of £500,000. That is assuming that you use your pension pot to purchase an annuity giving you the annual income of £25,000. Try this pension calculator to work out how much you would need at other income levels. As you can appreciate, £500,000 is a large amount especially when it’s considered that the average pension pot in the UK is around £50,000.

What Should you do Now?

Pension Pot

Work out the total pension pot you currently have, if you have had several jobs during your career you may need to do a little detective work to track down all of your workplace pensions. This article will help you find your pensions.

Up Your Contributions

Re-evaluate your household budget, can you afford to increase your contributions? If you are in a workplace pension then you should maximise the contributions that you make because these will be matched by your employer. If you are self employed, you should also increase your contributions.

Develop a Plan B

It may be that increasing your pension contributions alone will not be enough for you create a big enough pension pot for retirement. If that is the case, you should develop a Plan B.

Property is a great way to supplement your pension savings, you could downsize your main residence and use the profit for your retirement. Alternatively, you could rent out a spare room and earn extra income that way. There are other ways too, they include equity release and property investing. You can read more about these ways via this link.

If you own a business, this could become your Plan B. Depending on the nature of your business, you may be able to sell it and contribute money to your pension savings after the sale.

Don’t Lose Heart

The fact that you are reading an article like this is a positive in itself. You still have time to improve your level of preparedness for retirement and there are a number of ways you can do so.

Are you on track with your pension savings? If not, what are you going to do about it? Let me know in the comments section below.

If you have enjoyed this post you will also like the following posts:

Why Choose a Gold IRA?

What are the Best Savings Accounts for Children?

How to Teach Your Children About Money

How to get Value for Money When Buying Foreign Currency

Save up to £500 Per Year With a Sim Only Mobile Phone Deal

How Much Should You Save?

10 Ways to Make Money Now

What are the Different Types of Savings Accounts?

Best regards,

Mike

What are the Best Savings Accounts for Children?

Are you and Your Partner Financially Compatible?

This post may contain affiliate links please read our disclosure for more info.

Image credit: http://thepayoffprinciple.com

If you are going to be successful and achieve your financial goals you will need to face up to obstacles head on rather than wait and hope that they disappear of their own accord; usually, they do not disappear of their own accord. Are you financially compatible with your partner?

First of all, a quick definition, when I use the use the term financially compatible, I mean to share the same financial goals, vision and habits. Are you both saving regularly and maximising investment returns? Is your discretionary expenditure linked to value for money? I do not mean that you need to be earning the same salary. It is great if you are but it is not essential for financial compatibility. The key word in this context is together, ideally you need to be able to plan your financial future together and work towards it. This could mean saving to buy a home, a goal of becoming debt free or financial freedom (retirement) at an early age.

Financial literacy is not a skill-set everyone has, some are willing to learn whereas others are more interested in living for the moment instead of having a financial plan. Not everyone approaches personal finance and their financial responsibilities in the same way.

Are You Financially Compatible?

Disagreements over money remains one of most common causes of divorce. If one person is a disciplined, lifelong saver and the other is frivolous with money, there will be friction between the two. In my opinion, if these differences are entrenched there is no chance of achieving your financial goals together. It does not seem very romantic to consider a partner’s financial compatibility when you are just getting to know them but if you don’t, you could be storing up problems for yourself later on. Hopefully, if you are in a relationship you have already taken an opportunity to discuss money with your partner.

Depending on your starting point, following a budget for a prolonged period can be hard work. To achieve financial freedom for example, you and your partner will need to work as a team and to be consistent. You need to be in alignment.

Create a Financial Plan Together

If there are only slight differences between you then thankfully, with a calm approach, compromises can be agreed upon.

If that is the case, the following steps will help:

Arrange to have regular money meetings with your partner; during these meetings discuss financial goals and budgeting and agree a way forward.
If one of you is the natural saver, take the lead in these meetings but be careful to avoid being judgemental.
Build in quick wins on your financial journey together, this could be paying off a credit card with a low balance or saving for a planned weekend away.
Allow yourself small celebrations when you hit your financial milestones, be creative with these and do not spend a lot of money on them.

By working together you will dramatically improve your financial health and you will strengthen your relationship. Well done! Your future is looking bright.

Have you sat down with your partner and discussed finances? How did the conversation go? Let me know in the comments section below.

If you have enjoyed this post you will also like the following posts:

Why Choose a Gold IRA?

How to Teach Your Children About Money

How to get Value for Money When Buying Foreign Currency

Save up to £500 Per Year With a Sim Only Mobile Phone Deal

How Much Should You Save?

10 Ways to Make Money Now