Tag: United Kingdom

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

Save Hundreds on Rent Per Month By Becoming a Property Guardian

4 Obstacles you Will Face on Your Financial Journey

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

How to Stop Emotional Spending

Investments: Why Saving is Not Enough

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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?

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

Save Hundreds on Rent Per Month By Becoming a Property Guardian

4 Obstacles you Will Face on Your Financial Journey

Best regards,

Mike

Water Bills: Are you Pouring Money down the Plughole?

How to Stop Emotional Spending

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

In my recent post, How to Stop Impulse Buying -10 Ways, one of the causes of Impulse Buying that I discussed was emotional spending. It is a topic that deserves even more attention and is the focus for this blog post. A survey conducted by MoneySupermarket and Mindlab found that 57% of respondents had ‘regretted purchases made whilst feeling overly emotional.’ It is clear that spending as a consequence or our emotional state is clearly widespread. The survey also confirmed that negative emotions rather than happiness were more likely to increase our spending. Given this insight, ‘comfort spending’ could be considered as very similar to ‘comfort eating’. If your objective is to take control of your finances and move towards financial freedom, you will need to stop emotional spending.

Stop Emotional Spending

The first step towards a solution is to identify why you are spending emotionally.

Work

Recognise the triggers or patterns that precede an emotional purchase. Is it after a bad day at work? According to research conducted by CV library 55.6% of British employees are unhappy with the jobs that are currently doing and would love to change. If you have experience of a feeling that could be described as Sunday Evening Dread or often find yourself wishing your week days away, this 55.6% could include you. Clearly, there is a lot of dissatisfaction around, work is a common trigger for emotional spending.

Relationships

Have you had an argument with your partner prior to going shopping? Is there a subject that you are regularly disagreeing over? Relationship issues and arguments are strong triggers to emotional spending. Significantly, money is often a cause of arguments in relationships.

Boredom

Boredom can also be a cause of emotional spending, especially if accompanied by a general questioning of one’s life. Sometimes life can seem dull, an endless succession of bills to pay or work to be done. It is in a mood like this that someone is more likely to chase the Dopamine high that a shopping spree can deliver.

There are many other scenarios which make emotional spending more likely including bereavement. Consider your life and identify those that apply to you.

Action: What Should you do?

Talk

The first step you should take is to talk to someone about your emotional spending, it could be a friend or a family member. If you feel it would be worthwhile speaking to a professional about it The National Debtline or Citizens Advice would be a great places to start.

Break the Habit

Now that you know the triggers that precede emotional spending in your life, focus on creating different reactions to the same circumstances. Those circumstances will come again but this time you will react to them differently. Without knowing you personally it would be impossible for me to suggest the best solution for you but the activities listed below are likely to prove beneficial.

*Taking regular exercise

*Going to walks in natural surroundings

* Watching Stand-up comedians

*Socialising with close friends (without spending a lot)

If your unhappiness or other problems persist, definitely speak to a professional counsellor; if necessary plan significant life changes such as a change of job, the ending a relationship or a move to a new location. Do not just accept being unhappy on an ongoing basis.

Can you remember occasions when you have made purchases because of your emotional state? Did you ever have the courage to take the items back? Please let me know in the comments section below.

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

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

Save Hundreds on Rent Per Month By Becoming a Property Guardian

4 Obstacles you Will Face on Your Financial Journey

Best regards,

Mike

Water Bills: Are you Pouring Money Down the Plughole?

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

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

I am convinced that the water supply companies are no more virtuous than gas and electricity suppliers. If you have read my post of a couple of weeks ago, entitled Save Money by Switching Energy Supplier Every Year you will know that my recommendation is to review your energy supplier every year and then visit a comparison website. Your objective is to switch to the best value for money deal available for your post code.

Unfortunately, you cannot do the same with your water supplier. The water supply industry has not been deregulated in the way that gas and electricity has. What does this mean? The water supply companies have localised monopolies and consumers can do nothing about it. For example, I cannot change my water supplier; Thames Water will remain my supplier whether I like it or not.

What can you do?

Install a Meter

If you have been paying water bills as unmetered charges, the chances are that you will save money by switching to a metered bill. Visit the website of your supplier and request that a meter is installed to track your actual water usage. Water companies should inform you that you would benefit from having a meter installed but in many cases they do not. If a meter cannot be fitted you will get an assessed bill.

Reduce Your Water Usage

Below are a list of simple steps that you can take to reduce your water usage:

Limit the amount of time everyone takes having a shower. Shorter showers will mean less usage.

Avoid taking baths for the same reason.

If you have a dishwasher, ensure that you only use it with a full load. If you still wash up by hand, do so once a day with a sink full rather than several times a day.

Limit the amount of washing machine loads you wash per day and per week. Ensure that you wash full loads only.

Clean your car with a waterless instant shine cleaning product like this one, instead of using buckets of water and soap. Click on the text in red to be taken to an example.

Collect rain water in a water butt and use that ( and a watering can) to water your plants rather than using a hose pipe.

Avoid using a hosepipe in any scenario.

In the bathroom, avoid running taps when shaving or brushing your teeth.

Store cold tap water in the fridge rather than running a tap until it’s cold enough to drink.

If you have any leaky taps or shower heads, fix them.

Using a combination of these methods will definitely reduce your water usage and bill without you having to make any major changes to your lifestyle. Please take action today and let me know how you get on.

Are you already taking steps to reduce your water usage? Have you discovered any other ways? Please let me know in the comments section below.

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

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

Save Hundreds on Rent Per Month By Becoming a Property Guardian

4 Obstacles you Will Face on Your Financial Journey

Best regards,

Mike

How to Stick to Your Budget During Summer: 5 Tips

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Image credit: https://www.peakretreats.co.uk/

‘Summertime, and the living is easy...’ are the words of DuBose Heyward, he wrote the lyrics and George Gershwin wrote the music for the famous song from the opera Porgy and Bess in 1935. The song has been performed all around the world by thousands of musicians. Summertime can indeed be a wonderful time; better weather brings more opportunities to have fun, more day trips and other leisure activities either close to home or whilst on holiday (vacation). All of this having fun and leisure time can put household budgets under enormous pressure and it is no surprise that so many budgets fall by the wayside during the summer months. It does not have to be this way, below I have listed 5 budget friendly ways to keep yourself on track financially during the summer months.

Stick to Your Financial Goals During Summer

Forward Planning

Time that you take off work for a holiday and your children’s summer holidays from school are predictable events; you know that they are going to happen so you can plan for them and prepare. Ensure that you save for your cost of your holiday and spending money months in advance. Your holiday savings can form part of the 20 % that I wrote about in this post, How Much Should You Save? In taking this approach, you will minimise the financial impact of your holiday. Don’t forget to save for the additional day trips and activities that you will also do at home too. The summer is longer than your holiday in most cases.

Booking in Advance

In nearly all instances, booking in advance will enable you to access discounts and special offers that will enable you to keep costs as low as possible. Contrast that with trying to book hotels, flights and activities at peak time when the costs will be much higher. Make your money go further by booking earlier.

Take Picnics Rather than Relying on Restaurants

Buy yourself a picnic basket like this one, and then get in to the habit of making food for your family the night before day trips. This is a great way of keeping a lid on expenditure; it also means that you will be able to eat exactly when you want rather than having to wait for space to become available at a restaurant or cafe. Queuing for a popular restaurant is not fun, you will be able to avoid that entirely.

Filling up Your Tank

If you are going to visit a major attraction such as a theme park, fill up your car at a local petrol station rather than one on the motorway. Motorway service stations are always much more expensive than filling up at your local supermarket petrol station.

Cash Budgeting at Theme Parks and Funfairs

Theme parks or funfairs often have lots of different rides or attractions for you and your family to choose from, If all rides are included in the admission price feel free to experience as many as you can fit it during the time that you have available. However, some places that you visit will have individual costs for each ride; in this instance its very easy to spend a lot of money very quickly. The best approach is to set a mini budget for your children or yourself, you could allow them to choose 3 or 4 rides for example.

By following these tips, you’ll find that you are aren’t having any less fun than if you hadn’t applied the brakes to your expenditure. The difference is that this time you will not have any guilt as a result of overspending. It just takes a little thought and preparation but is totally achievable.

How do you prepare financially for the summer months? What steps have you taken to stick to your budget during summertime? Please let me know in the comments section below.

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

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

Save Hundreds on Rent Per Month By Becoming a Property Guardian

4 Obstacles you Will Face on Your Financial Journey

Best regards,

Mike

Does Your Choice of Supermarket Matter?

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Image credit: http://www.goodhousekeeping.co.uk/

Groceries are a necessity for life but it must be remembered that not all supermarkets are created equal in terms of value for money. Convenience is also an important factor when it comes to selecting a supermarket; you are more likely to shop at a supermarket that is easy for you to get to, particularly if you plan on going there on foot. If you are driving you’ll pick a supermarket with a car park over one that requires you to find an available parking meter. This is an entirely natural way of choosing a supermarket and is to be expected. However, if you have financial goals to achieve you should recognise that your choice of supermarket is a huge opportunity to make regular savings and achieve your financial goals more quickly.

Supermarket Choice

Luckily for us we don’t have to guess which is the cheapest supermarket. Food retailer trade magazine, The Grocer regularly conducts secret shopper research to confirm where you should go to buy the cheapest groceries. According to their data, Aldi is the cheapest supermarket. When you click on the link in red text you will see that they have compared supermarkets for a range of everyday items and Aldi has come out on top because the basket of items wash cheapest there.

What Should you do?

If you have an Aldi near where you live, choose Aldi for your grocery shopping from now on. If there is not an Aldi near you, choose Asda because Asda was number two on the list. At the risk of sounding like a grocery shopping geek, when I made this change to my regular choice of supermarket I was saving 30-40% on my regular items when compared to Tesco, for example. I did have to change my routine to make this change, I had to drive slightly further to visit the nearest Aldi but even when I factored the additional petrol cost, Aldi was still a clear winner. The change I made was not a big deal and amounted to an extra five minutes in the car.

In an earlier post on this blog I asked the question, Do you have the Right Money Mindset? Small behavioural changes like driving a bit further to a cheaper supermarket can create more abundance in your life. It is so simple to do and yet most people do not do it. Instead the continue to shop at the most conveniently located supermarket despite the fact that it costs them more. Which type of consumer do you want to be? A frugal one who is intentional about their purchasing decisions or someone who regularly spends more than they need to on groceries?

Have you changed your choice of supermarket to take advantage of lower prices? If so, what has the money that you saved allowed you to do? Please let me know in the comments section below.

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

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

Save Hundreds on Rent Per Month By Becoming a Property Guardian

4 Obstacles you Will Face on Your Financial Journey

Best regards,

Mike

Save Money By Switching Energy Supplier Every Year

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

Image credit: https://banglamirrornews.com

For most people, the prospect of assessing the best deals amongst energy suppliers is not exciting. It is necessary for us to choose a supplier for electricity and gas but I imagine most people spend as little time as possible thinking about it. This is exactly what the large energy suppliers want us to do, of course. Their strategy is to capitalise on our inertia or lack of interest to keep us as customers when we would be better off finding a great deal with one of their competitors.

Switching Energy Suppliers

Typically what happens is this, we are attracted by a good 12 month deal advertised online and sign up for it. When the initial 12 months are over, we have become accustomed to logging in to a particular account and receiving communication from one company. As the renewal date approached our existing supplier offers us a chance to renew with their ‘best offer’ for you. In most cases, this best offer is not a good deal and the price will rise if you accept it. Many people do accept it because it seems convenient.

What Should you do?

When you receive your pending renewal communication from your existing supplier, make a note of amount of your current direct debit and energy usage for electricity and/or gas and visit a comparison website. I went through this process yesterday, as I do each year, the website I used for comparison is called uSwitch, you could also try moneysupermarket.com. Allow yourself around 10 minutes to input some details about your existing supplier and contract and then the website will present you with the best choices for your energy supply and you can select one. My selection of new supplier meant that I will save £110 on my energy usage over the next 12 months.

Most people I have spoken to about this are aware of these websites but do not make a habit of visiting them each year. This is exactly what you should do to the best value for money deals. The same also applies for other categories including car insurance and home insurance.

The comparison websites I have highlighted are based in the UK because I live in the UK. If you live in another part of the world please use similar comparison websites to achieve the same results. I would be interested to know some of those websites and which country they relate to, you can let me know in the comments section below. Also, have you recently changed energy supplier? Let me know below.

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

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

Save Hundreds on Rent Per Month By Becoming a Property Guardian

4 Obstacles you Will Face on Your Financial Journey

Best regards,

Mike

How to Stop Impulse Buying – 10 Ways

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According to research conducted in 2016, 54% of Britons admit to making an impulse purchase every time they go shopping. Impulse buying is a big problem that results in many losing control of their financial affairs and failing to stick to their budget. Consumers impulse buy both in-store and online, with in-store customers being more susceptible to impulse purchases. Retailers have accumulated their own data and design their stores to encourage buying on impulse; the more this happens, the greater the profits for them. What can we do to eradicate impulse purchases from our monthly expenditure? I have listed some very effective ways below.

Impulse Buying

Keep a Budget

Once you have identified your financial goals, the best method to move forward towards achieving your goals is to keep a monthly budget. If you have not already set up a budget, this post will help you, How to Create a Budget That you can Stick To. Budgets make you become more intentional about all of your expenditure and leave little room for impulse buys. Ensure that you look at your budget frequently; be disciplined and you should be able to resist impulse purchases.

Follow a Cash Budget

One step up from a regular monthly budget is a cash budget, following a cash budget will give you further daily reminders of what you intend your cash to be used for. Resist the temptation to take from one of your envelopes to fund an impulse purchase. Stay focused.

Keep a Spending Diary

For a period of a month, write down every purchase you make, there is no need to include bills. Be accurate and include morning coffees and snacks etc. After the month is over analyse your spending to identify any weak areas. Are there regular times when you are more prone to impulse buys? Is it when you are bored? Have you looked around shops during your lunch hour and succumbed to a purchase?

Work out Why you Impulse Buy

What are the circumstances that lead to impulse purchases in your life? Is it when you are feeling a bit low? Or lonely? When you have received some bad news? Or had a particularly tough day at work? Perhaps after you’ve had an argument with your partner? Only you will know the answers to these questions. If you need to talk to someone confidentially about the amount of impulse purchases you are making you can contact The National Debtline or Citizens Advice. Click on the words to be taken to their websites.

Make a List Before you Shop

Make a list of items that you intend to buy before shopping online or in-store. Use retailers websites to get a good understanding of where you can buy the items you need and the best prices for those items. If you can purchase cheaply online, do so. For some items, fruit and vegetables are a good example, it may make sense to visit a store and then make you planned purchases. Having a physical list will help keep you on track and avoid impulse buys .

Introduce a 48 Hour Rule

If you spot something that you would like to buy, but it is not a planned purchase, force yourself to wait 48 hours before purchasing it. This is assuming that you can afford to buy the item and will not have to use money that is already allocated for something else. The self imposed 48 hour ‘cooling off ‘period will allow you time to think about whether you really should make the purchase. Take the time to think about whether you need or only want the purchase. Realistically how much would you use the new item?

Don’t Set up One Click Ordering

Do not set up one click ordering on websites, websites offer this convenience because they know that it will result in more sales for them and increased profits. We have all been in the situation where we are about to leave a website and are then presented with a ‘special offer’ that we can order with one click. This ‘convenience’ can prove very inconvenient when it comes time to reconcile our budget.

Do Not Browse

Do not browse in shopping centres or on retailer websites, only visit if you have something specific to buy. This simple step will cut down the amount of temptation that you face.

Do not Routinely Carry all of Your Credit cards

Carrying all of your credit cards in your wallet or purse every day increases the chance that you will make an impulse buy. This is because the increased access to funds can prove a very strong temptation to many. Leaving them at home in a safe place is much better approach if you are trying to curb impulse purchases.

Convert Your Potential Purchase into Hours of Work

Think about how long it takes to earn enough money to purchase the item, if you earn £30 per hour and you are considering a new pair of shoes for £150 consider whether they are really worth 5 hours of work. How many pairs of shoes have you got already? If your money is limited, also consider the opportunity cost of the shoes. In other words, what will you have to sacrifice in order to be able to buy the shoes.

You don’t have to implement all of these methods to eradicate impulse purchases. Think of this list as a menu and pick those tactics that will be most effective for you.

Monitor your own progress in the weeks ahead. Do you have a problem with impulse buying? Let me know in the comments section below.

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

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

Save Hundreds on Rent Per Month By Becoming a Property Guardian

4 Obstacles you Will Face on Your Financial Journey

Best regards,

Mike

Can you live off a Cash Budget for a Week?

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

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

The next stage up from following a monthly budget is living off a cash budget for a week or a month. If you are not already following a monthly budget, please read this post, How to Create a Budget That you can Stick to; that post will help you create your monthly budget. For those of you already following a monthly budget, the cash budget could be for you. Following a cash budget will enable you to make further financial gains.

What is a Cash Budget?

Each month you receive your salary or pay cheque, when you do you should pay all of your bills and account for your needs. There will be money left over that you allocate to discretionary spending; items such as groceries and entertainment will fall into this category. For each of these items of expenditure you are going to withdraw the money from your account and place the money in an envelope. For example, if you have allocated £200 for entertainment during the month, you must place £200 in the entertainment envelope. Once that entertainment envelope is empty, you have run out of money for entertainment until next month. The same applies for all the other sub categories.

The Benefits of a Cash Budget

The beauty of the cash budget system is that you will physically see how much you spend on different items of expenditure. Compare that to contactless payments with plastic cards and no receipts, a scenario that makes it so easy to lose track. When you are living with a cash budget, do not steal from one envelope to make up for a shortfall in another. Your envelopes will become emptier as the month progresses; you might find that you are spending a lot on entertainment, groceries or lunches at work.

If you are disciplined, the cash budget system will make you more intentional about everything you spend your money on. This will mean greater control of your finances, which in turn will mean that you improve your net worth and achieve your financial goals more quickly.

It may be that you need to make more money, if that is the case the ideas contained in this post will help you, 10 Ways to Make Money Now.

What if you Have Money Left Over?

If you have money left over in some sub categories and shortfalls in others, you may need to re-visit your monthly budget and make some changes. If you have money left over and no shortfalls it would be advisable to increase the amount that you are saving.

The ideal scenario is for your first experience with a cash budget to be a positive one and for a new habit to be created. Research has confirmed that paying with cash will make you more conscious of every expenditure. Many people have attributed their success in paying off debts and achieving savings targets to the fact that they have used a cash budget.

Your Challenge

Your challenge, should you choose to accept it, is to live off a cash budget for one week. Split your money into budgets for the different sub categories and then live out of the envelopes on a day to day basis. I would love to hear about any progress that you make. Also, feel free to tell me about anything you found particularly difficult and how the overall process made you feel about your personal finances.

Let me know in the comments section below.

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

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

Save Hundreds on Rent Per Month By Becoming a Property Guardian

4 Obstacles you Will Face on Your Financial Journey

Best regards,

Mike