I have a bad relationship with money. I made mistakes when I was much younger, stupid things like taking out a credit card with a £5,000 limiter at aged 18, solely because the company offered it to me. I didn’t need it and I didn’t have the financial literacy or maturity to handle it properly. Needless to say, within about 18 months I’d maxed it out. It took me a long time to pay off what took momentary bad decisions to spend.
I went on to make a host of other mistakes over the years and it’s only now I have children that I’ve taken my finances more seriously. I used to bury my head in the sand, part of me was so defeatist it didn’t even make sense for me to try to clear up my financial situation. I was so certain I had no chance of thriving so there was no point.
Luckily, I have a very different mindset now and have spent a lot of energy teaching my daughters to financial lessons I learnt the hard way. They are both brilliant at saving, very savvy about making decisions and no where near the impulsive buyer their mum used to be. If you, like me, have found yourself in need of tackling your finances, I’m here to offer some advice on some first steps to creating financial freedom.
I must make it clear, I’m not a financial advisor, I’m giving my own opinion on what can work based on my experience and research. If you would like professional debt help, there are many organisations out there who specialise in financial advice such as www.citizensadvice.org.uk and www.stepchange.org
What's in this post
Keep a diary of what you currently spend
It sounds simple right? But many of us don’t actually know how we actually spend our money. By writing down everything and I mean everything you spend money on over a month it can be really illuminating. I’m not suggesting you do this to guilt or shame yourself into not spending more but if you have a clear idea of what it is you’re spending it makes it much easier to make a plan and prioritise how and why you spend your hard earned money.
For me, I realised I had quite a few subscriptions that I didn’t really need anymore. They were for small amounts, the odd £10.99 here and there but it soon added up considerably. What’s more, it turned out my partner and I were paying for the same subscriptions! Did we really need two Amazon Prime accounts for the one house? Spotify and Apple Music? It’s only by going through our spend like this that we realised there were many areas where we could make really simple savings.
Check if you can get a better deal on utilities and other fixed bills (phone, broadband etc)
Do you have Sky and all the add ons? Still paying for the kids package even though they don’t watch those channels anymore? It’s time to look through your fixed bills and see if you can get a better deal by either swapping providers or talking to your current ones and getting a new package.
We use comparison sites such as comparethemarket.com or moneysupermarket.com to make sure we’re getting the best deals on everything from car insurance to our electricity bill. If you don’t want to swap providers, it’s still worth talking to them (even pretending that you’re wanting to leave!) as they will normally offer you reduced packages to keep you as a loyal customer. I tried to cancel quite a few subscriptions this past couple of months and each provider did just that, cut their fees dramatically to try and entice me to stay!
Decide if your ‘necessities’ are really necessary
It’s funny what we become used to as a necessity when in reality it’s probably just a nice to have. Before lockdown, I’d have sworn I needed to have coffee every day, particularly a takeaway one on the way into work. I spent quite a lot on takeaways and ate out nearly every lunch time. Yet, I went months without any of these things and now that I can go back to that routine it turns out I don’t want to.
Review your subscriptions and items you might treat yourself to. Can you swap to other companies or brands? There’ll be some things that you will see as a hard stop and won’t want to substitute and that’s cool, just figure out what that looks like for you.
Open a savings account or savings pot and pay yourself
Separate your money. There are so many ways you can do this so it’s fine to experiment and figure out what method works for you. It might be that you draw money out on payday and put it into a savings account or physically pull it out of the ATM and keep it in a jar somewhere, whatever you choose, put your savings away separately from your disposable income. I have a friend who pulls out his ‘spending money’ for the month and then doesn’t go near his account for the rest of the month as everything else in there is either for bills or to be saved.
Personally, I’d recommend whatever method you choose, put your savings away when you get paid, don’t wait to see how much you have left at the end of the month as it’s giving you the opportunity to dip into what would otherwise have been saved.
Really important one. Be kind to yourself, it didn’t happen over night and you won’t fix it overnight. Set realistic comfortable goals
If you have debts, speak to the debtors and see if you can arrange payment plans. Seek professional help, it’s free and they can help you make sense of your debts and explain things in more detail.
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