Ever wondered why, no matter how much you earn, there is never enough for you?
Well I am going to explain that today.
It’s funny, once we set up a standing order or a direct debt, we kind of forget about it.
What we actually spend half our money on is what I like to call “essentials” water, food and shelter.
Once we have set up that direct debit for our mortgage or rent.
We come home, transport ourselves somehow magically. Lay our heads down knowing we have somewhere warm and dry to sleep, somewhere to wash ourselves, wash our clothes, cook a nice dinner, even plug in our phone to charge.
Yes that does take up about half our money, 50%.
Personally I think it is a good investment, but I do my best to keep the costs down.
In America, that is one of the reasons for ‘Tiny Houses’ where people say no, I don’t want to spend that money on housing, I want to spend it on travel and technology, but it is your choice.
What about the rest of our money?
Well on one hand, half of that, 25% goes on debt payments or savings, depending on your personality.
The other half, 25%, goes on things we get really excited about.
I am talking days out, I am talking delicious food, I am talking getting together with the family, birthday presents, Christmas, holidays, even just a decent phone.
And we are not even talking vices, wine, chocolate, smoking, or whatever else you do?
Maybe that explains why, no matter what you do, this is only 25% of your after tax income.
That’s why it never seems to stretch as far as you hope it will!
So hopefully that answers the question, where does your money go?
If you would like some help, message me on Facebook, or book one of my workshops on Money Mastery.
An interesting question, that I have had lots of questions on this week, so I thought I would do a blog on it.
It is not just saving money we resist, but we resist change generally.
We are really happy in our comfort zones.
It takes a lot to get us out of those and in to doing something new.
For example, I was really happy paying £30 a month for my mobile phone and have done so for many years, more than 10 years. It was only when I started paying £38 for my new iphone, I was bit uncomfortable.
Then a friend said to me, she only pays £5 and I was “she is tights”, she’s not.
Or “she probably doesn’t have data” she does.
Instantly, I didn’t want to admit that maybe I could have got a better deal and it was my loss and not hers.
It wasn’t till I lost the signal on my mobile phone and couldn’t hear people, that I actually did something about it!
Even noticing they charged me twice for one month didn’t do it.
In less than an hour, I have managed, with the same supplier to get a better deal, improve the quality of the call, for more data, text and calls that I have ever used for £5 a month. I was amazed.
Not just that, I got £60 refund, which effectively meant the first year was free.
A few years later, I am still paying £5 a month, saving £300 per year.
I haven’t had to review it every year, which is always nice but I realised other people are missing out.
I wanted to let people know that it is possible with the internet changing so fast, to save 100’s of pounds on those bills, you think you have to pay, as opposed to those things you want to pay.
So my challenge to you “How much can you save?”
I would love to hear how much you have saved.
I also know you need to be moved from that state of comfort to discomfort, in order to have it happen!
So I have scheduled a workshop in 3 weeks time, on Saturday 15th July.
If you haven’t saved at least £100 by then, come to the workshop.
Is there anything I need to do with my business before the end of the tax year on 5th April 2017? (UK)
Now this is the time of year accountants and financial advisersget very excited, they are also quite often busy.
It is all to do with Tax Allowances, which I know sounds really boring but it is essentially the government’s way of encouraging us to do things , like savings and pensions and other things like that.
So before you glaze over and switch off. I have made it as simple as possible. So you can start your journey of understanding these things, because they are important and will provide for your financial future.
Let’s face it, most of us don’t get up in the morning going yeah! Let’s sort out our savings and pensions and tax allowances, how exciting!
So simple, so clear, let’s go.
If you bring home to you, less than £11,000, from all your jobs and businesses. That’s £11,000.
Here are my suggestions to consider.
Putting some money in an emergency savings account – you know it is important, well now is the time to create or add to your emergency savings.
To check your eligibility for the state pension, before you go ‘nooo, not relevant’ and dismiss it.
You only need 30 years of national insurance now to be eligible and if you are self-employed, it is actually a really good investment.
One they are probably going to change in a few years, so worth looking at this year.
This is the one thing I recommend you do – get a statement from the government on where you are with your state pension. click here to apply
So check out your state pension as it is a very good investment particularly when you are self-employed.
Married Couples Allowance
I know it sounds archaic but was brought in by David Cameron and not of lot of people know about it.
It will give you £220 a year, so worth considering. You can just apply online.
You are eligible if one partner is earning less than £11,000 and one partner is earning over £11,000.
mainly I focus with Money Coaching on bringing money in,
so when someone brings up debt half way through a session, I know it is probably a little more serious than they are letting on,
so I recommend taking dramatic action.
My 2 steps are:
Firstly: Dramatically, drastically reduce all your expenses
This does involve having really horrible, embarrassing conversations with people, about getting out of things you have committed to, that are awkward and emotionally yuck.
Remember that yucky feeling is what will stop you going into debt again. Breathe.
I did say they were dramatic.
Secondly: Get a part time job
All my clients are in business and we try and get a quick win on their business or schedule a follow up session.
The reality is sometimes businesses go through peaks and troughs or they just take longer to make money that you expect so getting a part time job does at least bring in some income, which does make a difference.
Now these are quite dramatic solutions, and the reason is to try and shock people out of denial, into dealing with their debt.
Often there is someone in their life they can talk to but they haven’t because they are too embarrassed.
After a conversation with me! They are much more likely to do that and come up with a less embarrassing, less awkward situation.
So it is about getting out of denial and into action because once you are in action, the worry and the stress just calms down quite a lot.
It can be done and all my clients who have followed this advice have got out of debt and none of them have got back into debt.
So I know it is a difficult subject and I wish you the best with it.
I am doing…, so it is Dear Money and then say what you are doing. I am feeling…and say what you are feeling. Ask what can you do…what can you do? Dealing with buts, and’s and I want more’s… they will come up so have that as a topic. What can I do now? You don’t have to do it but ask the question. End with a Thank You, that is always a good way to end.
So that is my ‘get yourself unstuck’ little tool so thank you very much for watching.
Next week we are back to practical stuff and it is a Live Q & A on Facebook at 12 noon GMT on Friday 3rd February 2017.
We are talking about now you have done your books, or now you have done your accounts, what now? You can just stick them in a drawer but we are going to provide you with some other useful suggestions.
Thank you for watching.