my-journey-with-money

[my-journey-with-money]

Why I’m Terrible with Money - Part 2

In my last blog, I was exploring the reasons I am/ was terrible with money (I say I am/was as I am still learning and improving). In this blog, I will delve into a couple more reasons as to why I have struggled with managing my money.

Thinking about it one of the first reasons is I never talked about it with anyone, friends or family I always dealt with it myself. I think it has to do with the idea that it is impolite to talk about money. I get this in regards to if people boast about how much money they have - that is shortsighted. But to discuss with friends or family about how they manage or not manage money for that matter could have been helpful. I don't mean the conversations where you say I have no money, I mean the detailed discussions about working out how or why or tricks people have. But I suppose it also goes back to the embarrassment of showing my insecurity or being seen as stupid or dense for not already knowing. If we don't talk about it, how would I have known? Chicken and Egg scenario.

Another thing I have been thinking about is sometimes women are deemed less able in maths style subjects at school. The idea that maths and science subjects are for boys and the arts subjects are for girls still plays a part in how women relate to money and finances. If society shows men as the breadwinner and bill payer and the women as the homemakers, this will perpetuate this. This is absolutely not how society runs anymore. More and more women are the primary breadwinners in families. They live alone, are single, or in a same-sex relationship, because of this, we as women we must start helping each other out through talking about money.

The last point doesn't really relate to why I struggled with managing money; however, it still affects a lot of women nowadays, and we need to talk about it. I think talking is the key, talking, sharing and learning from each other. However, always bear in mind what works for me and how I work might not work for you. You need to try things out to see what fits.

I have come to the realisation that we just need to talk, try not to be scared but start a discussion with friends or family, you might find a lot of people feel the same way as you and you can help each other.

[my-journey-with-money]

Why am I terrible with Money?

The last couple of blogs I have written concentrated on tools and the processes I have used to help me in managing my money more effectively. This blog is going to be a little different, I am going to delve and reflect on the reasons why I struggled with managing my money in my teens, 20s and early 30s. So here goes...

I grew up in a small town in NZ called Queenstown, if you have ever heard of Queenstown it is a spectacular place, you can ski in the winter and do numerous adventure sports throughout the year. I was incredibly privileged to live there and grow up with all the fantastic opportunities afforded to us kids. My family were not wealthy in the sense that we didn't have a lot of spare cash, but we well, my parents ran a successful business. We didn't have the luxury of getting pocket money on a weekly bases. Still, I did have a paper round from the age of 10, babysitting from 14, and I worked in more formal jobs from 15 consisting of a supermarket, hotel cleaning, a bookstore and when I was older working for my parents' tourism company. I also worked right through university (apart from my first year), working was never an issue for me. So I was earning money, but generally had nothing to show for it. I just spent it!

Pic of Queenstown where I grew up

When I was a kid with the idea of saving was mentioned 'you should save your money' my parents would say but for what? Looking back, if I had started my 10% from when I was a kid, I would be in a totally different space financially now. But I spent my school and university time being frivolous, keeping up with my friends who had more disposable cash than me as their parents were wealthy. I have reflected and come up with the first 2 of many reasons why I am terrible with money.

Reason number 1: I did not understand the power of saving, I didn't see the benefit of putting money aside I was like the 30% of people in the UK living paycheck to paycheck or the 41% of UK workers who have less than £1000 in savings. I was spending everything I earnt! I could have not indulging in that last drink or takeaway when I was a student, or when I began my teaching career, I could have taken my lunch to work every day rather than buying it. These little changes would have enabled me to save a little bit more every month, putting me on the right path of managing my money.

Reason number 2: my need to not be seen as poor or a cheapskate, keeping up with what others were spending. I would find it super embarrassing to say oh I can't afford that or no I'm not doing that. Or even when I was out in a big group, you know how it is, the bill comes and people don't put in enough, so I would see it as my responsibility to cover that extra bit (IDIOT - me not you). I was too embarrassed to say no, come on guys everyone cough up a little more.

It wasn't that I couldn't save, I could save in short busts, i.e. saving over the summer to ensure I had money for part of the year at uni, buying my plane ticket to the UK, saving to purchase furniture. It was always saving for something big, never just because. When I was a student, my budget was super tight, but I would still go out or buy junk food and alcohol, which is neither good for the waistline or budget. Oh if only I could go back, but no! Here is to looking forward and taking control and managing my money successfully!

I will continue to delve into my relationship with money and how I am trying to change it in further blogs.

[my-journey-with-money]

Budgeting made easier!

In my last blog, I spoke about budgeting, it is a tedious process, but once it's done, it can help. However, if you are working from a traditional bank, it can be challenging to keep track of your money, especially when you don't use cash. Your money is generally all in one account or two if you have a savings account which is frustrating and hard to monitor, especially when you are trying not to overspend.

Luckily we live in 2020, and there have been several new app-based banks started that make budgeting and apportioning money SOOOO MUCH EASIER!!! For the last couple of years, I have been using MONZO, and it has made my ability to budget and manage my money so much better. Again I am not saying go out and get a Monzo account, I am just telling you what works for me.

I am going to answer some general question about Monzo but should follow the same idea as Starling another app-based account.

So how does Monzo work? Well, like any traditional bank, you have a debit card, but unlike most traditional banks, you sign up by downloading the app to your phone. You prove who you are, they open your account and send you the card. The app will inform you every time you spend or transfer money, so you always have a real-time update on how much money you have in your account.

How does having Monzo help you save? So this is the fantastic bit, in Monzo you can create different pots for your money. You can name these pots anything you like. So if you are saving for a car you can have a car pot, or make-up, savings, food... pots, you get the picture. This then apportions out your money to reflect your budget. When you spend on a said item from your budget, you can just transfer the funds between pots. There is a little image from my Monzo and pots below. At the end of each month, you can also clearly see how much you spent in each pot which is useful. In Starling app, the pots are called spaces.

Other excellent parts of these app-based banks: So you can quickly transfer money between yourself and other Monzo/ Starling members. You can split bills - so if you go out for dinner, you can split the bill and request the money from your friend. If you lose your card, you can freeze it on your app and order a new one asap without calling a sole. Like a traditional bank, you can pay bills etc. They are also so good to use when travelling overseas.

To take your budgeting to the next level these app-based banks are so useful, it also limits the need for excel spreadsheets which is excellent news to me!

[my-journey-with-money]

BUDGETS 1st step!

People tell you to do a budget, what they don't really tell you is how to go about it! It sounds a lot easier than it is, I used to think I would just allocate money to each area without much real thought, oh yes £20 for this or £40 for that and so on. Every month, in the beginning, I would start out so well, but those little things crept in that you hadn't thought of, it is also hard because it's challenging to track. Generally, by week 2, my budget was usually out the window, and I was just trying to not spend more than I earnt! By week 4 I was really thinking ok I have £20 how can I get 4 meals out of this and travel, just trying to hold out until I got paid at the end of the month! 

Over the last year, or so I have really found out what works for me to budget effectively. I have found it is not just an allocation of money to different things each month, unfortunately, you have to sit down and work it out. I am going to go through what works for me now, I am not saying this is how you should do it but just what I have learnt. I found the best way for me is to sit down with a spreadsheet in front of me and work out everything! Down to the toilet paper. I will work out how much toilet paper I will use in that 12 months and divide it by 12, that then gives me an indication how much I need to be setting aside each month for that specific object/ product. I also group objects/ products to make the allocations of money easier. I know it sounds tedious and boring; however, it really works! Below I have done an example for one of my groups, make-up. 

My makeup budget, excel spreadsheet:

Ok, let's break this down. I went and looked through all my make-up - I don't use massive amounts of the stuff; however, I do buy more expensive brands such as Hourglass, Bobbie Brown and Benefit for my mascara. 

I had a realistic guesstimate of how much of each product I would use in a year as you can see I thought I would buy 7 mascaras over the year, just over 1 every 2 months (as I wear it every day). I then went online to see how much this is per product, times that by the number I think I will buy then divide it by 12, giving me how much it would cost per month. That then starts the amount I would need monthly to buy my make-up. Adding it along with all the other products I will generally buy gives me my budget for makeup monthly. It turns out that over the year I would buy around £727.5, so each month I put aside £60 for make-up. When you see it like that it really brings it into light regarding how you spend your money.

Now I don't spend £60 each month, but doing this means I am never caught out, that money is always set aside for me to buy makeup when needed. It also allows me to take advantage of sales etc. to bulk buy products when they are on sale or a store has a promotion on.

I then do this process for everything I buy, toiletries, face stuff, clothing, cleaning, going out... This really helps you to see where your money is going, it also shows where you might be spending too much or budgeting too little for each month. I also include my savings of 10%, and I put money in my ISA. You could set aside an amount for holidays, or maybe if your trying to buy something bigger or more expensive, such as a car, this can give you a good indication of how long you will need to save or what money you have to be able to put aside.

This as the title states just step 1, there are several other things to think about and tools that can be used to help you when setting or doing your budget, I will be discussing these in other blogs. 

[my-journey-with-money]

Little quote to live by 

[my-journey-with-money]

My First Revelation

A couple of years ago now my husband suggested I read a book, he thought it would help me with managing my money more effectively. It is an old book (first published in 1926), a concise book, but man it changed the way I look at money. It is a book I would suggest everyone reads! The Richest Man in Babylon by George Samuel Clason. It is only 144 pages long, and not difficult to read at all!

Its a book of parables, fun and easy to read stories. If I could choose the most essential idea, it would be the following: always paying yourself first! It also happened to be the idea that catapulted me in getting started on my journey with money. However, it doesn't mean paying, as in buying yourself things or treating yourself. It means to take a percentage (in the book they suggest 10%) every time you get paid and save it. It is the first thing you do when you get paid whether it be weekly, fortnightly or monthly, take 10% and put it in a savings account. Ensuring you do this before you pay bills, rent, food anything. First thing you do is 10% or whatever percentage you decide is right for you and put away. In essence, you are paying yourself. What's left is the budget you have to work with for the rest of the week, fortnight or month.

When I first read this, I was like, 'but I don't earn a lot!' 'Can I really afford to do that?' But I'm telling you I did earn enough and I could afford it! It is now the first thing I do every time I'm paid. I have now extended it to any money I received, such as gifts, or if I sell anything, the first 10% is put in a savings account straight away. If you earn an average wage, it will be slow to start but give it a few months. Let's take a look at the numbers:

So if you earn a monthly wage after tax of £1000, you will put £100 straight into a savings account leaving £900 as your budget for the rest of the month.

Over 6 months you will then have £600 in your savings account, after 12 months it will be £1200 and so on. However, it doesn't take into account any interest you could earn, or if you put the money in a stocks and shares ISA, it could be even more after 12 months.

Below is a little table showing the different amounts you could be looking at after 1 year, 3 years and 5 years.

Again this is not me telling or advising you to do this. It is just what works for me!

[my-journey-with-money]

First Post - WHY?

I have decided to start this blog about money because a. women don't tend to talk about money or how to manage it b. we get told to save but how? why? what for? c. to look at different ways of trying to get money to work for me, using this platform to reflect on my process and progress.  

I am no expert; all I am going to say/ write is what I have learnt, listened to, and discovered myself. I am not giving advice! No advice here! If you decide to implement some of what I have done great, I hope it works for you as it does for me. But please do your research before you do/ put/ invest your money anywhere! I am doing this to start a conversation and to get us woman or men (I am not going to discriminate against anyone) talking a little more about money.

A bit about me, I am a mid 30's woman who has been terrible with money most of my life, and I shouldn't have been. I am a professional, degree educated, and I even did economics and accounting up to the equivalent of A level. Not to sound cocky but I am not a stupid woman. However, money has always been a downfall on my behalf. It's not all bad though; there are some silver linings a. I have never got myself in silly dept (unless you count my student loan which I don't) b. I have managed to do some travelling and generally enjoyed life c. I have been living mostly within my means. However, looking back, I wish I knew then what I know now. I would have been in a more financially secure position if I had. Why didn't I get myself a stocks and shares ISA earlier? Why couldn't I take the time to budget more effectively? Why did I not understand money better or how it could work for me? But there is no point looking back. I am now all about looking forward and doing what I can now to sort my self and my money out more effectively.