What makes you poor?
Finance is all about looking at the margins — income minus expenditure. So, how do you make that margin as large as possible?
In my 20’s the importance of retaining as much money for investing in the long term was something on the horizon but not for now. in my late 20s and early 30s, I worked at a financial brokerage in London which opened my eyes to the types of financial products (funds, stocks & shares etc…) to the types of investment vehicles such as an ISA or pension funds.
However, I soon realised the missing element I did not have was enough money to invest. Why was this? I am working at a brokerage with a good salary yet at the end of the month not much to show for it. That is when I looked at my monthly expenditures beyond the bills for services or my mortgage.
Here is a list of some of the things that you can look at to increase the money that you have in your pocket.
Subscriptions
We all have our subscriptions, Apple TV, Netflix, Amazon Prime, cloud service, Gousto, Music streaming service etc… but do you need them all? I found I was spending a chunk of my money on these services when I hardly used them.
Gadgets
Gadgets are a way of life, technology moves forward and there is always something that you need but, do you need the latest mobile? buying second-hand from a reputable source and not the absolute latest will save you hundreds.
Credit card’s
This is my bug bare, credit cards can eat away at your money very fast. The APR can on average be 19% and as high as 50%! The amount you spend paying the credit card company before paying off your credit card balance can be extortionate. If you can not afford to pay the whole thing off at once, transfer to a zero per cent card then pay it off as fast as possible. You could save thousands!
Loans
This is just as important as Credit cards if not more so, when taking out a loan it is wise to pay this off sooner rather than later as this will decrease the amount you pay to the company loaning you the money. again just the same as credit cards you can save thousands by paying this off sooner.
Expensive clothes
I am not saying you can not have expensive clothing, I am saying you need to limit yourself to what you buy and be selective in your purchases. If you can get the same at a cheaper store and looks just as good, all the better to do so.
Food waste
We here in the UK waste an estimated 80% of the food we buy through not thinking ahead and throwing it out when it is still good to eat. This can all be avoided by thinking of what you eat and when you will eat it. I tend to do batch cooking, write down the food that is required and think of what I wasted.
The use-buy date is not always correct, For meats and fish I follow the use-by date but all other goods can be used beyond that date. Just use your initiative to check and see its condition before putting it in the bin.
Overpaying for services
All services should be looked at with a fine tooth comb, is there a cheaper gas or electricity service provider? or is there a cheaper home or contents insurance you can use? every service is switchable and can save you hundreds per year.
Coffee on your commute
Although a large proportion of the population feels like they need their coffee or tea in the mornings, the commute is a trap for people selling us a drink at a high price. I know I have done my fair share of coffee purchases en route to work but I then switched to taking my coffee with me on the train in a small flask. Given a coffee in London will set you back on average £3, this can over a year mount up to hundreds.
Investing for your future
Investing is the cornerstone of your future happiness, it is what will make your retirement worth living for or, it is the dread of finding you will be working until you get to your late 80's! but investing comes with costs, brokerage costs can be high and eat away at your savings. Take from a seasoned investor investing is a matter of keeping as much of your money as possible and making sure as little goes into someone else’s pockets.
Investing in yourself
Your skills are your tool for earning through a company as an employee or as a self-employed individual. when these skills become stagnant and behind you will be less attractive to be employed. As such keeping your skills up is an investment in yourself and your future. Do not stop learning and you will be financially successful, stop learning and it will cripple your finances.
Holidays
We all need our holidays once in a while to recharge and come back with the energy and enthusiasm for that next big project, but do you need to go on amazing holidays each year? or can you draw back and have something not as expensive but still as good? Do you need to go on multiple holidays each year? can you go on 1 or 2 a year to recharge?
Gym membership
The ubiquitous gym membership that if not used and is not needed will be a huge drain amounting to hundreds per year. Of course, if you need it use it but can you go to a gym that costs less? do you need all the extra packages the gym may offer you? I changed from going to the gym to going outside and running in the fresh air, I have weights at home and a yoga mat for stretching. All this saved me hundreds per year.
Mortgage
If you have a mortgage this is of course needed and unless you manage to pay for your property outright (which most of us can not) you will be paying off the debt gradually. but, you can still save over the long term through overpaying for your mortgage which will then cost you less in the long run and save you 10s of thousands.
Pay rise or move
With your job, you will come to a point where you can see other positions with your skill set that pay more. The question is do you move or ask for a pay rise? first, you need to look at a pay rise and if your company will not do this for you even though you have given a good argument as to why you should then look to moving to another company. Either way, you will increase the amount you can invest and have in your pocket.
Lastly…
I am sure there are other means to decrease your outgoings and have a far greater amount in your pocket to save for the future, yet these cover the basics and help you in your journey to retirement with the funds to keep you going.
If you have other ways to increase the amount in your pocket then comment I would love to hear from you! :)
If you like the article, please click “follow” and more posts will be covered in the future. I take great care when writing each article to be informative and hopefully useful.
If you have any questions about something specific, add a “comment” it will be a pleasure to respond — I will be posting other articles as often as I can.
