Seven Cures for a Lean Purse

1. Make your wallet – or your wallet thicker.

This does not mean filling out receipts for all items you have purchased with a credit card. That means fill your wallet with money. And the best way to do that is to spend less than you earn. This treatment follows from the first gold law we reviewed last week: we aim to save 10% of your income. At least. Save more than you can. Save for the long term, on collateral or retirement, depending on where you are in life. If you need to save on short and medium term things like vacation or car, this should be an addition to the 10% + that you save for your long term needs.

Your 10% may include your pension contributions, ISAs, premium bonds or any high interest / restricted savings accounts. With compound interest your wallet will become very plump over the coming months and years, even if interest rates remain low.

2. Control your expenses.

If you are going to save at least 10% of your income in the long run, you need to make sure that your current expenses are no more than 90% of your income. This means that wherever you are on the income scale, you will need to apply some self-discipline when it comes to treating yourself and loved ones.

For starters, keep your credit cards for emergency use only, and if you use them, repay them before you start accruing interest. Similarly, avoid taking loans unless you can justify the interest you will eventually pay for this privilege. A car purchased under one of the popular leasing schemes can be justified if it is necessary for your work or business. But a vacation loan? Staying would be the best choice. Learn to distinguish between desires and needs. A roof over your head and food on the table – needs; month in the Maldives – a wish. Entertain yourself so if you save 10% of income for a year or two and be able to afford to fly to paradise without immersing yourself in these savings.

The secret to controlling spending is to create a budget and then stick to it. If you have Microsoft Excel, you can download a template to help you track expenses for a week or a month. You can also find ready-made templates online or in phone apps. Determine how much you spend on mortgages, rent, travel to work, etc., and set yourself limits on items such as food, entertainment, travel, etc. This will help you keep below 90% of your income.

3. Make your money multiply.

You are looking for a stable return in the long run, not winning the lottery. You need to constantly increase your capital, your core wealth, such as compound interest from an ISA or savings account, or – more risky – dividends from shares you have in managed companies, including your employer, if they have an equity scheme. property of employees. If you are not an expert in financial products and investment funds, find someone who is. Don’t make any commitments until you talk to a professional financial advisor. Explain what your investment goals are and ask them to help you develop a plan to implement them.

4. Protect yourself from losses.

An impressive nightmare, when you see your dreams of wealth turn to dust when bitcoin collapses or the guy you met at the pub the other night disappears along with your savings. One way to avoid losses is to make it an inviolable rule not to touch the basic wealth that you save and invest for a long time. Keep around this steel ring! If you are tempted to try your luck in bitcoin or currency trading, use only the money you can afford to lose. That means any money left over after you’ve saved 10%, paid your bills and stuffed your stomach. The money you could spend on night outs can be transferred to online bookmakers if you can pay for it – see The second treatment is above. Under no circumstances use a credit card or loan to spread bets, gambling or any risk investments. Before engaging in high-risk investments or betting, make sure you have thoroughly researched the industry and understand what you are getting into. If online poker is your dream, practice with your teammates first.

5. Make your home a profitable investment.

Owning your own home (and ideally a few people buy real estate) has become an obsession over the last thirty to forty years. Given how real estate prices have increased during this time, it is logical to get on the property ladder as soon as possible, especially if house prices are rising much faster than income.

However, be aware that at some point the bubble may burst. Yes, people have been talking about it for years, and it hasn’t happened yet. But it is increasingly likely that the authorities will take steps to release some air from the real estate market. Potential measures include reassessing the level of property taxation and penalty purchase taxes to keep real estate and real estate empty. Significant house growth is unlikely in itself to have a major impact on house prices, but combined with potential tax changes we may notice that prices reach a plateau and remain there for some time.

Given all this, the best approach would be to find an inexpensive house or apartment in the area where you would like to live in the foreseeable future, given things like local amenities, schools and commuting. Think also about the benefits of paying off a mortgage and gradually acquiring the common property (rent and free use) of your home for 25 or 30 years, compared to having a landlord who can increase the rent or evict you in a month, and who still will own a roof over your head despite all the £ 000 you put in his or her pocket.

If you can’t afford to shop in the area where you want to live or work, consider options such as joint ownership and self-development. Check what schemes are available in the area where you want to live.

If you already own your own home, you can use it to earn extra income by taking a tenant. If you live in a big city, a good source of guests are contractors – professional people working on a local project who need to find a place for a few months and don’t want to use hotels. Often they go home for the weekend so you have a place for yourself. Another option is to accept exchange students. They usually come for a week or two. You provide them with a bed, breakfast, a hearty lunch and dinner and get paid for it. Another option is to use the holiday home while on vacation. This works especially well if you live in a big city or historic city.

Even if you are renting a home, take a tenant (if your landlord allows it) or run a home business (see below). You can still make your home a source of extra income, even if you don’t have it.

There are two more things to consider. First, home and content insurance. Make sure you have adequate protection against the worst that can happen: fire, flood, theft. Second, if you have a mortgage, look at how to insure it against unemployment and illness. Take the advice and make sure any rules you make fit the goal and will be paid when the worst happens.

6. Develop future income.

Who wouldn’t want to wake up in the morning knowing that no matter what happens, they’re confident of a steady income for eternity? Well, you can achieve this through your long-term savings of 10% +, which you invest month after month, year after year.

When you talk to your financial advisor (as needed!) About your savings and investment goals, the first two issues you should focus on are retirement for you (and your partner, if any) and providing for your family if you are no more, that is life insurance. A financial advisor should also direct you to other investments that can bring extra income for you and your family, such as ISAs, mutual trusts and government bonds.

Your goal is to provide a decent income for a long old age. Remember, people live longer, but not always healthier. It’s unpleasant, I know, but think of the worst that can happen to you (if not an early death). You or your partner is chronically ill or disabled and need long-term care. How will you finance it? If you sell a house, leave it to the children. This issue needs to be discussed with the financial advisor. You need a pension as well as other income streams that will pay for all your needs, perhaps thirty to forty years after you stop working. Develop a plan, implement it, and then continue to enjoy life.

7. Increase your ability to earn.

Lifelong work no longer exists. Nowadays, even such professional professions as lawyer, accountant and insurance insurer are threatened by automation and deterioration of work. So it makes sense to develop additional skills that you can take advantage of if you find yourself without work.

If you think you are in danger of being replaced by a robot, you should look very closely at “securing the future” of your career. Think of jobs that are unlikely to be automated or unofficial in the future. Typically, they involve face-to-face contact, such as adjunctive therapy, hairdresser-nail master, personal trainer, life coach, counselor. In addition, work where a local presence is needed: electrician, plumber, locksmith, craftsman.

Of course, many of these jobs are relatively low-paid and are in highly competitive sectors. This means you need to find a unique selling point: you do what no one does, or no one does as well as you. Focus on what you sincerely care about – or better yet – admire – and what you know you can be brilliant. Be realistic about the potential profits, competition and the time and energy required to run it. If you no longer have experience in your chosen field, you will need to devote a lot of time, and possibly money, to acquiring the necessary skills and certifications. You will also need to decide how you will work: sole proprietor, limited liability company, franchise? Take the advice before you do anything.

A popular option for earning extra income is online sales. Even if you work full time and are happy with your income, you can try it in your spare time and understand what is at stake here. Regular fuss will reveal a variety of things you can sell: clothes, DVDs, cell phones, unwanted gifts. If you enjoy selling online, you can grow a successful business without risking your core capital.