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Authors: Simon Smith
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have several websites that make me small sums of money each month. But the beauty of it is, I don’t have to work to get that money. I’ve done the work, and now they pay me whether I’m sat at my computer, sleeping, or out having fun. This can take a bit of time to learn, but it has to be better than watching crappy TV right?
Decreasing Your Expenses
Again, this, if done correctly will pay big dividends. I see a lot of people that are broke within a week of getting paid. When I ask what they’ve been up to, they tell me about the wild weekend they had where they spent hundreds of pounds on shopping, clothes, and going out. Do you do this? If so, you’re eroding your future wealth. Every penny you spend on unimportant things doesn’t just cost you what the item/experience cost. It also costs you the interest you could have earned if you had invested that money.
Here are some things you can do to decrease your expenses.
Keep a strict budget. If you know where every pound or dollar you spend goes, you are more likely to be frugal with your purchases. Try this: For one month, take a little note book out with you everywhere you go. Every time you spend any money at all (even 50p on a cup of tea), write it down. This will accomplish two things. One, you will see exactly where all of your money is going. Two, it will stop you spending on things you don’t need as you will have to take your notebook out every time, and this will put you off.
The trick to this is to make sure you do it consistently. If you have a joint account, then you need to both do it, otherwise one of you could end up continuing to cause financial difficulties, and the other could be trying to make things better. You can’t fix what you can’t see.
The next thing you need to do, is go through your bank account/accounts, and see where you can cut back. Are you still paying for breakdown insurance on the TV you bought eight years ago, and just haven’t gotten around to cancelling? Are you paying £100/$100 for satellite TV when you could cut down on some of your channel subscriptions and pay £40/$40 instead?
Do you shop around for things like insurance, or do you just renew with your current company? If so, you could be paying a lot more than you need to. Are you paying high interest rates on any cards/loans? Can you reduce them?
You can write to your creditors and request a reduced monthly payment. Quite often, they will do this for you. I had to do this in my early twenties, and every single one of the financial institutions I contacted agreed to reduce my payments. Most of them also agreed to suspend the interest temporarily as well.
Write a list of all the things you HAVE to buy each month. This should include mortgage/rent, gas/electric, phone, food, transport, clothing (the ones you need, not £300 jeans), taxes, etc. Anything that isn’t on the list, create a small budget for and try to stick to it. Make sure that paying yourself first to create future wealth is on this list.
Stop “Treating” yourself. Just because you’ve had a bad day or a bad week, doesn’t mean you need to go out and spend a load of money to make yourself feel better. Make yourself feel better with a nice hot bath, and some relaxing music. If you go and spend a load of money that you can’t afford to lose, (or even worse, put it on the credit card), you will actually feel worse because you KNOW you shouldn’t have done it! For men, this often means spending time at the pub drowning your sorrows with your mates. All you’re really doing is drowning your future wealth.
Ok, so now you’ve built up a bit of cash flow, what are you going to do with it?
You’re going to save it. Your goal should be to save no less than 10% of your net income each month. If your monthly income is £1,500 after tax, you should aim to save £150. If your income is £5,000, you should aim to save £500. Put this money somewhere that
Decreasing Your Expenses
Again, this, if done correctly will pay big dividends. I see a lot of people that are broke within a week of getting paid. When I ask what they’ve been up to, they tell me about the wild weekend they had where they spent hundreds of pounds on shopping, clothes, and going out. Do you do this? If so, you’re eroding your future wealth. Every penny you spend on unimportant things doesn’t just cost you what the item/experience cost. It also costs you the interest you could have earned if you had invested that money.
Here are some things you can do to decrease your expenses.
Keep a strict budget. If you know where every pound or dollar you spend goes, you are more likely to be frugal with your purchases. Try this: For one month, take a little note book out with you everywhere you go. Every time you spend any money at all (even 50p on a cup of tea), write it down. This will accomplish two things. One, you will see exactly where all of your money is going. Two, it will stop you spending on things you don’t need as you will have to take your notebook out every time, and this will put you off.
The trick to this is to make sure you do it consistently. If you have a joint account, then you need to both do it, otherwise one of you could end up continuing to cause financial difficulties, and the other could be trying to make things better. You can’t fix what you can’t see.
The next thing you need to do, is go through your bank account/accounts, and see where you can cut back. Are you still paying for breakdown insurance on the TV you bought eight years ago, and just haven’t gotten around to cancelling? Are you paying £100/$100 for satellite TV when you could cut down on some of your channel subscriptions and pay £40/$40 instead?
Do you shop around for things like insurance, or do you just renew with your current company? If so, you could be paying a lot more than you need to. Are you paying high interest rates on any cards/loans? Can you reduce them?
You can write to your creditors and request a reduced monthly payment. Quite often, they will do this for you. I had to do this in my early twenties, and every single one of the financial institutions I contacted agreed to reduce my payments. Most of them also agreed to suspend the interest temporarily as well.
Write a list of all the things you HAVE to buy each month. This should include mortgage/rent, gas/electric, phone, food, transport, clothing (the ones you need, not £300 jeans), taxes, etc. Anything that isn’t on the list, create a small budget for and try to stick to it. Make sure that paying yourself first to create future wealth is on this list.
Stop “Treating” yourself. Just because you’ve had a bad day or a bad week, doesn’t mean you need to go out and spend a load of money to make yourself feel better. Make yourself feel better with a nice hot bath, and some relaxing music. If you go and spend a load of money that you can’t afford to lose, (or even worse, put it on the credit card), you will actually feel worse because you KNOW you shouldn’t have done it! For men, this often means spending time at the pub drowning your sorrows with your mates. All you’re really doing is drowning your future wealth.
Ok, so now you’ve built up a bit of cash flow, what are you going to do with it?
You’re going to save it. Your goal should be to save no less than 10% of your net income each month. If your monthly income is £1,500 after tax, you should aim to save £150. If your income is £5,000, you should aim to save £500. Put this money somewhere that
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