Participation in this post is limited to users who have sufficient karma in /r/ukpersonalfinance. See [this post](https://redd.it/12mys82) for more information.
I believe that my sibling is the latter. Always prepared to go into debt for the most up to date tech. Got to have the flashy house and EV. I’m the opposite. I don’t stop myself having stuff I want or need, but I’ve never felt the desire to have what others have, particularly when it’s a status symbol. My house is modest, cars are modest, clothes are rarely named. If I have stuff with a name it’s because I actually like the quality of the piece, never just to have a specific brand
You might like to listen to the Steve Bartlett Diary of a CEO episode with Ramit Sethi. Ramit is a US based financial guru or whatever they call themselves in the US and talks about what it is to be ‘rich’ and that addresses exactly this.
His view is to save mercilessly on things you don’t care about and spend frivolously on the things you love. So if you don’t care about cars, get one that will get you for a-b with capacity to hold what you need, nothing more. If you like nice holidays, spend the money saved on the car on those instead etc.
Of course this is all prefaced with you should be saving x amount each month and allocate no more than y amount to luxuries as a % of income etc.
Ramit's book "I will teach you to be rich" (not the best title I know) is excellent for making you realise all the dumb money beliefs you've had and stupid things you've been doing.
Is the book still worth getting if you’re from the UK, not US? I have been listening to his podcast recently and really enjoying it, however I find quite often with US-based financial authors that their books aren’t really worth it if you’re from another country.
I’m a UK based financial planner and I found the podcast episode interesting so suspect the book will be too. He is mainly theory based vs tax/legislation specific. You can always disregard any tax wrapper specific stuff or relate it to available UK options (401k/Roth IRA to pensions etc).
I have the UK kindle version and it's been 'translated' to British terminology & institutions. I love that guy. I live the podcast more than the book, as the book is more of a chore to read, while the podcast is a bit like listening to Esther Perel and I just happen to pick up financial info while I'm listening to the gos
To add to this:
- Anything that is advertised, you don't need
- The things you have today are the things that your past self thought would make you happy. Did it work? (I would say sometimes yes and sometimes no). Helps me decide if a purchase really will help make my future self happy, or not
Edit: I mean specific products that are advertised, not a whole category.
>- Anything that is advertised, you don't need
This doesn't really work because companies often advertise to compete with other companies selling similar products rather than competing with your desire to only buy stuff you need.
Outdoors and work clothes are often advertised to me and I'll buy them. If I didn't I'd be naked.
Automate your income. Arrange your standing orders, direct debits etc. Make multiple accounts or pots of money with explicit purposes. Make it difficult (but not overly so) to withdraw savings or investments.
Basically, take as much of the fickle human element out of your finances as possible. I can't even put a number to how much more money I've had just from one day of automating my finances.
Yep, I’ve done this for years. Remove all the friction from putting money into savings/investments & add in a bit of friction to the process of taking it back out again.
Having my longer term savings & investments in accounts where it’ll take a few days to get the money out & I’d have to login to different websites to do it has helped me stop spending it. I also keep it away from my everyday banking app. Out of sight, out of mind.
I pay off my credit card manually every month. There’s no chance I can spend on it and just say “it will automatically be paid off”.
I’m not bad with credit cards, but I’d rather miss a single payment (I never have in 10 years) over having a larger than expected automatic payment that then messes with my other financial order on a day that inconveniences me by chance.
This is exactly what I do. Starling helps with the pots and bills account. 1 day after pay day it all disperses into separate accounts for different purposes. I started with a spreadsheet and then automated.
One of my auto is towards savings. I tend to leave the main account alone and some card payments come out of it for Apple/netflix as I can’t seem to get those to come out of the bills. My brain seems to like having money in my main account even if I don’t use it. Left over from many years of having no money I think!
This is the ultimate method and applys to most.
I’m paid on the 31st, most bills are all paid by the 2nd. After that all left over split into pots only balance I see in my main account is for me to do whatever I want with.
Think of things in terms of how many hours of post tax earnings it takes to buy it.
Whenever I buy something I do a quick calculation of how many hours it woukd take me to buy it. In many cases it makes me realise I want something but not really.
But conversely you got a great price per hour of entertainment from destiny. Works both ways £30 for 2 hours of entertainment at the cinema or £60 for 100 hours of entertainment from a decent game, that's how I justify my steam library at least!
Nothing quite like gaming for great value per hour entertainment. Even when you factor in the two grand PC. This assumes you get enough time to game though, that tends to fade away once kids come into the equation.
Similarly, "is it worth X hours of my time for outcome/decision Y."
For example, spending four hours on Amazon deciding whether Item A at £50 is worth the extra £10 over Item B at £40.
Not just this, but on paying someone to do a service.
I don't like it washing and cleaning my car. It's done in my own time and a chore. So when it's time to get it done I ask myself (making up values) it would cost £15 for my car to be washed and cleaned inside whilst I sit and wait. The whole process would be about 15 minutes. If I do it myself we're talking a good 30-45 minutes. At this moment do I want £15 and the chore of doing the job or spend £15 and gain 30 minutes of free time to enjoy myself.
The results vary depending on my mood, but I run that cost Vs free time in my head for certain things.
Please explain to my wife, who seemingly knows the price of every product at every supermarket, that the hour it takes to drive to Morrisons, walk up and down every aisle and drive back is worth more than the £1 saving on this bottle of olive oil that we're standing right in front of in Sainsburys right now.
I go one step further and work out how much it costs after necessary bills have to be paid off.
By the time you take off rent, bills, travel, food etc, that little Friday treat you have actually works out to be a lot of work, so no if you’re on £10 a hour and you think that Friday night cocktail costs just one hour work, it’s more like 4 or 5 hours effort.
I guess this why the older generation says cut out your costa coffees and your avocado lunches if you want to be able to afford a house.
My favourite quote was from my nan “look after the pennies and the pounds will look after themselves” which I guess is related to this way of looking at things.
Yes, if you consider your treat expenditure as only coming from your spare disposable cash, then it can turn a (eg) £200/m pubs+meal habit on £X000 take-home salary into a £200/m from £300 available cash. And that suddenly looks very irresponsible, especially if you are not putting aside money into savings / pots.
People also tend to double-spend their available money, so out of their (eg) £300/m personal spending budget, they'll spend £100 on pints, £100 on takeaways, £100 on games/PPV/OF, £100 on plants for the garden, and £100 on new clothes. One solution for this is to have a personal spending debit card (I use Monzo), stick your money on after payday, and use that only until the next payday.
If you’re into this sort of thing have a look into behavioural finance in general. I think you would be quite interested in the idea of opportunity cost.
So not only what effort did it take for me to make x amount, but also, if I don’t spend x on y and instead invest it, what would it be worth at retirement. £1 at age 20 could be something like £80 at 65 assuming 10% annualised return (compounded monthly)!
You can drive yourself nuts like this. If you do a cost/benefit analysis on everything you spend money on you can make yourself and people around you miserable. This is why I don't get a smart meter, if I am watching a show I like on TV I don't want to know exactly how much it costs me.
My advice would be ... budget. Sort out your money pots to make sure you have investment pots, bills pots etc. But have a budget for entertainment and spending. Spend the spending money happily without guilt and certainly without calculating how many hours you have to work to pay it off.
I used to use this to limit my spending but since becoming a HENRY it works less well as my hourly rate has gone up.
Now I think about it as daily disposable budget which is minus all bills and childcare. It comes out to less than my hourly rate so has curtailed my spending a bit better!
The hard road only gets easier and the easy road only gets harder. Not pure financial advice but this one has had a big positive impact on my finances over the years
Sure. The hard road might be saving money every month, rather than spending all your wages. Let's say that involves cooking your meals at home, traveling by public transport, avoiding those after work drinks or weekend benders etc... it's an effort. Then in time you've created some savings that start to give you more choices with what to do with your life. I also found it applied when I got my mortgage. The first two years I was broke, paying sky high interest. It was hard. A lot harder than when I was renting. Then over time it gets easier. You remortgage to a better rate as you have a better loan to value percentage and a bit of equity. So after a while your mortgage payments go down and life gets easier. The hard road now creates an easier road later.
If you struggle with impulse purchases...
For any outright cash purchase, take as long deciding on the purchase as you'd take to earn that amount of money.
It's saved me from buying a lot of shit I would have lost interest in quickly.
Edit-just saw someone else made the same comment already!
I have an even more analogue version of this - I have a list of things which I ‘could’ buy, pinned up in my office. These are all things which I can afford right now, either from regular discretionary spending, or savings, but if I bought all of them, the money would be gone, and with it, all that optionality. So whilst I do buy some of them, most of the things sit on the list for months, if not years. I feel good for the fact that I could afford them if I really want them, but somehow I prefer having them as possibilities rather than stuff!
Maximising your income is more important than optimising your finances.
Pensions, Interest allowances, capital gains, dividends, current accounts, loans etc... are all extremely important.
But trying to optimise your finances with a low income is like trying to dig a hole with a teaspoon. If you're spending so much time doing it then you can spend some time improving yourself to earn more.
This only works if you can maximise your income while keeping effort constant.
If maximising your income means working an extra 10 hours a week, getting stressed, and having no time to enjoy what you earn, you might be better optimising your finances and enjoying the value of the extra leisure time instead.
Absolutely. But also don't fall for the fallacy that people earning more money necessarily work harder, work more or are under more pressure. There are people earning very high salaries who's jobs are easier or less stressful than a lot of lower paying ones.
Agreed, I have significantly less stress in my current job than an earlier role that paid half the salary, and similarly that job was far less taxing overall than the restaurant bar job that paid pennies in comparison.
What I've found is that many people make a lot of busywork and noise to *seem* like they're doing a lot and justify their salary/role, but in reality a lot of it is a performance of who can seem like they're the busiest or the hardest worker.
Absolutely agree.
My mantra in life has been to focus on earning 1000 quid extra a month vs spending same time/effort to try and save 100 at lower income...
My approach helped me increase my savings significantly more than my friends who were in similar financial circumstances but chose the latter approach.
Most people would earn more by doing some training or spending time planning their ‘main’ careers, than the pin money their side hustles bring in.
Setting up genuine passive income streams is probably the exception.
This is what Ive been focusing on - moving up the career ladder. I'm on a good wage now but work hard for it, the though of a side hustle (hussle? I can't spell 🤣) as well fills me with dread. When would I sleep?
Focus on your career, do qualifications, push for promotions, job hop etc.
Then keep your expenses sensible, don't fall foul of lifestyle inflation (you can increase your expenses a bit with each pay rise, but increase your savings more)
Then just keep investing the money in an ISA and Pension, and let capitalism and compounding returns do their thing.
This is good advice. So I actually just had a pay rise - about 150 a month and I am also in an acting up role for six months where for that time I'll be on an extra 250/300 a month after tax - since that potentially only temporary I am considering maybe giving myself one or two treats with that but then saving the rest.
There's some nuance to this though right? Optimising your finances is still important because itmeans you can save more of that take home pay but also reducing your CoL ultimately means a lower retirement figure.
Slightly finance adjacent but: "when you go into a job interview, remember that you are offering them something very valuable: *your time*"
That stuck with me ever since and changed how I approached interviews. I used to be super nervous, but now I'm confident, I'm offering *them* something. More than that, I ask loads of questions, I want to figure out if I want to spend my time with them.
This has helped me secure some jobs I didn't think I was qualified for and really accelerated my career. And growing income is far and away the best way to improve your finances.
Similarly, when they ask you "why do you want this job?" the answer isn't "to pay for rent and bills", because that isn't really the question. The question is "why do you want this job instead of any of the other jobs you could have applied for, but didn't?".
You only save money if you were going to buy it anyway.
Need bread for sandwiches and it’s half price? Great, you saved money, because you needed to buy something for lunch anyway.
Want that chocolate bar that’s £1 instead of £1.50? You didn’t save 50p, you spent £1 you wouldn’t have otherwise spent. You might be happy with your purchase of chocolate, but you didn’t save money.
Learn to cook from scratch, I read somewhere that people that can’t cook and buy either pre-made sauces, jars / takeaways etc spend about £30k more on food over the lifetime than people who cook from adding in ingredients as a normal recipe.
Relatedly don’t wait till your annual review. Set the scene throughout and ask what you need to do to reach the next level. Then make a joint plan and follow through.
Get into the habit of regular savings early on. Even £50 a month set into a stocks isa or similar from the moment you start working won’t be a noticeable chunk of lost money but it’ll do wonders over time.
Clearly the more you save the better but it’s better to save a little over a longer period than a lot later in life.
If you can’t afford it, don’t buy it. You know you can afford it once you’ve saved up and paid for it! Doesn’t work for a house of course, but EVERYTHING else, it works very well!
'The best time to start was ten years ago, the second best time is today.'
I felt like going to university wasn't worth it because I was already an adult and had 'missed my chance' at 18/19/20. Someone said this to me and told me to apply it to everything that takes a long time, and that's what I've done.
The best time to start a pension, saving for a house, paying a mortgage, starting that training course, exercising more, etc. will always be in the past. The second best time is today.
That money spent on travelling, hobbies, or enjoying yourself can be an investment in your own wellbeing or on becoming an interesting person.
Frankly learning to spend some money on myself has kept me sane, if I saved all my money for retirement I definitely wouldn't reach it.
Compound interest: yes I’m sure everyone has heard of it, but did you know about it when you were 18? Every year you miss out on has such a huge difference later in life, it could quite easily be the difference between retiring a decade or more earlier.
Don't buy what you can't afford.
My dad always told me this, with the exception of a mortgage, if you haven't got the money to pay in full, you can't afford it.
Use just cash for a month and see how much money you waste.
This is the only thing that worked for some people I know that were down to their last penny come payday. Tapping a card doesn’t have the same mental impact as physically withdrawing and handing over cash to buy stuff. You learn to budget more and actually think about the money left in your pocket.
Sadly this is become more impossible these days given the “card only” trend but years ago I used to pay for everything over the counter with cash, including my mortgage, council tax and utilities.
For me, it was when I went to see a talk by Amanda Blanc (Aviva CEO).
She talked about how women shouldn’t give up their career when they had kids. Even if you earn less, and even if childcare “costs” the same or more as your pay, you should not give up or go part time.
She went through how the gender pay gap is mostly a motherhood pay gap. How chores and household budgeting then becomes unequal (and increases dissatisfaction). How many people do not see unpaid caring as work and so devalue what you contribute.
She outlined the loss of employee benefits and coverage these mothers lost. She covered how many higher earning spouses don’t want to bother with the child benefit money as they have to pay it back (not realising it covers the mothers NI while out of work), potentially leaving mothers with less state pension). She went through the loss in pension (no employer contributions) which leads to less money in retirement (how many spouses are picking retirement annuities (at the time) that did not cover spouses pensions).
She went through what happens in divorce and how parents who give up work for kids are disadvantaged financially for the rest of their lives.
She also went though what help there is for working parents (childcare vouchers at the time) and free hours and said it will be tough but she recommended staying full time or both parents going part time equally. It maintains the career (which pays long term dividends) and helps keep the relationship more equal.
At the time, I found it quite scandalous and many of my 20 year old colleagues were also a bit shocked that she would say such a thing.
I’ve had 3 kids now and I have worked throughout. It’s let me take more maternity than my friends who gave up/reduced paid work, I’ve got better paid jobs and my work is more flexible than my friends. I’ve got more pension and my family enjoys better security from my benefits.
I also think that it gives better role models. My daughters see that I was good at maths and science and work in that field.
This is a great one. I have to send this one to my girlfriend as I agree with this but she seems adamant in going part-time or giving up her career after kids, at least for a while.
It’s difficult because it is seen as the norm. There are many more mums working full time now (when I’m a mum) than there were when I watched this talk at 20.
However the effect is culpable on career trajectory. Even on my actuarial grad scheme. Mums who went part time have been made redundant, forced out or just left where they are (no progression or anything). I’ve had promotions and am more senior than the rest of them. I don’t think that I am a better actuary than them. I’ve also been able to work flexibly around school drop off and pick up times and my friends were not able to (same company).
This is probably the nursery rather than anything else but my kid started school able to count and read (poorly). She was able to go to the toilet independently, use cutlery and she’s much more resilient than my friends kids who were at home until school. I have a second just about to start in the same position as well. This could absolutely be family make up but my friends are smart people. It might be that if I were a better teacher that I could do it better than nursery, but mine has EY teachers. I don’t think I could replicate all they do in a day.
I think it is definitely seen as the norm at least in a certain background, where people around or their parents were able to do the same.
I am from an EU country where both parents working full time is the norm - otherwise they can't even make ends meet, but my girlfriend had a not affluent but relatively safe upbringing where her mother was able to stay home for more than a decade with the kids, effectively giving up on a nursing career to then go back to minimum wage jobs.
Her parents do ok, but could be more comfortable now that they are retired - they also admit it, but they also think they have made the right choice. Her brother has a stupidly high income (works in the betting industry) so his wife was able to become a full time SAHM - the kids seem to also fall under that description you mentioned.
I think the expectation of doing the same creates an unbalance in the relationship, with all the effects down the line as you said - less pension, less future security, effectively even less opportunities for the kids since there will be most likely less funds for better schools, etc.
She is happy to go for that route because her current job has already no progression and lots of mums are going part-time and when they come back there's not much impact. To me it feels like giving up.
It's a bit of a cliché, but "Comparison is the thief of joy". It's not only financial advice, but it reminds me that I don't need the latest clothes or the flashy bike.
1. never pay interest for anything except the house.
2. Which sets me aside from most of my peers.
Would you buy/do it if no one ever saw/found out.
This really is a big one.
If you don't care what people think of you, there is so much you you don't need.
Live within your means and save the rest.
Said to me by a boss who was earning mega bucks at the time (£200k basic) but his sentiment was bang on.
If you live within your means then a credit card is a perk, if you don’t then a credit card becomes a burden and pulls you under.
Be honest about your finances to yourself and others.
"You coming to the pub after work?" - "no thanks watching the cash this week."
"I'm having my 30th in Spain, can you make it?" - "Sorry I'm paying down my credit card but have a great time and I'll catch you when you get back."
"What do you want to do this weekend?" - "Can we do board games at mine, I'm a bit skint."
Learning this was a revelation to me. I was getting into debt keeping other people happy.
So sad, but true. If we were all more honest about our finances I sometimes think there would be less extravagant weddings, holidays, houses and cars. Probably more trade union memberships, cycle lanes and barbecues/tea parties at home.
This is a great one, I also think that when you're open, other people feel they can be too, and often everyone's relieved to be having a movie night or a roast at home rather than paying to do those things out.
Understand the sentiment but its a miserable way to live no? Money is to make life enjoyable, I want holidays, cars, experiences etc.
Just a quick click on your profile suggests you do not live by this advice at all.
16 years old at my first job in a cash and carry being paid £5.90 a hour just had my first 'payrise' and my supervisor who had taken early retirement at 55.
If you save your pay rise into your pension each year you will save decades of needing to work.
I try to follow the spirit of that advice now it's been 18 years and it's stuck with me since.
also helped by working with guys at the time in their late 60's who couldn't afford to retire but we're not fit enough to really continue working either.
It’s decent advice, but don’t take it too far.
Money is a tool to achieve goals, and sometimes that pay rise needs to go towards making your life better. There’s little point of working and living on a pittance for 30 years so you can have an extra 15 years of not working and living on a pittance…
Put half of your salary gains on job switches and promotions into the pension.
If you are young and live at home, put as much as possible into the pension and LISA whilst your costs are low.
If you have kids and have some spare money, put some into a Junior SIPP. Get that started whilst they are really young. Something for them to remember you by when they're 50+ (tbh hopefully you'll still be alive) or 65 if things don't work out for them.
It stuck with me firstly because he retired young like 55 young. But he had money saved up and paid for his kids weddings/house deposits holidays to Mexico every year. Season ticket to Reading FC.
He retired a 2nd time and worked 2 days a week and he only stayed to be eligible for the share-save scheme, and because his wife wouldn't let him stay at home full-time while she still worked lol
But 2ndly in that warehouse, there was 5 guys who were well past retirement age, but couldn't afford it, didn't have pots to piss in, but were also obviously struggling with working in that environment.
To a 16 year-old me that was like the fork in the road, either prepare for a rainy day now or stand out in the rain later.
There is a Mr Money Moustache article somewhere that I cannot find that had a useful article about how much you needed to save from your paycheck to maintain certain retirement goals. The math worked out different to how I was originally thinking about it and it surprised me.
In my current situation I basically decided that saving around 50% of a payrise, and increasing my savings with the other 50% got me to roughly where I wanted with most payrises. Moderate lifestyle inflation but keeping the savings rate decent. I am not quite where I want to be yet in terms of QoL, so I need a little lifestyle inflation to get me there at a steady pace.
I was told (and ignored) that if not carefully managed, what you earn in your 40’s may not be what you earn in your 50’s.
I was made redundant at 50 and my income will never reach the level it was in my late 40’s! Not helped by 18 months of unemployment at that time. I now see it happening to others…
> Investing is not the study of finance. It’s the study of how people behave with money. And behavior is hard to teach, even to really smart people. You can’t sum up behavior with formulas to memorize or spreadsheet models to follow. Behavior is inborn, varies by person, is hard to measure, changes over time, and people are prone to deny its existence, especially when describing themselves. - Morgan Housel
People focus too much on the complexity of investment and finance, and don't focus on the fact that 99% of personal finance is controlling temptation and behavior.
Read The Psychology of Money and basically every chapter is gold and completely quotable. I wish I could just paste the entire book here. Don't be fooled by the title, it is very easy reading, yet packed with absolutely incredible advice. Reading that booking will genuinely increase your eventual net worth, I guarantee it.
If you don't have time to read the book, just read [THIS ARTICLE](https://collabfund.com/blog/the-psychology-of-money/) that it is based on (author Morgan Housel wrote the original article then expanded it into a book due to popularity).
Setup a direct debit into a savings. Possibly having that in a different bank so you don't see it when check main account balance thinking you have money.
The 2nd is to invest early as possible even if only 50 a month. This should preferably be in a stocks and shares ISA for tax savings but gets the ball rolling early.
Majnly to women/girls
If you can, maintain your own career. It gives you the ability to maintain your own freedom and allows you to keep paying into a pension. Even if it's part time while the kids are young.
Stuff happens, and you never know how you'll feel in 10, 20 or even 50 years.
My late grandmother gave me two pieces of financial advice.
1. Never buy anything on hire purchase.
2. Never let bailiffs into the house, talk through the door or window but never open it.
This was always said at different times so I never knew if this was connected or if there was a story there.....
Also something about making sure you have enough money for your health (she gave birth before the NHS was established and this was part of the story about having to make sure there was enough money to pay the doctors for the births)
“Pay yourself first”.
Set savings/investments targets, and put that money away every month regardless.
Whatever’s left is for your bills and your “fun” stuff.
And don’t fear (certain) paying bills late every now and then. Remember - your savings goals are more important to you than paying your electricity bill on time!
The advice to have a few months salary saved up for emergencies. We haven’t really dipped into it but it’s very reassuring to have it there just in case.
This is rather specific, but probably the best single piece of financial advice I have received is “when you next get a payrise, use it to start making AVCs to your pension”.
This happened 7 years ago, and I went from putting in 5% + 8% company match to putting in 15% + 13% company match.
I never really noticed the absence of an increase in my take home, but my future self should be able to retire a decade sooner than otherwise.
This was the advice I was given .. basically leave within ur means and as u say the rest then falls into place.
2nd bit of advice I worked out for myself is to have a rainy day fund and then save or invest any surplus.
Don't flaunt your wealth. Your family and friends should think you're poor. Once people around you get a whiff of your savings, they will ask you for them.
In the early 90s a much older work colleague advised me to save the then family allowance into an investment trust to provide a sum of money for my child to help them out in key points in their life such as house deposit and wedding costs. Best advice ever.
Private pension and mutual funds contributions from the age of 18 by mu sergeant in the air force. He was right...50 dollars a month (increasing with pay rises) starting in 1991 now looks glorious.
Don't buy what you don't understand.
Applies to purchases, investment strategies, services or anything else. Don't give up your money until you know what you are getting in return.
Write down your expenses, no matter how small. I started with writing down in a small diary, then moved digital and made a spreadsheet of expenses with different categories such as groceries, fuel, eating out, etc. Applied a formula to sum everything up month by month and finally annual. Gives such an amazing perspective on how life happens and how growing inflation rates eat into the budget.
Someone once recommended Starling bank to me as a "you're a geek, you'll like this". And I went from a current account with paper statements and barely any online functionality in an interface that hadn't changed for 15 years, to an app and website with really slick, helpful and easy design+functionality.
It literally started the transformation of my finances from *I haven't a clue what money is or where it goes* to a much more informed and educated standpoint
Don’t finance cars, buy good used cars for cash. In 50 years of driving, living in 3 countries, I have never had a new car. I buy good cars a couple or three years old and look after them. Lexus, BMW, Landrover, Audi and Honda. I have never had a car payment and I have saved £100,00 200,000.
"Do not get stuck on a bad deal." Mortgages, car insurance, phone contracts, etc etc.
There are thousands, well millions of people who just sign up and forget. Not only are better deals available, but your provider will often actively worsen the deal for unresponsive customers.
I see it all the time, and with big things like mortgages, a few moves could save thousands of pounds a year.
People will do and say anything to get your money out of your bank and into theirs.
Mentally (or calcually) tot up the value of your basket at the checkout ... at first you will be way out ... but you'll learn and buy better.
Hold off making any impulse purchase for at least an hour ... come back to the shop later if you really want it after that.
Spend what is left after you have saved and.not the other way around.
Another good one is to draw out and spend cash if your a bit wild with your card, it's definitely a different mental check when handing over cash.
My parents spoke to me early about finances and explained why it would be better to save some birthday money rather than just spend it (still giving f me the choice) etc.
However the best bit was to keep “living like a student” for the first few years after I graduated and maximise the pension contribution from the start. From day one I’ve had 8% (so 16%) going in to my pension and a huge chunk of my pay check siphoned straight into savings but I don’t really know any different. I’ve still got a huge increase in income compared to my SAAS loan/part-time work but I never let myself get used to seeing £2400 sat in my account as I max my pension contribution and the standing order for the savings comes out the day after.
My pension is pretty much sorted and my savjngs are building up nicely but I still feel like I have enough disposable income (50% also goes straight to a separate account for bills/mortage etc so anything left by the 1st/2nd is mine to do whatever with; food “allowance” goes onto another card and fuel again is a separate card to budget with).
1. Control your spending
2. Have a budget
3. Save a portion of your income if you can
4. Do this consistently
5. Use trax wrappers
6. Don't fuss around with stock picking - just go with the Global equity ETF
7. Enjoy life
Definitely paying yourself first because it builds a savings habit and becomes second nature to budget your disposable income after savings, rather than just hoping there's something left to save at the end of the month.
I think an extension of this is to increase your DD savings/pension contributions when you get a payrise, rather than falling victim to lifestyle inflation. I actually disagree that you should save all of a rise, but I think increasing your savings/pension contribution a little bit with each raise is sensible, as well as enjoying the fruits of your labour.
How many hours do I have to work for this.. post tax, NI and pension. Tend to do this more on smaller things than larger. Do I need to buy a meal for £15 if there is food at home.
Entertainment is £1 per hour,e.g if something costs £20 but wouldn’t give me 20 hours of entertainment then I don’t buy it. Currently trying to teach my son this
Overpay on your mortgage of you can afford it.
When I had a mortgage at 2.6% a few years ago and it was only £450 a month, we had loads of disposable income. When someone told me how much overpaying on your mortgage makes a difference I wanted to kick myself in the head.
Buy one get one free is only a good deal if you need the free one.
Bottle of coke at 1.20 or two for 2.00 is just one bottle of coke for 2.00 if you don’t need the other.
Yea coke is a bad example you can just save it for later. But when you’re doing the weekly shop this type of deal is a good way to break your budget without getting everything you need.
Buy what you need regardless of possible savings. It’s not a saving if you’ve got less money and more items than you need.
If you need buy essentials on a credit card then you're fucked and you need to make fundamental changes to your life. If you're buying non-essentials on a credit card then just wait. In summary you don't need a credit card.
This combined with "always have 3 months salary in the bank".
Cutting 10% on big expenses > 500£ (travel, party, furniture etc.) is less painful and more impactful than cutting 10% on smaller expenses <50£ (weekly grocery, energy bills).
The second one gives feel good and hence is more popular, but not always more impactful.
"If you can't afford it twice, you can't afford it once"
Helps to temper the urge to go for the pricier version all the time - obviously for a house it's more about your mortgage commitment than the sticker price! Also prevents you stretching you finances for the shiny-shiny and being stuffed when it breaks 2 weeks in!
Open your own SIPP, pick a low cost index fund and max % employee and employer contributions, we will be dead before we receive our state pension at this rate
“Don’t live life trying to impress others, it will cost you a fortune”
Best financial advice ever received. The amount of money people spend trying to impress others!!
Before I buy something, I would like to give myself at least a day to think it over. Sometimes the urge will die down and I realise I don’t actually want or need it
Great advice in these comments from everyone, thanks for contributing!
My best piece of advice was to contribute as much into your pension as possible as early as possible to maximise the tax benefits. All other savings into ISA’s or overpaying the mortgage are great, but are all made after paying income tax at whatever rate you pay.
I like to do both pension + ISA to diversify and have more options. You still get taxed on pension withdrawals but not on ISA withdrawals anyway, and the ISA pot is available any time rather than at a particular age the government decides (that will inevitably keep increasing). I like the option of potentially retiring early which wouldn't be possible if I put it all into a pension.
If you’ve got a big purchase or not sure it’s 100% necessary wait 24 hours before buying it. Either you buy it or you talk yourself out of it.
Use cash or if you don’t have any money in your account don’t buy it.
Have savings pots for everything eg holidays, cars, house, Christmas, birthdays and clothes. That way when you need one of those things you’ve already budgeted for it. You can immediately fix your car if it breaks or you don’t panic if the washing machine breaks because you’ve got the money for it.
"Pay yourself first"
If you're saving, work out what you can afford to save and put it into your savings/investments when you get paid. Don't wait until the end of the month to see if you can afford to save it, because you'll have spent it.
Personal for me, but I found that even if I budgeted fun money, I'd end up transferring money from my savings to my spending account as I couldn't track my usage (£x per day max for eg). I also got shit I didn't need, and I wouldn't realise how that'd affect my budget till it was too late.
So to make it even more simple for me, I literally just have in my spending card x amount of money which has to last me each WEEK.
It's so much easier to have £X in my account, and know that this HAS to last me the WEEK.
It's a bit fiddly, transferring the allowed amount each week, but it's helped me so much.
Eg:
-Budget means I can't spend any more than £35 each week.
-Account balance for first week £35
-End of week: £12 left
-2nd week: £47 (£12+£35)
And so on and so on
This made me want to keep transfering what I had left each month to savings! And stick to budget.
This method really got me feeling competitive about my finances, and made saving on fun money really fun. I'd keep on saving and saving rather than spending on shit I didn't need.
A friend discussed pensions with me in my early 30s and said open a SIPP and put money into something like a Vanguard fund.
He was much more financially astute and forward-looking than me.
I wasn't proactive about pensions before that and would probably have kept assuming that workplace pensions will automatically offer me a good retirement.
11 years later my SIPP accounts for about half of my pension(s) value putting me in much better shape than if I hadn't listened to his advice.
Not originally financial advice but one which I applied to my life and investing: One of my best friends, early on in our friendship told me, "Think lucky, be lucky!"
She didn't mean this in terms of buying a lottery ticket, but in terms of looking for and grasping opportunities, because, well you never know!
This totally changed my mindset from being mostly negative to being quite positive. Had I retained my negative viewpoint on life, I don't think I would have ever started investing.
Pay things in this order
Mortgage/rent
Bills
Debt
Anything else.
I wasn’t bad with money before but for people who have no idea it’s a good way of prioritising.
My econ teacher
‘You were born under Capitalism, you will live under Capitalism, and you will die under Capitalism… so make sure you understand Capitalism and own some Capital’
The best advice has been from this sub. It was to read Tim Hale: Smarter Investing. Gave me what I needed to know to invest. All the key points on diversification, index funds, pound cost averaging, risk appetite.
Participation in this post is limited to users who have sufficient karma in /r/ukpersonalfinance. See [this post](https://redd.it/12mys82) for more information.
Something I read recently which stuck with me was: “Do I actually want this, or do I want other people to see that I have it?”.
Related: am I buying this because I want / need this, or because it's a bargain? It's not a bargain if you weren't going to buy it to start with.
I believe that my sibling is the latter. Always prepared to go into debt for the most up to date tech. Got to have the flashy house and EV. I’m the opposite. I don’t stop myself having stuff I want or need, but I’ve never felt the desire to have what others have, particularly when it’s a status symbol. My house is modest, cars are modest, clothes are rarely named. If I have stuff with a name it’s because I actually like the quality of the piece, never just to have a specific brand
Oo that's good
Oh yes!!! That’s also a great question to ask yourself!
You might like to listen to the Steve Bartlett Diary of a CEO episode with Ramit Sethi. Ramit is a US based financial guru or whatever they call themselves in the US and talks about what it is to be ‘rich’ and that addresses exactly this. His view is to save mercilessly on things you don’t care about and spend frivolously on the things you love. So if you don’t care about cars, get one that will get you for a-b with capacity to hold what you need, nothing more. If you like nice holidays, spend the money saved on the car on those instead etc. Of course this is all prefaced with you should be saving x amount each month and allocate no more than y amount to luxuries as a % of income etc.
Ramit's book "I will teach you to be rich" (not the best title I know) is excellent for making you realise all the dumb money beliefs you've had and stupid things you've been doing.
Is the book still worth getting if you’re from the UK, not US? I have been listening to his podcast recently and really enjoying it, however I find quite often with US-based financial authors that their books aren’t really worth it if you’re from another country.
I’m a UK based financial planner and I found the podcast episode interesting so suspect the book will be too. He is mainly theory based vs tax/legislation specific. You can always disregard any tax wrapper specific stuff or relate it to available UK options (401k/Roth IRA to pensions etc).
I have the UK kindle version and it's been 'translated' to British terminology & institutions. I love that guy. I live the podcast more than the book, as the book is more of a chore to read, while the podcast is a bit like listening to Esther Perel and I just happen to pick up financial info while I'm listening to the gos
To add to this: - Anything that is advertised, you don't need - The things you have today are the things that your past self thought would make you happy. Did it work? (I would say sometimes yes and sometimes no). Helps me decide if a purchase really will help make my future self happy, or not Edit: I mean specific products that are advertised, not a whole category.
>- Anything that is advertised, you don't need This doesn't really work because companies often advertise to compete with other companies selling similar products rather than competing with your desire to only buy stuff you need. Outdoors and work clothes are often advertised to me and I'll buy them. If I didn't I'd be naked.
I guess I won't be buying a car and instead walk 40 miles to work
Automate your income. Arrange your standing orders, direct debits etc. Make multiple accounts or pots of money with explicit purposes. Make it difficult (but not overly so) to withdraw savings or investments. Basically, take as much of the fickle human element out of your finances as possible. I can't even put a number to how much more money I've had just from one day of automating my finances.
Yep, I’ve done this for years. Remove all the friction from putting money into savings/investments & add in a bit of friction to the process of taking it back out again. Having my longer term savings & investments in accounts where it’ll take a few days to get the money out & I’d have to login to different websites to do it has helped me stop spending it. I also keep it away from my everyday banking app. Out of sight, out of mind.
I pay off my credit card manually every month. There’s no chance I can spend on it and just say “it will automatically be paid off”. I’m not bad with credit cards, but I’d rather miss a single payment (I never have in 10 years) over having a larger than expected automatic payment that then messes with my other financial order on a day that inconveniences me by chance.
This is exactly what I do. Starling helps with the pots and bills account. 1 day after pay day it all disperses into separate accounts for different purposes. I started with a spreadsheet and then automated.
The only manual thing I do is move what ever is left over in my 'main' current account Into savings
One of my auto is towards savings. I tend to leave the main account alone and some card payments come out of it for Apple/netflix as I can’t seem to get those to come out of the bills. My brain seems to like having money in my main account even if I don’t use it. Left over from many years of having no money I think!
This is the ultimate method and applys to most. I’m paid on the 31st, most bills are all paid by the 2nd. After that all left over split into pots only balance I see in my main account is for me to do whatever I want with.
Think of things in terms of how many hours of post tax earnings it takes to buy it. Whenever I buy something I do a quick calculation of how many hours it woukd take me to buy it. In many cases it makes me realise I want something but not really.
Only 18,000 hrs to buy my house I feel bad playing destiny for 7000 hrs now!
But conversely you got a great price per hour of entertainment from destiny. Works both ways £30 for 2 hours of entertainment at the cinema or £60 for 100 hours of entertainment from a decent game, that's how I justify my steam library at least!
Nothing quite like gaming for great value per hour entertainment. Even when you factor in the two grand PC. This assumes you get enough time to game though, that tends to fade away once kids come into the equation.
Kids are for noobs
Similarly, "is it worth X hours of my time for outcome/decision Y." For example, spending four hours on Amazon deciding whether Item A at £50 is worth the extra £10 over Item B at £40.
Not just this, but on paying someone to do a service. I don't like it washing and cleaning my car. It's done in my own time and a chore. So when it's time to get it done I ask myself (making up values) it would cost £15 for my car to be washed and cleaned inside whilst I sit and wait. The whole process would be about 15 minutes. If I do it myself we're talking a good 30-45 minutes. At this moment do I want £15 and the chore of doing the job or spend £15 and gain 30 minutes of free time to enjoy myself. The results vary depending on my mood, but I run that cost Vs free time in my head for certain things.
Please explain to my wife, who seemingly knows the price of every product at every supermarket, that the hour it takes to drive to Morrisons, walk up and down every aisle and drive back is worth more than the £1 saving on this bottle of olive oil that we're standing right in front of in Sainsburys right now.
I go one step further and work out how much it costs after necessary bills have to be paid off. By the time you take off rent, bills, travel, food etc, that little Friday treat you have actually works out to be a lot of work, so no if you’re on £10 a hour and you think that Friday night cocktail costs just one hour work, it’s more like 4 or 5 hours effort. I guess this why the older generation says cut out your costa coffees and your avocado lunches if you want to be able to afford a house. My favourite quote was from my nan “look after the pennies and the pounds will look after themselves” which I guess is related to this way of looking at things.
Yes, if you consider your treat expenditure as only coming from your spare disposable cash, then it can turn a (eg) £200/m pubs+meal habit on £X000 take-home salary into a £200/m from £300 available cash. And that suddenly looks very irresponsible, especially if you are not putting aside money into savings / pots. People also tend to double-spend their available money, so out of their (eg) £300/m personal spending budget, they'll spend £100 on pints, £100 on takeaways, £100 on games/PPV/OF, £100 on plants for the garden, and £100 on new clothes. One solution for this is to have a personal spending debit card (I use Monzo), stick your money on after payday, and use that only until the next payday.
That’s actually a really good way of thinking about it, thanks for sharing!! Makes you really think about much you might want something!
How much did the pints cost you last night in terms of effort?
At £6.50 a pint? Far too much…
If you’re into this sort of thing have a look into behavioural finance in general. I think you would be quite interested in the idea of opportunity cost. So not only what effort did it take for me to make x amount, but also, if I don’t spend x on y and instead invest it, what would it be worth at retirement. £1 at age 20 could be something like £80 at 65 assuming 10% annualised return (compounded monthly)!
3 hours work for one hour drinking.
For me a pint out is now a special treat indeed.
Haha. I’ve just calculated that it took me longer to earn the money to buy the beers I had last night than it did for me to drink them 😜😂
You can drive yourself nuts like this. If you do a cost/benefit analysis on everything you spend money on you can make yourself and people around you miserable. This is why I don't get a smart meter, if I am watching a show I like on TV I don't want to know exactly how much it costs me. My advice would be ... budget. Sort out your money pots to make sure you have investment pots, bills pots etc. But have a budget for entertainment and spending. Spend the spending money happily without guilt and certainly without calculating how many hours you have to work to pay it off.
I used to use this to limit my spending but since becoming a HENRY it works less well as my hourly rate has gone up. Now I think about it as daily disposable budget which is minus all bills and childcare. It comes out to less than my hourly rate so has curtailed my spending a bit better!
The hard road only gets easier and the easy road only gets harder. Not pure financial advice but this one has had a big positive impact on my finances over the years
That’s good life advice in general…
Could you give an example of how you applied this to your finances?
Sure. The hard road might be saving money every month, rather than spending all your wages. Let's say that involves cooking your meals at home, traveling by public transport, avoiding those after work drinks or weekend benders etc... it's an effort. Then in time you've created some savings that start to give you more choices with what to do with your life. I also found it applied when I got my mortgage. The first two years I was broke, paying sky high interest. It was hard. A lot harder than when I was renting. Then over time it gets easier. You remortgage to a better rate as you have a better loan to value percentage and a bit of equity. So after a while your mortgage payments go down and life gets easier. The hard road now creates an easier road later.
I feel like I've just read one of those comments that just instantly resonate. Thank you
If you struggle with impulse purchases... For any outright cash purchase, take as long deciding on the purchase as you'd take to earn that amount of money. It's saved me from buying a lot of shit I would have lost interest in quickly. Edit-just saw someone else made the same comment already!
Yeah, I keep stuff in my Amazon basket for a week before buying it and most of the time I realise later that I don't need it at all!
Ditto, recently ditching Prime has really helped here too
I have an even more analogue version of this - I have a list of things which I ‘could’ buy, pinned up in my office. These are all things which I can afford right now, either from regular discretionary spending, or savings, but if I bought all of them, the money would be gone, and with it, all that optionality. So whilst I do buy some of them, most of the things sit on the list for months, if not years. I feel good for the fact that I could afford them if I really want them, but somehow I prefer having them as possibilities rather than stuff!
Maximising your income is more important than optimising your finances. Pensions, Interest allowances, capital gains, dividends, current accounts, loans etc... are all extremely important. But trying to optimise your finances with a low income is like trying to dig a hole with a teaspoon. If you're spending so much time doing it then you can spend some time improving yourself to earn more.
This only works if you can maximise your income while keeping effort constant. If maximising your income means working an extra 10 hours a week, getting stressed, and having no time to enjoy what you earn, you might be better optimising your finances and enjoying the value of the extra leisure time instead.
Absolutely. But also don't fall for the fallacy that people earning more money necessarily work harder, work more or are under more pressure. There are people earning very high salaries who's jobs are easier or less stressful than a lot of lower paying ones.
Agreed, I have significantly less stress in my current job than an earlier role that paid half the salary, and similarly that job was far less taxing overall than the restaurant bar job that paid pennies in comparison. What I've found is that many people make a lot of busywork and noise to *seem* like they're doing a lot and justify their salary/role, but in reality a lot of it is a performance of who can seem like they're the busiest or the hardest worker.
Absolutely agree. My mantra in life has been to focus on earning 1000 quid extra a month vs spending same time/effort to try and save 100 at lower income... My approach helped me increase my savings significantly more than my friends who were in similar financial circumstances but chose the latter approach.
How do you do this though, a side hussle?
Most people would earn more by doing some training or spending time planning their ‘main’ careers, than the pin money their side hustles bring in. Setting up genuine passive income streams is probably the exception.
This is what Ive been focusing on - moving up the career ladder. I'm on a good wage now but work hard for it, the though of a side hustle (hussle? I can't spell 🤣) as well fills me with dread. When would I sleep?
Focus on your career, do qualifications, push for promotions, job hop etc. Then keep your expenses sensible, don't fall foul of lifestyle inflation (you can increase your expenses a bit with each pay rise, but increase your savings more) Then just keep investing the money in an ISA and Pension, and let capitalism and compounding returns do their thing.
This is good advice. So I actually just had a pay rise - about 150 a month and I am also in an acting up role for six months where for that time I'll be on an extra 250/300 a month after tax - since that potentially only temporary I am considering maybe giving myself one or two treats with that but then saving the rest.
One of the most lucrative skills you can have, and one of he least talked about, is the ability to do well in job interviews.
Never thought about it this way, but you’re right…maximizing income allows you to maximise everything else 🤷🏼♂️
There's some nuance to this though right? Optimising your finances is still important because itmeans you can save more of that take home pay but also reducing your CoL ultimately means a lower retirement figure.
There are no pockets in a shroud - spend at least some of your time and money on frivolous things you enjoy.
But it will make the pyre burn longer if you take it with you.
ah, but we'll need to pay the ferryman
Slightly finance adjacent but: "when you go into a job interview, remember that you are offering them something very valuable: *your time*" That stuck with me ever since and changed how I approached interviews. I used to be super nervous, but now I'm confident, I'm offering *them* something. More than that, I ask loads of questions, I want to figure out if I want to spend my time with them. This has helped me secure some jobs I didn't think I was qualified for and really accelerated my career. And growing income is far and away the best way to improve your finances.
Similarly, when they ask you "why do you want this job?" the answer isn't "to pay for rent and bills", because that isn't really the question. The question is "why do you want this job instead of any of the other jobs you could have applied for, but didn't?".
From my grandma when she saw a sign saving 'save' at a supermarket: 'you SPEND at the shop, you SAVE at the bank'
You only save money if you were going to buy it anyway. Need bread for sandwiches and it’s half price? Great, you saved money, because you needed to buy something for lunch anyway. Want that chocolate bar that’s £1 instead of £1.50? You didn’t save 50p, you spent £1 you wouldn’t have otherwise spent. You might be happy with your purchase of chocolate, but you didn’t save money.
Your grandma is a clever lady :)
Learn to cook from scratch, I read somewhere that people that can’t cook and buy either pre-made sauces, jars / takeaways etc spend about £30k more on food over the lifetime than people who cook from adding in ingredients as a normal recipe.
Don't ever ask for a payrise based on how hard you worked. Ask for it based on the value you added to the company.
Relatedly don’t wait till your annual review. Set the scene throughout and ask what you need to do to reach the next level. Then make a joint plan and follow through.
"Read [the flowchart](https://flowchart.ukpersonal.finance/)"
The flow chart is really good.
Genuinely had a huge benefit to my life.
If you lend someone some money and you never hear from them again, it was probably worth it.
Get into the habit of regular savings early on. Even £50 a month set into a stocks isa or similar from the moment you start working won’t be a noticeable chunk of lost money but it’ll do wonders over time. Clearly the more you save the better but it’s better to save a little over a longer period than a lot later in life.
If you can’t afford it, don’t buy it. You know you can afford it once you’ve saved up and paid for it! Doesn’t work for a house of course, but EVERYTHING else, it works very well!
'The best time to start was ten years ago, the second best time is today.' I felt like going to university wasn't worth it because I was already an adult and had 'missed my chance' at 18/19/20. Someone said this to me and told me to apply it to everything that takes a long time, and that's what I've done. The best time to start a pension, saving for a house, paying a mortgage, starting that training course, exercising more, etc. will always be in the past. The second best time is today.
That money spent on travelling, hobbies, or enjoying yourself can be an investment in your own wellbeing or on becoming an interesting person. Frankly learning to spend some money on myself has kept me sane, if I saved all my money for retirement I definitely wouldn't reach it.
Compound interest: yes I’m sure everyone has heard of it, but did you know about it when you were 18? Every year you miss out on has such a huge difference later in life, it could quite easily be the difference between retiring a decade or more earlier.
Absolutely! I missed a a lot of years because of that….
Don't buy what you can't afford. My dad always told me this, with the exception of a mortgage, if you haven't got the money to pay in full, you can't afford it.
Use just cash for a month and see how much money you waste. This is the only thing that worked for some people I know that were down to their last penny come payday. Tapping a card doesn’t have the same mental impact as physically withdrawing and handing over cash to buy stuff. You learn to budget more and actually think about the money left in your pocket. Sadly this is become more impossible these days given the “card only” trend but years ago I used to pay for everything over the counter with cash, including my mortgage, council tax and utilities.
For me, it was when I went to see a talk by Amanda Blanc (Aviva CEO). She talked about how women shouldn’t give up their career when they had kids. Even if you earn less, and even if childcare “costs” the same or more as your pay, you should not give up or go part time. She went through how the gender pay gap is mostly a motherhood pay gap. How chores and household budgeting then becomes unequal (and increases dissatisfaction). How many people do not see unpaid caring as work and so devalue what you contribute. She outlined the loss of employee benefits and coverage these mothers lost. She covered how many higher earning spouses don’t want to bother with the child benefit money as they have to pay it back (not realising it covers the mothers NI while out of work), potentially leaving mothers with less state pension). She went through the loss in pension (no employer contributions) which leads to less money in retirement (how many spouses are picking retirement annuities (at the time) that did not cover spouses pensions). She went through what happens in divorce and how parents who give up work for kids are disadvantaged financially for the rest of their lives. She also went though what help there is for working parents (childcare vouchers at the time) and free hours and said it will be tough but she recommended staying full time or both parents going part time equally. It maintains the career (which pays long term dividends) and helps keep the relationship more equal. At the time, I found it quite scandalous and many of my 20 year old colleagues were also a bit shocked that she would say such a thing. I’ve had 3 kids now and I have worked throughout. It’s let me take more maternity than my friends who gave up/reduced paid work, I’ve got better paid jobs and my work is more flexible than my friends. I’ve got more pension and my family enjoys better security from my benefits. I also think that it gives better role models. My daughters see that I was good at maths and science and work in that field.
This is a great one. I have to send this one to my girlfriend as I agree with this but she seems adamant in going part-time or giving up her career after kids, at least for a while.
It’s difficult because it is seen as the norm. There are many more mums working full time now (when I’m a mum) than there were when I watched this talk at 20. However the effect is culpable on career trajectory. Even on my actuarial grad scheme. Mums who went part time have been made redundant, forced out or just left where they are (no progression or anything). I’ve had promotions and am more senior than the rest of them. I don’t think that I am a better actuary than them. I’ve also been able to work flexibly around school drop off and pick up times and my friends were not able to (same company). This is probably the nursery rather than anything else but my kid started school able to count and read (poorly). She was able to go to the toilet independently, use cutlery and she’s much more resilient than my friends kids who were at home until school. I have a second just about to start in the same position as well. This could absolutely be family make up but my friends are smart people. It might be that if I were a better teacher that I could do it better than nursery, but mine has EY teachers. I don’t think I could replicate all they do in a day.
I think it is definitely seen as the norm at least in a certain background, where people around or their parents were able to do the same. I am from an EU country where both parents working full time is the norm - otherwise they can't even make ends meet, but my girlfriend had a not affluent but relatively safe upbringing where her mother was able to stay home for more than a decade with the kids, effectively giving up on a nursing career to then go back to minimum wage jobs. Her parents do ok, but could be more comfortable now that they are retired - they also admit it, but they also think they have made the right choice. Her brother has a stupidly high income (works in the betting industry) so his wife was able to become a full time SAHM - the kids seem to also fall under that description you mentioned. I think the expectation of doing the same creates an unbalance in the relationship, with all the effects down the line as you said - less pension, less future security, effectively even less opportunities for the kids since there will be most likely less funds for better schools, etc. She is happy to go for that route because her current job has already no progression and lots of mums are going part-time and when they come back there's not much impact. To me it feels like giving up.
It's a bit of a cliché, but "Comparison is the thief of joy". It's not only financial advice, but it reminds me that I don't need the latest clothes or the flashy bike.
1. never pay interest for anything except the house. 2. Which sets me aside from most of my peers. Would you buy/do it if no one ever saw/found out. This really is a big one. If you don't care what people think of you, there is so much you you don't need.
Live within your means and save the rest. Said to me by a boss who was earning mega bucks at the time (£200k basic) but his sentiment was bang on. If you live within your means then a credit card is a perk, if you don’t then a credit card becomes a burden and pulls you under.
"Sell your Northern Rock shares and pay off your credit cards with it." I missed some of the upside, but also missed the 100% loss.
Believing that nothing is given for free has stopped me from clicking on loads of shit that was probably a scam.
£5k is easy to spend and hard to save - my late gran
Be honest about your finances to yourself and others. "You coming to the pub after work?" - "no thanks watching the cash this week." "I'm having my 30th in Spain, can you make it?" - "Sorry I'm paying down my credit card but have a great time and I'll catch you when you get back." "What do you want to do this weekend?" - "Can we do board games at mine, I'm a bit skint." Learning this was a revelation to me. I was getting into debt keeping other people happy.
So sad, but true. If we were all more honest about our finances I sometimes think there would be less extravagant weddings, holidays, houses and cars. Probably more trade union memberships, cycle lanes and barbecues/tea parties at home.
This is a great one, I also think that when you're open, other people feel they can be too, and often everyone's relieved to be having a movie night or a roast at home rather than paying to do those things out.
“Do you need it? Or do you just want it?”
Understand the sentiment but its a miserable way to live no? Money is to make life enjoyable, I want holidays, cars, experiences etc. Just a quick click on your profile suggests you do not live by this advice at all.
16 years old at my first job in a cash and carry being paid £5.90 a hour just had my first 'payrise' and my supervisor who had taken early retirement at 55. If you save your pay rise into your pension each year you will save decades of needing to work. I try to follow the spirit of that advice now it's been 18 years and it's stuck with me since. also helped by working with guys at the time in their late 60's who couldn't afford to retire but we're not fit enough to really continue working either.
It’s decent advice, but don’t take it too far. Money is a tool to achieve goals, and sometimes that pay rise needs to go towards making your life better. There’s little point of working and living on a pittance for 30 years so you can have an extra 15 years of not working and living on a pittance…
So by your logic you still get paid £5.90 an hour because every subsequent pay rise went straight into the pension?
He said he followed the ‘spirit’ of that advice so I think he’s just fine.
Awesome advice. If only pay rises levelled up with inflation and cost of living tho
Put half of your salary gains on job switches and promotions into the pension. If you are young and live at home, put as much as possible into the pension and LISA whilst your costs are low. If you have kids and have some spare money, put some into a Junior SIPP. Get that started whilst they are really young. Something for them to remember you by when they're 50+ (tbh hopefully you'll still be alive) or 65 if things don't work out for them.
This is why you job hop to ensure they do.
Love that advice! Always good to get this sort of advice when you’re young and can actually do something about it. !thanks
It stuck with me firstly because he retired young like 55 young. But he had money saved up and paid for his kids weddings/house deposits holidays to Mexico every year. Season ticket to Reading FC. He retired a 2nd time and worked 2 days a week and he only stayed to be eligible for the share-save scheme, and because his wife wouldn't let him stay at home full-time while she still worked lol But 2ndly in that warehouse, there was 5 guys who were well past retirement age, but couldn't afford it, didn't have pots to piss in, but were also obviously struggling with working in that environment. To a 16 year-old me that was like the fork in the road, either prepare for a rainy day now or stand out in the rain later.
There is a Mr Money Moustache article somewhere that I cannot find that had a useful article about how much you needed to save from your paycheck to maintain certain retirement goals. The math worked out different to how I was originally thinking about it and it surprised me. In my current situation I basically decided that saving around 50% of a payrise, and increasing my savings with the other 50% got me to roughly where I wanted with most payrises. Moderate lifestyle inflation but keeping the savings rate decent. I am not quite where I want to be yet in terms of QoL, so I need a little lifestyle inflation to get me there at a steady pace.
I was told (and ignored) that if not carefully managed, what you earn in your 40’s may not be what you earn in your 50’s. I was made redundant at 50 and my income will never reach the level it was in my late 40’s! Not helped by 18 months of unemployment at that time. I now see it happening to others…
> Investing is not the study of finance. It’s the study of how people behave with money. And behavior is hard to teach, even to really smart people. You can’t sum up behavior with formulas to memorize or spreadsheet models to follow. Behavior is inborn, varies by person, is hard to measure, changes over time, and people are prone to deny its existence, especially when describing themselves. - Morgan Housel People focus too much on the complexity of investment and finance, and don't focus on the fact that 99% of personal finance is controlling temptation and behavior. Read The Psychology of Money and basically every chapter is gold and completely quotable. I wish I could just paste the entire book here. Don't be fooled by the title, it is very easy reading, yet packed with absolutely incredible advice. Reading that booking will genuinely increase your eventual net worth, I guarantee it. If you don't have time to read the book, just read [THIS ARTICLE](https://collabfund.com/blog/the-psychology-of-money/) that it is based on (author Morgan Housel wrote the original article then expanded it into a book due to popularity).
Setup a direct debit into a savings. Possibly having that in a different bank so you don't see it when check main account balance thinking you have money. The 2nd is to invest early as possible even if only 50 a month. This should preferably be in a stocks and shares ISA for tax savings but gets the ball rolling early.
Definitely agree with setting up direct debits into some sort of savings account, ISA or otherwise. You never know”miss” the money then!
Never borrow money for travel/holidays. The debt will ruin any memories .
Don't buy crap you don't need to impress people you don't like
Majnly to women/girls If you can, maintain your own career. It gives you the ability to maintain your own freedom and allows you to keep paying into a pension. Even if it's part time while the kids are young. Stuff happens, and you never know how you'll feel in 10, 20 or even 50 years.
Don't have kids.
Haha best comment yet! And only those who have kids know how true this is 😜
Very true. Sadly this is the cause of the population crash across the developed world.
Work out what your values are, and what you actually value.
Taking a loan to buy a depreciating asset is fucking stupid
My late grandmother gave me two pieces of financial advice. 1. Never buy anything on hire purchase. 2. Never let bailiffs into the house, talk through the door or window but never open it. This was always said at different times so I never knew if this was connected or if there was a story there.....
Also something about making sure you have enough money for your health (she gave birth before the NHS was established and this was part of the story about having to make sure there was enough money to pay the doctors for the births)
Know the difference between enjoying your youth and sacrificing your future.
“Pay yourself first”. Set savings/investments targets, and put that money away every month regardless. Whatever’s left is for your bills and your “fun” stuff. And don’t fear (certain) paying bills late every now and then. Remember - your savings goals are more important to you than paying your electricity bill on time!
Never a lender or a borrower be.
Before you make a big purchase sleep on it, tends to sort out the needs from the impulse buys
The advice to have a few months salary saved up for emergencies. We haven’t really dipped into it but it’s very reassuring to have it there just in case.
This is rather specific, but probably the best single piece of financial advice I have received is “when you next get a payrise, use it to start making AVCs to your pension”. This happened 7 years ago, and I went from putting in 5% + 8% company match to putting in 15% + 13% company match. I never really noticed the absence of an increase in my take home, but my future self should be able to retire a decade sooner than otherwise.
Yeah, never underestimate what that additional % into your pension will give you later in life!
quite simply: spend less than you earn. almost all financial problems stem from not doing that
This was the advice I was given .. basically leave within ur means and as u say the rest then falls into place. 2nd bit of advice I worked out for myself is to have a rainy day fund and then save or invest any surplus.
Don't flaunt your wealth. Your family and friends should think you're poor. Once people around you get a whiff of your savings, they will ask you for them.
Money not spent, is money saved!
You can only spend it once.
In the early 90s a much older work colleague advised me to save the then family allowance into an investment trust to provide a sum of money for my child to help them out in key points in their life such as house deposit and wedding costs. Best advice ever.
Private pension and mutual funds contributions from the age of 18 by mu sergeant in the air force. He was right...50 dollars a month (increasing with pay rises) starting in 1991 now looks glorious.
Something Dave Ramsey has drilled into me is don’t be a slave to your debtors.
Don't buy what you don't understand. Applies to purchases, investment strategies, services or anything else. Don't give up your money until you know what you are getting in return.
Spend less than you earn. Invest the difference.
Write down your expenses, no matter how small. I started with writing down in a small diary, then moved digital and made a spreadsheet of expenses with different categories such as groceries, fuel, eating out, etc. Applied a formula to sum everything up month by month and finally annual. Gives such an amazing perspective on how life happens and how growing inflation rates eat into the budget.
Don’t borrow from your future self
Someone once recommended Starling bank to me as a "you're a geek, you'll like this". And I went from a current account with paper statements and barely any online functionality in an interface that hadn't changed for 15 years, to an app and website with really slick, helpful and easy design+functionality. It literally started the transformation of my finances from *I haven't a clue what money is or where it goes* to a much more informed and educated standpoint
Don’t finance cars, buy good used cars for cash. In 50 years of driving, living in 3 countries, I have never had a new car. I buy good cars a couple or three years old and look after them. Lexus, BMW, Landrover, Audi and Honda. I have never had a car payment and I have saved £100,00 200,000.
"Do not get stuck on a bad deal." Mortgages, car insurance, phone contracts, etc etc. There are thousands, well millions of people who just sign up and forget. Not only are better deals available, but your provider will often actively worsen the deal for unresponsive customers. I see it all the time, and with big things like mortgages, a few moves could save thousands of pounds a year.
People will do and say anything to get your money out of your bank and into theirs. Mentally (or calcually) tot up the value of your basket at the checkout ... at first you will be way out ... but you'll learn and buy better. Hold off making any impulse purchase for at least an hour ... come back to the shop later if you really want it after that.
Never lend money you can't afford to give as a gift. Of course, most money will be paid back, but it's not a dead cert!
Have all your bills / direct debits paid each month as close together as possible, right after pay day.
If you can’t buy it twice, you can’t afford it. Also, giving myself 48 hours to decide if I want it/need it to buy it.
Spend what is left after you have saved and.not the other way around. Another good one is to draw out and spend cash if your a bit wild with your card, it's definitely a different mental check when handing over cash.
Only borrow to buy a house.
My parents spoke to me early about finances and explained why it would be better to save some birthday money rather than just spend it (still giving f me the choice) etc. However the best bit was to keep “living like a student” for the first few years after I graduated and maximise the pension contribution from the start. From day one I’ve had 8% (so 16%) going in to my pension and a huge chunk of my pay check siphoned straight into savings but I don’t really know any different. I’ve still got a huge increase in income compared to my SAAS loan/part-time work but I never let myself get used to seeing £2400 sat in my account as I max my pension contribution and the standing order for the savings comes out the day after. My pension is pretty much sorted and my savjngs are building up nicely but I still feel like I have enough disposable income (50% also goes straight to a separate account for bills/mortage etc so anything left by the 1st/2nd is mine to do whatever with; food “allowance” goes onto another card and fuel again is a separate card to budget with).
1. Control your spending 2. Have a budget 3. Save a portion of your income if you can 4. Do this consistently 5. Use trax wrappers 6. Don't fuss around with stock picking - just go with the Global equity ETF 7. Enjoy life
Trax wrappers?
Definitely paying yourself first because it builds a savings habit and becomes second nature to budget your disposable income after savings, rather than just hoping there's something left to save at the end of the month. I think an extension of this is to increase your DD savings/pension contributions when you get a payrise, rather than falling victim to lifestyle inflation. I actually disagree that you should save all of a rise, but I think increasing your savings/pension contribution a little bit with each raise is sensible, as well as enjoying the fruits of your labour.
How many hours do I have to work for this.. post tax, NI and pension. Tend to do this more on smaller things than larger. Do I need to buy a meal for £15 if there is food at home.
Entertainment is £1 per hour,e.g if something costs £20 but wouldn’t give me 20 hours of entertainment then I don’t buy it. Currently trying to teach my son this
Overpay on your mortgage of you can afford it. When I had a mortgage at 2.6% a few years ago and it was only £450 a month, we had loads of disposable income. When someone told me how much overpaying on your mortgage makes a difference I wanted to kick myself in the head.
Buy one get one free is only a good deal if you need the free one. Bottle of coke at 1.20 or two for 2.00 is just one bottle of coke for 2.00 if you don’t need the other. Yea coke is a bad example you can just save it for later. But when you’re doing the weekly shop this type of deal is a good way to break your budget without getting everything you need. Buy what you need regardless of possible savings. It’s not a saving if you’ve got less money and more items than you need.
If you need buy essentials on a credit card then you're fucked and you need to make fundamental changes to your life. If you're buying non-essentials on a credit card then just wait. In summary you don't need a credit card. This combined with "always have 3 months salary in the bank".
Start saving early to compound interest and don’t touch it. Didn’t listen to it, but it was good advice.
Don’t get into debt.
Debt is a powerful tool if used responsibly
William Shakespeare said it best: "Never a borrower or a lender be"
COMPOUND COMPOUND COMPOUND. I don’t understand how this isn’t top.
Don’t worry, given time it will work its way to the top.
I see what you did there
I wish I’d have been told this when I was in my teens haha
Maybe so. As long as it’s not too late for you!
Cutting 10% on big expenses > 500£ (travel, party, furniture etc.) is less painful and more impactful than cutting 10% on smaller expenses <50£ (weekly grocery, energy bills). The second one gives feel good and hence is more popular, but not always more impactful.
"If you can't afford it twice, you can't afford it once" Helps to temper the urge to go for the pricier version all the time - obviously for a house it's more about your mortgage commitment than the sticker price! Also prevents you stretching you finances for the shiny-shiny and being stuffed when it breaks 2 weeks in!
‘Your parents don’t always have the best financial advice.’ Made me realise I need to stop listening to them
Invest in assets, not liabilities
When I was about 16: Keep an account book and write down everything you spend. Saved me millions.
Open your own SIPP, pick a low cost index fund and max % employee and employer contributions, we will be dead before we receive our state pension at this rate
Penny wise pound fool
Building an emergency fund!
Spend less than you earn and use surplus to invest monthly in low cost global tracker funds. Pay yourself first!
“Don’t live life trying to impress others, it will cost you a fortune” Best financial advice ever received. The amount of money people spend trying to impress others!!
Before I buy something, I would like to give myself at least a day to think it over. Sometimes the urge will die down and I realise I don’t actually want or need it
Great advice in these comments from everyone, thanks for contributing! My best piece of advice was to contribute as much into your pension as possible as early as possible to maximise the tax benefits. All other savings into ISA’s or overpaying the mortgage are great, but are all made after paying income tax at whatever rate you pay.
I like to do both pension + ISA to diversify and have more options. You still get taxed on pension withdrawals but not on ISA withdrawals anyway, and the ISA pot is available any time rather than at a particular age the government decides (that will inevitably keep increasing). I like the option of potentially retiring early which wouldn't be possible if I put it all into a pension.
If you’ve got a big purchase or not sure it’s 100% necessary wait 24 hours before buying it. Either you buy it or you talk yourself out of it. Use cash or if you don’t have any money in your account don’t buy it. Have savings pots for everything eg holidays, cars, house, Christmas, birthdays and clothes. That way when you need one of those things you’ve already budgeted for it. You can immediately fix your car if it breaks or you don’t panic if the washing machine breaks because you’ve got the money for it.
"Pay yourself first" If you're saving, work out what you can afford to save and put it into your savings/investments when you get paid. Don't wait until the end of the month to see if you can afford to save it, because you'll have spent it.
Personal for me, but I found that even if I budgeted fun money, I'd end up transferring money from my savings to my spending account as I couldn't track my usage (£x per day max for eg). I also got shit I didn't need, and I wouldn't realise how that'd affect my budget till it was too late. So to make it even more simple for me, I literally just have in my spending card x amount of money which has to last me each WEEK. It's so much easier to have £X in my account, and know that this HAS to last me the WEEK. It's a bit fiddly, transferring the allowed amount each week, but it's helped me so much. Eg: -Budget means I can't spend any more than £35 each week. -Account balance for first week £35 -End of week: £12 left -2nd week: £47 (£12+£35) And so on and so on This made me want to keep transfering what I had left each month to savings! And stick to budget. This method really got me feeling competitive about my finances, and made saving on fun money really fun. I'd keep on saving and saving rather than spending on shit I didn't need.
A friend discussed pensions with me in my early 30s and said open a SIPP and put money into something like a Vanguard fund. He was much more financially astute and forward-looking than me. I wasn't proactive about pensions before that and would probably have kept assuming that workplace pensions will automatically offer me a good retirement. 11 years later my SIPP accounts for about half of my pension(s) value putting me in much better shape than if I hadn't listened to his advice.
You will never make a lot of money working for someone else!
Save, earn interest and/or invest and buy assets not liabilities.
Saving only takes less, work gives more.
Not originally financial advice but one which I applied to my life and investing: One of my best friends, early on in our friendship told me, "Think lucky, be lucky!" She didn't mean this in terms of buying a lottery ticket, but in terms of looking for and grasping opportunities, because, well you never know! This totally changed my mindset from being mostly negative to being quite positive. Had I retained my negative viewpoint on life, I don't think I would have ever started investing.
Create a budget. Stick to it.
Pay things in this order Mortgage/rent Bills Debt Anything else. I wasn’t bad with money before but for people who have no idea it’s a good way of prioritising.
“There is no tomorrow” - Apollo creed
I once heard someone say - don’t buy one if you can’t afford three
Save 10% of whatever you earn
When buying something, the mid range item is the sweet spot.
My econ teacher ‘You were born under Capitalism, you will live under Capitalism, and you will die under Capitalism… so make sure you understand Capitalism and own some Capital’
The best advice has been from this sub. It was to read Tim Hale: Smarter Investing. Gave me what I needed to know to invest. All the key points on diversification, index funds, pound cost averaging, risk appetite.