Let’s talk about money

This year I have made a few deals with myself that I know will pay off in the long term and a few of them revolve around money.

I do find it quite weird how in general people do not talk about money openly. It is a subject we find emotive and personal. Everyone is in a different situation and has different priorities in the their life that mean different spending habits. It’s too easy to compare to external views of people’s lives though as we only see part of the story. I admit I am the same and very people know an detail about my incoming and outgoings. I also know I can be really judgmental about other peoples spending habits when I only know limited this information (this is family related, not friends). But for the most part I think it doesn’t matter what other people do as long as they are happy with their lives and how they are living. I want the same in return, as I can probably seem quite selfish when it comes to some of habits, for example I will budget socialising so I can save for a holiday and that works for me.

So the last few months I have been reading the blog The Financial Diet and have become obsessed in making my money work differently in ways that will be less stressful and more fulfilling. It has made me set a few goals for this year to get myself in a better position financially and set myself for a future I want to live.

Firstly I am paying off my credit card!

I’m not a big credit card spending, but when I bought my house and had a few years of lower salary than before I ended up with £2k on credit cards. Ever since I have been paying the minimum and moving it round for the 0% balance transfers. This is more annoying than anything else. I am frustrated at myself for keeping it hanging around for so long. So this year I am going to get rid of it! I’ve budgeted it out and any additional income I get will go towards getting this gone. I will then seriously consider how I take credit cards forward. I would like to earn air miles so I am tempted to get a card that will allow me to do that, but I need this gone first.

Secondly I am creating an emergency fund!

This is one I have specifically taken from The Financial Diet and it makes so much sense. Next year I will have been in my house 5 years and all my warranties will be ending and so having a fund that will cover anything going wrong will be a lot less stressful than relying on emergency credit cards.  I am going to start by building up to £1000 in a completely separate account to everything else by the end of the year. Then I will continue to build up a nice amount that could cover me for a period of time if the worst happens with a job or illness. It feels extremely important to me that I am set up to be self-sufficient. I’ve always had my parents as a safety net, but they are getting older and I want to be fully able to take care of my own life going forward without that net. I also don’t want to be like some family who continue to depend on others to supplement income. It makes me angry to see it and I don’t want to be that person. So this makes good sense, but is also a personal value/belief I hold.

Thirdly I’m focusing on travel!

Being able to go to Japan last year was amazing and reminded me how much fun and experience you get from visiting completely different parts of the world. I feel in a place financially where this will be possible as long as live within my means and spend my money efficiently and effectively. This means making short term sacrifices for long term gains. This has to be a big part of my life and as I want to go away for Christmas this year the timing works out well. I can get my credit card paid off and save up an emergency fund and plan a nice trip for the end of the year.

What does this mean for daily life?

In essence not much will change as I have just divided up how I was saving for Japan last year into different pots. I have a spread sheet with this all in and I am going make sure I open it everyday, just as a reminder, to keep myself accountable. I have reduced my monthly budget a bit to ensure I think my purchases through more than last year. I know this will mean saying no for money reasons more often, but I know the long term pay off will be worth it. This is also goes hand in hand with another aspect of my life I want to focus on, which is having people round my house a bit more instead of going out. I am also debating going to a cash based system for a while as it seems with contactless I have become a bit loose with my spending and I do not like it, I’ll let you know how that goes!

So I have set myself a few rules for the next year:

  • Books – no new books until I have read the ones I have (I have 30 unread!)
  • Eating out – reduce eating out and when I do it has to be with others
  • General spending- do not buy replacements until the previous one has run out

Money makes life easier, but it can also make things very difficult. I don’t want my life to be about things and so I will be getting rid of more stuff over the next year. I doubt I’ll ever be minimalist, but I would like to reduce the clutter and only keep the things that hold meaning or purpose. I want my life to be about the simple things that make me happy and feel peaceful – travel to new place, reading great book, fluffy cats, restful space, and knowing good people.

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