trEAsury

3 simple steps to financial security…

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As you know from my previous posts I am trying to simplify my finances and the third piece of financial advice I have read that resonated with me is –

‘Each month put a small amount from your income into a savings account by standing order or direct debit’.

Putting money away from your income immediately,  before you have chance to spend it, is good advice and far better than thinking you will put away any money left at the end of the month –it probably won’t happen.  I could easily spend any spare cash on the above Household Shopping list – although this is an old list and some items I have bought and some turned out to be more wants than needs so have been removed from my list in my move to simplify and reduce stuff.

Therefore, doing it automatically by direct payment means there is absolutely no chance of spending it first and I think you adjust to the fact that your remaining disposable income is less and helps to keep your spending within this new limit.

Interestingly, there are a few accounts out there that offer a higher interest rate for saving a regular monthly amount and are perfect for this idea of putting away a portion of your income at the beginning of the month before you start to spend it.

I chose a Nationwide Flex Regular Saver account which has a 5% interest return over the year and I have set up a direct payment to put an amount into it at the beginning of each month.  You can put in any amount up to £500 a month so it accumulates over the year.  According to Martin Lewis’s savings calculator if I managed to save £500 a month over the year I would have a return of £160 interest.  To save that much would entail some serious economising on my part!

So there you have it – of all the books, articles and internet advice I have read I think this captures the ideas I think are most helpful –

  1. Spend less than you earn
  2. Devote an hour a week to staying on top of your money
  3. Each month put a small amount from your income into a savings account by standing order or direct debit

Incorporating these 3 simple steps into my daily finances should help me keep on track.

 

This weekend although many lucky bloggers have been out digging their gardens we have had rain and wind but I have used this indoor time to follow step 2 to stay on top of my finances and give my savings accounts a thorough overhaul.  As well as opening the Regular Saver account I have an ISA account recently matured and the money is just sitting in a very low 0.05% instant access account now and I need to reinvest.  I have looked at numerous possibilities – but should I go for 1 year, 2 year, 3 year, 4 year or five-year fixed rates?  In such indecisive circumstances I opt for the middle ground so I am edging towards a 3 year fixed.
My next project is to get rid of some stuff and make some extra money.

I have various large household items that I am going to try to sell on eBay (try being the operative word here!) – I have never done this before so if anyone out there is an experienced seller and can offer some good advice to a novice I would welcome your comments to get me started.

drEAming, random thoughts

Less is more, more or less…

The ladies down at my local library must think I am either very rich, or very poor or just plain obsessed with money because I am always borrowing books on Finances.  I have read them all from Rich Dad to Poor Dad, Martin Lewis, Suze Orman and Miss Moneypenny.   I even had a great book on explaining mortgages by Robin Banks.  I now know you should hang on to your assests and roll up your toothpaste tubes to squeeze out every last inch but for me the advice is still not quite enough.  It is the same with books and articles on organising – I read them all in the hope of discovering something really profound that will change my life.

I am not sure just what I am hoping to learn from these books maybe I am looking for some kind of definitive answer to budgeting and of course like everything else in life there isn’t one.  When I think back to my grandma and grandad they kept all their financial and other papers in a little old fashioned leather suitcase under the bed (I have a filing cabinet and a filing drawer!) but of course they had less to look after.  They rented so apart from the rent agreement they had no mortgage papers or buildings insurance and no contents as they had so little to insure.  They did have a tiny life policy to pay for their funerals like most people of their time.  They had a TV rented of course and a fridge but no other electrical items apart from the kettle and an iron.   Cakes were made by hand not a mixer, everything was chopped with a knife not a processor.  Computers were not an household item and they only had a phone installed aged 82.  They had a quarteley electricity bill that was paid in cash the same day it dropped through the door.  Their pension was just the one given by the state.  They had one savings book and no current account or cheque book everything was paid for by cash.

All in all their paperwork including any user instructions and guarantees was minimal and very little in the way of junk mail dropped through their door.  They still received those old fashioned things called letters, hand written ones, usually from family and friends and postcards too.   There was very little to maintain or breakdown and they never had to trawl the internet looking for advantageous savings accounts or run through comparison sites.  Their money flowed in and out with a little put by for a rainy day – such a simple life – a good example of the less is more some of us are striving for.

When we packed up their council flat it took us just 2 days to sort through all the stuff in comparison it took every weekend from January to March to go through my mums when she moved!

Yet even with so little Grandma and Grandad loved life and lived it to the full – they were not bogged down being keepers of stuff.  So really I do not need to read all those books I just need to be like dear old gran!

Anyone reading this post will love to read the post over at Marigold Jam  – ‘Less is often more – discuss’ – it seems we have been having very similar thoughts at the same time because like she says so much of blogland at the moment is given over to sorting out and decluttering.