What is your financial end goal?

Financial goal

(Who needs a face to get to the finish line?)

Do you know where you are going in life?

Sorry – that came out a little more deep and meaningful than I intended.

What I mean is, when you think about your financial situation, do you have a clear idea of what you want to achieve? A financial goal?

If not, then I highly recommend sitting down and really facing up to that question. If you are in a hole of debt so deep you can’t see the sky, then I understand that it’s not easy to have that conversation with yourself. But actually, in your case the answer should be really simple: get rid of that awful black cloud in your life. Get debt free. Full stop.

If you don’t have debt then the answer might be trickier to land on. Do you want to get a deposit for a house together? Maybe you want to pay off your mortgage? Get an emergency fund sorted? Build a savings pot? Save for a special holiday? Save for ANY holiday?

It could be any number of things but I think it’s really important to settle on what it is that you want to achieve – because how else are you going to identify the steps you need to take towards it?

I once heard a saying, “if you aim at nothing, you’ll hit it.” And it’s so true. If you want to achieve something, you have to aim for it first and then go headlong towards it.

For me, there have been various goals at stages in my life – including almost all of those listed above at one point or another. Today, at the moment, it’s clear the tens of thousands of pounds of debt that I’m currently in. I do have longer term goals I’d like to achieve after that, but until the debt is gone these are complete pipe dreams.

So I’ll put my head down and push towards that goal. And every decision I take should be with that goal in mind. Easy to say, not easy to do. But I’ll never achieve it if I don’t try. And neither will you.

So what are your financial goals you would like to achieve?

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The dumbest thing you’ll ever do

Expensive car

(Vroooom. I am expensive and shiny.)

I want to be clear and upfront about something right now: I am not here to judge. If it was easy to make our money work for us and be sensible with it then we might all be bloody millionaires by now. I don’t know about you, but that definitely hasn’t happened for me yet.

So chances are we’ve all made financial errors along the way and some silly money mistakes too. Sound familiar? Yeah, me too.

So – no judgement here.

But there is one financial decision that thousands of people make every day that I just don’t get it.

Why, tell me WHY, do people ever buy brand new cars?

I mean, really? I can’t think of any other situation where you would happily hand over anywhere between £10,000 to £50,000 (or more) of your hard earned money (after tax!) and gain an asset that is IMMEDIATELY worth approx 10-20% less the moment you get it, 40% less after the first year and 60% less after three years! Seriously – WTF?!

You have just overpaid by thousands of pounds and you will never ever see that money again. You have gained nothing for the benefit of those lost thousands. The moment you sign the papers and are handed the keys, that brand new car is no longer brand new. It’s worth a whole ton less and will continue to lose value far quicker than a second hand car would.

I just don’t get it. It seems to me to be the most baffling thing that anyone could choose to do with their cash, regardless of how much money they have.

But even more mind-boggling is the fact that people are buying new cars on finance because they don’t actually have the money to afford the full amount. This is even more strange to me – why, oh why, are you buying an asset you can’t afford, and losing thousands of pounds in the process?

On what planet does that make sense?

So yes, as I said, no judgement here. We’ve all done silly things. But this financial decision seems to me easily one of the worst you can make. If you want to throw away thousands of pounds for the sheer hell of it, just send it to me instead. I promise to do better things with it than the car salesman you were going to give it to.

On the other hand, I’m nothing if not open minded, so please – if you can explain this one to me in any way that makes sense, I’m all ears.

Spreadsheets are sexy

Spreadsheets

(O.M.G. – look at that sexy spreadsheet! Phwoar.)

Ok, I’m lying. Spreadsheets are not sexy – except perhaps to a really niche audience. I do not recommend bigging up your Excel skills by way of a chat up line. Not gonna work.

But spreadsheets are, nevertheless, a vital part of the money mission. To push this analogy to its limits, they are the Spanx of the money world. You need a decent robust spreadsheet underpinning everything and keeping it all together so that you can swan through life looking all sexy and money savvy. Ergo, spreadsheets are sexy.

Step one for me wrestling back control over my finances was to set myself up with a spreadsheet. Now I’m no Excel master. I’ve wrestled with many a table and graph in my time, and rarely do I win. But I’ve picked up a few tricks along the way and on a good day I can plug in a simple formula. This is helpful – it speeds things up. But it’s not vital. A calculator will do the trick too.

Basically the idea is to track your money. Some people call it a budget but actually I think that’s the next step up on the ladder. If you don’t know where the hell your money is going then there’s little point in setting unrealistic limits on what you spend. You’re just gonna blow straight through your budget without even thinking and then give up. Sadly I speak from much experience.

So step one is to track your spending. For a long time I told myself that this was pointless – I can see where the money is going from my bank statement. So why do I need to do the job of the bank and log it all separately myself? Waste-a-time.

Nope. This is your bad money brain talking. Truth is, it is nearly impossible to keep track of all your spending via your bank statement. Particularly if you are hiding from that statement at various points in the month (i.e a week before pay day, right?). Plus a statement doesn’t categorise spending so how are you gonna know just how much your coffee habit (or – because we’re millennials – avocado habit) is actually costing you a month? You might have a guesstimate in mind but chances are it’s wrong.

So: You need a spreadsheet.

There’s a ton of suggestions and pro-formas online for tracking spending which can get you started. I initially started out with one from the ‘Frugal Living’ forum on Money Saving Expert.com, but that was really aimed at setting an annual budget and didn’t really allow me to see where the cash was going each month. So I changed it and made it my own.

I set up a number of categories in columns along the top (which will be entirely personal to you) and put the days of the month down the side. Then I plugged in each item I bought. Yes – each time I bought a packet of crisps or a toy for my kid (or an avocado 🥑🥑🥑) on it went to the spreadsheet.

Now your spreadsheet has to work for you. Mine doesn’t happen to include household spending because my partner and I sort that separately, but it captures all my personal spending, which is the bit that was out of control. Obviously yours can include anything and everything you need.

And then you keep a running total of how much you’re spending in each category along the bottom. And voila – you promptly die of shock at JUST HOW BLOODY EXPENSIVE LIFE IS and that is the best realisation you will come to. Ever.

Because it is not possible to spend mindlessly when you know you have to remember how much a thing cost, in order to plug it into a spreadsheet later. And you become very aware of just how much you’ve already spent in that category this month and, who the hell knew that it all added up to so much anyway?? Jeez!

So, yeah. Spreadsheets. Track your money. Don’t worry too much about budgets just yet. It sounds a bit tedious and it is, but it also becomes mildly addictive. You start to see how you might actually get control of this situation one day and that feels great.

Just don’t expect it to be a great conversation piece at parties, that’s all.