Taken from the Quarter Life Crisis Issue of Girls Club Laura Suttle shares tips and advice on how to manage your money ahead of the new financial year.
We’re not born knowing how to manage money, and we don’t go to school and get taught the pros and cons of a credit card. We’re taught that getting a job and paying bills on time are good, but where was the lesson on how to actually manage money so that said bills don’t bounce? Or how to save for a holiday whilst still affording to eat / socialise / pay off a credit card AND overdraft at the same time / save for upfront flat deposit payments?
There’s a lot of blank spots in the 'life lessons' section that I could have really done with knowing long before I turned twenty-five, and looking after money is the gaping hole that I’m hoping to fill in for you. Because, after 407 days, I think I’ve finally mastered it. And if you’ve racked up a hefty credit card, bounce between the minus and zero every month, and have minimal to show for it, I promise I can help you. If there’s one thing worth being obsessive over (other than your health) it’s your finances, and often the two end up intertwining, particularly if you’ve spent an entire weekend at Download festival rotting your teeth out with K Cider and end up having to get two fillings - bye bye £250.
So below are my foolproof financial top tips, ranging from emergency savings, the 'luxury' method and how to avoid the spiraling work lunch debt.
The Financial Plan: Towards the end of 2014, I decided that I’d had enough of floating around in the minus all month, every month. So I drew myself up the most basic of financial plans which I have pretty much followed to a tee. This is quite possibly the least time consuming way of planning your money. I copy and paste it every month and have at least two months on the go at the same time so that I’m always looking forward.
Step One - Open ‘Notes’ on your phone
Step Two - Write your payday date at the top
Step Three - Create an 'out' list and write all of your guaranteed outgoing expenses, the things you absolutely have to account for, the cost, and, if it’s a direct debit, the date it comes out. e.g January 28 Out: Rent £XXX Phone £XX 9th Feb Netflix £XXX 7th Feb Bills £XXX Credit Card £XXX etc
Step Four - Total everything up, then minus it from how much you get paid every month (Student loan / Salary / Whatever). Leftover is the money you have to play with.
Step Five - Have a look through your calendar and see what’s going on this month and sensibly allocate some money, whilst also thinking if there’s anything you actually do need (not food, yet) e.g. a new toothbrush/new foundation because your current bottle is bone dry. You need to be sensible here; five new jumpers and a couple of pairs of jeans just isn’t feasible, and that’s probably why you’re broke in the first place.
Step Six - Repeat step four and total everything together, including your sensible allocations. Divide the total amount by how many weeks it is until the next payday. It’s up to you from this point to decide how much you can genuinely afford to live off, but I would say the priority is putting the biggest chunk that you possibly can towards debt/savings etc, leaving yourself with about £20 per week to cover food. Socialising is going to have to take a hit, but it’s not forever, and that said – Tesco do a pretty delicious cava for £5 a bottle.
The Working Lunch: A lunch that falls between Mon-Fri is rarely very good yet always over priced. Pret’s posh cheese and pickle baguette is okay, Itsu’s detox Potsu is nice-ish, burritos induce a satisfactory coma that can be endured on company time but to be completely honest can you tell me what your best lunch was the week before last? When a forgettable experience tallies up about £30 a week / £120 a month, and you realise if you save that £120 for 6 months and buy yourself a holiday, it pays to start revising the food budget. Put a couple of hours aside on your Sunday evening/afternoon and make a big pot of something - vegetable based keeps better, and eat that every day. By Thursday you’ll quite possibly never want to eat chickpeas again, but hey, next week brings something new! If you’re smart about it you can make two pots of something, portion it up, freeze half then alternate meals each day. 10 points if you do that.
Bank Account Blues: If you don’t have a banking app on your phone, this is the first step you need to take on your journey of penny preservation. Put it on the main screen of your phone and check it AT LEAST once a day. I used to be the girl that would avoid checking my bank balance at all costs, convincing myself it was too depressing/scary to face the truth, chipping and pinning my way round any shopping destination. Let me tell you though, it is way more depressing when you see the words 'transaction failed' and have to plea faulty card whilst running off in embarrasment. The only way to avoid this is by knowing exactly where you stand. It may be shit seeing -£2100, but at least you’ve ripped the plaster off. Take a deep breath and mix a stiff drink (medicinal purposes), this is the start of your journey.
Payday: Paying bills is shit, paying half your wages in rent to a landlord that never responds to your desperate cries to fix your broken freezer is shit, paying for travel which is frequently delayed is shit. But I tell you what is also shit - the morning struggle getting out of bed. I like to kill two birds with one stone and as soon as I wake up on payday, I log into my banking app and pay as many bills as possible, relocating them immediately below the out column and into a paid column. Then when you step out of bed, you’re starting the day fresh.
Go Cold Turkey: My dad used to say to me “Do you need it, and can you afford it? If the answer to either of those questions is no, then don’t spend the money.” I spent a few years believing "I need clothes and I can pay for it with my overdraft." This mentality meant spiralling debt. Leave your card at home, take a packed lunch to work and unsubscribe from all of your ASOS/Topshop/etc newsletters. If you can’t budget new clothes into your financial plan one month, then you’re not getting new clothes, get over it.
Luxury Mentality: Me and my housemate were burgled a few years ago, and sods law would have it, that it happened when I’d completely maxed my overdraft and had no readily available cash, forcing myself to get a credit card to pay rent which is pretty much the grimmest thing ever. When we relocated to our safe new house we would have evenings called 'Luxury Nights in' which is basically a bowl of stodge followed by a bubble bath, like a heavily discounted spa day. At first it seemed pretty sad, but we joked and referred to them so much as 'luxury' we really began to hold them on a pedestal. Just like when you adopt a new word into your vocabulary and can’t stop saying it, you’ll find you can apply it to anything. I find it best when it’s something a bit shit. At work, me and my mate will occasionally have a 'luxury coffee' where we'll go and buy a takeaway coffee. The L-Bomb is a great way to wean yourself off everyday coffees/breakfasts/after work dinners which start piling up the pennies.
Set Goals: So, now that you’ve listed everything out and you have a good idea of the money coming in and out of your account, you’ll start to get an idea of how long it will take to save a certain amount. I like to write another note on my phone, separate to the financial plan which is essentially a list of targets like “By X my credit card will be paid off if I continue paying off X amount each payday.” When you have goals and can keep reminding yourself of the end point, it makes it so much easier to save. Don’t get disheartened if you have a wobble one month and buy a hangover breakfast that you didn’t actually budget for. You can pay that back next month or just let the occasional £5 slide. Think of the bigger picture.
The Oh Shit! Fund: I lifted this tip from Sophie Amoruso's Girl Boss and this, depending on your current financial situation, may not be applicable until what I’m calling Phase Two - when you’ve cleared your debt. Put aside 10% of your salary and only ever touch if you’re like OH SHIT “I was burgled” “My phone smashed” “I need a filling”. As we get older, I’m convinced the OH SHIT’s will only get worse, so the more money you can accumulate in there the better. Do not touch if you want to go on holiday, or buy new shoes. Create a fun savings account for fun occasional treats.
I hope my foolproof finance guide proved useful. I’m not saying its going to be effortless, but I like to think it’s been pretty easy for me – after one solid year of following my own self taught methods I:
Paid off my ginormous overdraft
Paid off half of my equally large credit card
Saved upfront cash for a flat rental deposit
Bought a two-week holiday to Florida and saved ‘nuff cash to have the best time ever.
Let this be inspiration to you, and maybe next year you’ll have some spare cash to buy me a thank you can of K Cider.