In our blog we aim to provide you with thought provoking ideas and suggestions that might make life that little bit more rewarding or less challenging.
We talk a lot about health & fitness, but we’re delving into a new topic with this one – financial wellbeing.
Have you ever thought about taking a fresh look at your goals around finances and feeling more in control of them? Why not?! In some respects, it’s very similar to taking control of our fitness, which is something lots of Cannonball drinkers are familiar with. Getting on top of your finances can work wonders for your mental health and productivity.
In this short post, long-time customer and professional financial advisor, Ed Challis MBE, offers some actionable tips for improving your money habits.
Over to Ed.....
It is so easy to overestimate the importance of one defining moment and underestimate the value of making small improvements on a daily basis – James Clear, Atomic Habits
Do you remember the first time you picked up a cup of coffee and thought ‘wow, this is soooo delicious!’ or the very first time you tasted the now key stone of your morning ritual and thought ‘that is the most disgusting thing I have ever tasted!’ I would propose that you don’t. It is likely there was a scale that slowly moved from disgusting, through tolerable, to quite liking and eventually needing (once you had discovered Cannonball Coffee)!! The thing is we don’t remember these defining moments but as with most of our meaningful changes in life, they happen over longer periods of time with barely noticeable iterations.
What has this got to do with controlling finances? Well, this is exactly the same with building wealth. It is unlikely that we will one day wake up and suddenly feel in total control of our finances but what I propose to help you come up with a plan for getting there. Even the planning stage won’t necessarily make everything instantly crystal clear, but what it does, is ensure you take the first step towards total control. And that in itself is a great start!
A simple concept that I find really powerful is the idea of money management jars:
By dividing the money that comes into your account at the start of the month into these six suggested areas, you will automatically put yourself on the path towards financial freedom (where you no longer have to exchange your time for money) and concentrate even more time on the things you love.
The percentages given are a suggestion as everyone will have different personal circumstances but a good starting point to adjust from
To add a little detail about each jar:
55% Regular monthly needs – These are the things we must pay for each month (rent/mortgage, food shopping, bills… Coffee etc.)
10% Play – Discretionary spending or the things you don’t need but want – meals out, fancy clothes, holidays. The suggestion is this should be spent each month! Just like constantly dieting, only ever saving money can be stressful. Consider this the equivalent of the occasional cheat meal.
10% Financial freedom – An investment that will start making money for you, reducing the amount of hours you must sacrifice in exchange for money. Examples would be stocks and shares, or property. You should consider taking advice before investing, but this is how you win in the long-run.
10% Education and self-improvement – The best investment you can make is in yourself. Books, learning to sail or rock climb, a marketing course, or any improvement to you should be held high on your priority list. You don’t need to spend this every month, you can save it towards a course once a year.
10% Long term investment – something that will not be touched for 30+ years allowing the 8th wonder of the world (according to Einstein) to be used to full effect - compound interest! You’d be amazed at how much a few quid a month can make over 30 years.
5% Give and Charity – whether it’s wedding or Christmas presents or making donations to charity, giving always gives that feel good factor!
Want to learn more?
Ed loves talking about financial behaviour as much as we love talking about coffee. He is running some educational zoom calls in February getting that feel good factor by not charging for them. If you would like to know more then find a time that suits you at this link: https://calendly.com/edchallis/financial-behaviour-understanding?month=2021-02
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