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Is your money safe with banks?

6/29/2021

 
You are on track with your savings and investments plans. You also have different bank accounts for your money. What's more, your mortgage is from another provider and you use different apps to invest and manage your pension.

Think about this - what if the bank or investment platform goes bust (like this one), how much can the UK government pay you back to protect some of your hard earned cash? 

The FSCS is a scheme you may have recognised on banks website, investment websites, emails and more. What are they trying to tell you? How can you make a claim and how much protection do you actually have? 


Trivia: Imagine you have £50k in Lloyds bank and £50k in Halifax, how much of your money is protected? Hint: not all of it.
The Financial Services Compensation Scheme (FSCS) formed in 2001 is a free resource which acts as an independent body that protects customers of financial firms that fail. The FSCS covers:
  • Savings 
  • Bank accounts
  • Pensions
  • Insurance 
  • Investments
  • Mortgages
  • Bad financial advice
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How much of your money is protected?
Source: FSCS

Money held in banks or building society
  • up to £85,000 per eligible person, per bank, building society or credit union.
  • up to £170,000 for joint accounts.

Money in Investments 
  • Investment provision is now £85,000 per person per firm
  • Investment intermediation* is now £85,000 per person per firm

Mortgage 
  • Home finance intermediation* is now £85,000 per person per firm

*Intermediation is when an entity works on your behalf to get you financial products

Your Pensions
  • Life and pensions intermediation is now £85,000 per person per firm

Your Debt
  • Debt management is now £85,000 per person per firm

Insurance
  • Long-term care insurance is now 100% of the claim per person per firm


What if I have more than £85k?
Based on my research you may to have distribute the excess of your money across different banks and or platforms to be fully protected. Sometimes, this can be expensive due to the fees that could be paid. This also also be difficult to manage over time as you cannot exceed 85k in total (capital + interests or dividends). Alternatively you can trust that the provider is taking the right steps to protect your money and is in alignment with the Financial Conduct Authority (FCA) rules.

How do you make a claim?
To make a claim, click here to find out if you are eligible.
Remember: Your money is safe with FSCS up to a limit.
​Your checklist
  1. Make sure your money is held in companies that are enrolled in the FSCS scheme. Ask your provider or use the FSCS checker to know for sure: Some companies have subsidiaries or banks that share the same banking license. The savings guru gives this great example - if you have 50k saved with Lloyds Bank and 50k with Halifax, you'll only get the 85k protection as both companies share the same license.
  2. ​Remember that this limit applies per person, per bank/financial institutions
  3. Not all financial products are covered so check carefully before you sign up
FSCS Protection Checker
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A 2 min video on FSCS

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Three ways to go Green with your money

5/30/2021

 
Savings accounts that plant trees when you open an account, Banks that only loan to charities, Cheaper mortgages that reward you for an energy efficient home or 1-click robo-advisors that help you invest your money in green ways. ESG, Impact Investing or Green Investing is taking off these days. But what is it about and how can you use your money to align to your beliefs?​
​There is a lot of about 'Going Green'; you may be actively looking for ways to use and grow your money in ways that are helpful to society, the environment and in alignment with your own ethics or beliefs. You may be interested in supporting companies that for instance, treat workers well, are socially responsible and take sustainability seriously. Your money has impact and investing is one way you can make a loud positive noise.

If you are interested learning how to make it happen, below are 3 ways to grow your money and do good.
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Savings Account that plant trees
One of the first areas you might to consider is where to put your cash. Companies like Gatehouse bank is encouraging savers to open on of their green savings accounts; by doing this, a tree will be automatically planted. Charity Bank uses your savings to make loans to charities and social businesses.

Cheaper rates, Green Mortgages for Energy Efficient homes
If you buy an energy efficient home, some banks (like NatWest, Barclays) are promising lower mortgage rate (monthly payments) to encourage you to remain sustainable. The banks will look at the energy performance certificates (EPC)  or your energy rating of your property which must be rated A or B along with other typical  factors (like your income, deposit, credit score and more) to determine your mortgage. EPCs are valid for 10 year and if you want to know the rating of your home, click here to find out.

Invest in Green funds on the Stock Market
​Impact Investing, Environmental, social and corporate governance (ESG) funds, Ethical Investing, Green funds used interchangeably are themes or words that allude to a group of companies that are focused on doing good.  These companies typically create products or have plans in plans to become more ESG sound. As a shareholder buying into one of these companies of funds (group of companies) you have the ability to use your influence to help them raise their ethical or green standards.

You can choose individual companies to invest in that are creating products that are ESG friendly. You can look at their annual reports to see what they are doing about ESG or Going Green.

You can also choose funds that have been set up to focus on ESG. A quick google search can yield multiple results. Many
robo-advisors have set up 1-click funds for investors to get started with no hassle.

​Now, some of these companies or funds may be using green as a new buzz word to get you hooked so it is important to check the credentials of these companies to ensure they align with your moral goals.


Read here to remember to keep fees low.
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Invest in Everyday people...building insect pet protein
Everyday people are also taking part in the Green Wave. Websites like Seedrs and Crowdcube allow you to invest in small early stage companies that are tackling the ESG challenge head on. Where it is creating biodegradable products, building technology to reduce carbon emissions, creating insect protein pet food or even building plastic roads; you can choose to support an entrepreneurs dream to create products that you'd like to see in the world. Of course every investment has its own risks so read the terms and conditions carefully.
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Savings you need to avoid being house poor

4/8/2021

 
Home ownership is a goal many have but I have seen many stories of people buying their home and becoming worse off financially because they have saved for years and have put ALL their savings to get a roof over their head. 6 months later, they have save just enough to get a couch and the slog continues. This doesn't have to happen.

in this post, we explore ways to avoid being house poor and it takes planning and prioritising your well being.

Rule of Thumb: The deposit is just the start add fees, tax and savings.​

Key takeaways
  • Don't deplete your ALL savings
  • Plan in advance
  • Get money back from clever sources
Build your emergency fund. This fund should not be used for the home. Your emergency fund is purely for your own insurance and should cover a minimum of 3 months. I would even take this further and have a small pot for fun so you remember to prioritise yourself.
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Don't only save for your deposit, legal fees and Tax. Factor in payments for furniture, furnishings and at least two months utilities. ​Let us know if we are missing any other costs.
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​

Get cash back for all the spending. As a new home owner, you'll be buying a lot of things in a given time period. So get cash back to get paid while you spend. This is money you can spend else where.
​

12+ guilt free ways I cut my spending to save more

If it doesn't appreciate, get it pre-loved
To save money, use pre-loved websites like e-bay or gumtree for things that you are not to precious about. Things like flower pots, cookery are great candidates.

​Stick to your budget and take your time
You've already made a budget for your home purchase. Your budget is the cornerstone of your financial life - it is your partner in helping you to achieve your financial priorities. It also keeps your focused for all the other non home expenses you need. So future you asks that you stick to it and prioritise your joy.

I stopped making these mistakes and it changed everything
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I have a high salary how can I keep more of it?

3/30/2021

 
Someone reached out to me to try to solve the puzzle related to earning a high income as an employee (£237,000 to be exact) and using tax laws and perks to keep the most of the money to save and invest.

I scoured the tax rules to pull a quick report that broke down how that money can be allocated in tax friendly accounts or where tax relief can be obtained.

This exercise was a great reminder on why we should invest in a tax advisor to help us keep most of our money. A tax advisor is available to all income levels and although there could be costs associated with this service you can save up and use them at least once a year to get your monies in order. If you are on a low income, you can get free advice from the government. I have just opened a Money pot called Life Admin where I'll be saving to get a tax advise and formalise a Will.
Many wealth builders have great lawyers, accountants, doctors and financial advisors. What can a tax advisor do for you:
  1. Plan your finances according to your goals
  2. Make your money tax efficient using the tax laws in place
  3. Give advice on when and how to file your tax return to get tax relief

How to manage a £237,000 income and Tax.​ Click here or the image below to see the full report.
​
Need a Tax Adviser, click here to choose who is appropriate for you or use the all in one service from Taxscouts and get 10% off.
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60+ Financial Goals you can achieve anytime

12/20/2020

 
Here's a 60 plus list of money goals you can achieve anytime. We've covered the research behind the power of writing down your goals. So choose yours or add to the list.​

Do right with my cash savings

  1. Calculate my savings/expense rate
  2. Complete savings for my emergency pot​
  3. Save one month worth of expenses into my emergency fund​
  4. Move my cash savings into the best interest rate available

Travel & Fun

  1. Start a Travel savings pot
  2. ​Start a fun jar so I can enjoy my money with no guilt​
  3. Give myself a raise of __ a month​
  4. Start saving for a year off work (Target is £___ by 20__)​
  5. Renew my travel insurance
  6. Find opportunities to win free stuff

Protecting my Family

  1. Open children's school fund
  2. ​Start a Junior ISA for the kiddo(s)​
  3. Build a savings account to start supporting my parents in 3 years​
  4. Buy life insurance​
  5. Start a baby savings pot​​
  6. Start saving for my wedding​​

Save better and more

  1. Automate all my savings
  2. Experiment with Crypto​
  3. Stop waiting for a stock market crash to invest, do regular savings
  4. Invest __ in the stock market​
  5. Grow my Stocks & funds portfolio

Manage Debt

  1. Reduce my debt by __ this year​
  2. Pay off my student loans
  3. Negotiate better interest rates
  4. Pay off all credit card debts
  5. Read this article

Take care of my future

  1. Start a personal pension
  2. ​Top up my pension savings by ___
  3. ​Write a Will (free)
  4. ​Find out when I can retire. it is Year 20__​
  5. Update my Will​
  6. Increase my employer pension matching to the max​
  7. Plan my retirement activities
  8. Speak to a financial adviser about inheritance​​
  9. Retire​

Give Back

  1. Increase Charitable donations by __
  2. Review the charities I donate to check that they are still effective
  3. Use CAF- Give as you earn to donate and reduce the amount of tax you pay

Homeownership 

  1. Buy a home
  2. Start saving for a home deposit via a LISA or high-interest savings account
  3. Insure all the appliances in my home
  4. Overpay my mortgage by __
  5. Remortgage my home and get a lower interest rate​
  6. Search for a better internet, gas/electric deal to reduce my expenses​
  7. Buy a second home and rent out my first​
  8. Get home and contents insurance​
  9. Buy land​
  10. Check the warranty and Guarantee of my household products

Financial Health Check

  1.  Improve or Maintain my credit score​
  2. Be intentional about where I spend​​
  3. Write down my savings goals​
  4. Start recording my financial progress (e.g. Net worth)
  5. Learn about taxes
  6. Review my monthly subscriptions and agree which ones I'll continue
  7. Review my standing orders and direct debits

Experiment with my ideas

  1. Research and write my business plan
  2. ​Start my side hustle, experiment to see if I can maintain it
  3. Get feedback on my business plan from an expert or a trusted friend​
  4. Use social media to promote my side hustle and get feedback​​

Enablers

  1. Get health insurance​ or critical illness cover
  2. Increase my income by __​​
  3. Start a self-investment pot for my self so I can retrain & get new skills​
  4. Get a promotion at work​​

Big overall Goals

  1. ​Ask others about their financial goals​
  2. Financially recover from this year​
  3. Save __% of my income this year
  4. Maintain or increase my savings rate​​
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7 ways to make the most of your cash in a low interest world

9/29/2020

 
NS&I have cut Interest rates meaning you get less back for your money. There is speculation that other bank/lenders will follow NS&I's lead. This means that holding a lot of your money in cash will not make you rich anytime soon. What else can you do with your cash?
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  1. ​​Build your emergency fund and aim to cover at least 3 months of expenses.
  2. Pay off your debts (mortgage, credit card) and reduce the interest you pay in the long run.
  3. Research higher savings account like this one from NatWest with 3% variable rates and move your cash into these pots. These accounts come with limits so read the terms and conditions carefully. 
  4. Start with as little at £2 and Invest in the stock market using Apps like Freetrade and/or try robo-investing. Read this article to find out how the rich take advantage of this option.
  5. Top up your pension. You can save up to £40,000 a year and it reduces your taxes.
  6. Invest in promising start-ups. Click here to learn more about the opportunities and risks.
  7. Despite the cut in interest rates, you can save up to £50,000 in NS&I and get a chance to win of up to £1million which is tax free. I won £25 last month.
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Smart money moves students should make before it is too late

9/22/2020

 
Leaving university can be an overwhelming and stressful time for students and I firmly believe that Personal finance does not have to be one of these issues.​ The truth is,  all you need are a few basics to set you up for life and luckily, these are not complicated. Looking back I wish I had someone to teach me personal finance whilst at university and so in this post, I share my experience, key tips and hacks related to budgeting, saving, investing and borrowing.

Key points
  • The salary you would probably get and how to spend it
  • What to consider when choosing your salary
  • ​How to budget and still have fun
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University is a fantastic starting point to begin building a brilliant fiancial future because students have the benefit of time to apply their skills to do meaningful work
My Experience
​I know from my experience, even with a degree in economics and a job in banking, I could use someone discussing money with me. It has been one of my goals to bring this valuable knowledge back to schools. I launched wealthsquats.com to start this journey.

My vision is for all students to make clever financial choices whether it is how much to save, how to manage debt, how to use the stock market, how to be rich or how to have peace of mind about money.  This post is my view of how students can get started on their financial journey. The first step is to set up some money goals that you want to acheive. When I began this journey, my goal was to track and increase my net worth. As I progressed, I increase the amount of money I paid into my company pension from 3% to 5% to benefit from company matching and I opened a Stocks & Shares ISA to get involved in the stock market.
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Will you be self employed or work for an employer?
​Many students will choose to work for themselves as the freelance and consulting  industries continues to form a significant part of the UK economy. Others and the likely majority will find jobs with employers for instance through graduate schemes.  As a student, what does it mean to be self-employed or employed?

Self employed
  • You are your own boss
  • You get paid when you provide a service so your Income pattern cam vary
  • You take care of your own taxes and pension
  • You have to pay for your own private healthcare 
  • You own your time

Company Employed
  • You work for someone
  • Income pattern is regular (e.g. 1st of each month)
  • Company takes care of your taxes and pension
  • You also get other benefits like healthcare provided while you are with the company
  • Your time is 'owned' via contract 
​
The first financial decision you make as a Graduate is what Salary to choose
Let's use the example of a student who will be employed in London. The salary this student can expect to get in London is around £29,000 - the average annual salary for graduates in London. Of course depending on the role, sector and negotiation, this figure can vary. It is important to know that the salary you choose will form the basis of how much you can save or invest. If you are able to have other sources of income, your savings and investments can expand accordingly.
The salary you choose upon graduation will form the basis of how much you can save or invest
What could be your salary?
Using the salary calculator, If you make, £29,000 a year your actual take home pay is around £1,800. As a working member of the population, you will start to contribute to the wider economy via taxes and national insurance.

In addition, your company will likely have a pension plan which is deducted before you receive your  take home pay. Also, if you have student loans, these will be deducted as well. For 2019/2020, the personal allowance - which is the amount of money on which you do not pay taxes on is £12,500.

So what is likely to be your take home pay?
  • £2416.67 Gross pay
  • £72.50 Pension
  • £260.50 Tax
  • £203.68 National Insurance
  • £75.49 Student Loan

Your TAKE HOME PAY (salary after tax) is £1804.50

Next, we deduct your expenses?
  • £700 Rent
  • £100 Council Tax
  • £20 Phone
  • £25 Internet
  • £30 ​Electricity & Gas
  • £20 Water
  • £400 Food & socialising
  • £140 ​Transportation

Your TOTAL EXPENSES: £1435

What is LEFTOVER: (£1804.50 - £1435)  = £369.5
Most people do not get rich by winning the lottery or via inheritance. For many, they just saved in assets that grow over a long period of time. 
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What steps can I take to build a brilliant future

As a student, it is from the £369.5 that you can start to save and invest. The expenses example above is just an example of what you can have to build a great financial future. This amount is much higher than what I began with and I focused on investing in things that grow.

Step 1: Choose how much to save and where
Here is how you could save or invest £369.5.

£60 Emergency Fund (Cash Savings)
£30 Oops account 
(Cash Savings)
£75 Travel & Fun account
£150 Stocks & Shares
£25 LISA
£25 Bond Account (5 years)
TOTAL SAVINGS & INVESTMENTS: £365

To maximise your savings, continue to invest each month (automate this process) and keep tracking your performance.


Most people do not get rich by winning the lottery or via inheritance. For many, they just saved in assets that grow over a long period of time.  ​In my experience, I have found my pension to be one of the fastest way to grow my overall net worth this is because if I put in 5% of my salary, my company matches it by 5% so I get 100% increase each month on my pension savings. 

Step 2: Step up a budget 
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Entering your savings and expenses into the WealthSquats tracker, you can see that your expenses make up around 80% of your income and you are only able to save around 20%. Now you can take steps to creatively think about how to increase your savings. In my case, I moved to a cheaper room to reduce my rent after reading that rent should take no more than 30% of my income. Thereafter, I significantly reduced my eating out and put every extra savings into cash savings or the stock market. Today, I still continue to find ways to optimise.

There is a rule of thumb that says, wealth creators save 30% of their income and spend 70% on expenses. This rule is a rough guide but can help wealth builders like yourself to control your outgoings. 

I do not believe in budgeting and suffering, we should still live a good life no matter what income we have so it is crucial that you add 'enjoyment' into your budget so you do not restrict your self from doing what you like. Every month, I make sure that I save or invest my target amounts and once I've done that, I am free to spend whatever is left as I please!

Step 3: Control your Debts
Debt is another expense that can significantly reduce your ability to create wealth. I suggest you read this post on how to spot good and bad debt behaviours. 

To summarise, save and invest in things that grow
Wealth building is fundamentally about saving and investing in things that grow. With this in mind, use the tips below to build that brilliant future.
  • ​Maximise your company pension plan - match to the max
  • Open a Lifetime ISA (LISA) and benefit from the 25% annual free increase
  • Use robo advisors to invest into the stock market
  • Start to build your emergency fund
  • Set up your Oops account (Tip. use saving pots from Monzo or Vaults by Revolut)
  • Control your debts
  • Control your expenses
  • Track your progress and net worth

Once you've got the hang of this, your money goals will evolve and you'll already have the wealth building basics.

 What to consider when deciding on your first salary

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Self employed
  • How much can I charge for my services within my sector
  • How will I manage tax and legal rules?
  • How much do I need to set aside for taxes
  • What will be my pension strategy
  • What is my plan to charge more for the value of my services 
  • Who are my customers
  • How will I market my self
  • Will I have employees?

Company Employed
  • Download or use the salary calculator to check:  Can this salary cover my expenses and still allow me to save a little?
  • What is my probationary period
  • Can I enter the pension scheme from Day 1 or only after my probation?
  • What is the maximum pension matching available?
  • Will I get a bonus and what is it dependent on (my performance, company performance or both)?
  • What is the career path in this role
  • Can I get FREE training and courses to upgrade my skills?​
  • What is the team like?
So what choice will you make?

​Remember to share these tips with your friends and start taking active steps to build a wonderful financial future.
​
Get in touch if you have more questions.
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Research says this is how to be rich in the UK (2020)

8/23/2020

 
Why do the rich pay less for housing month on month? How do they make their money grow? How many of them can survive one month without a pay-check? I read the 2020 report from Resolution Foundation on wealth in the UK to see what research says about how to be rich in the UK. Keep reading to see the surprising answers.

First, a quick recap: What is Wealth?
Wealth is your assets (An asset: is a thing of value that grows e.g. savings, pension, real estate, art, gold etc.) minus your debt. We also call this your net-worth. In this study, 4 types of wealth were measured:
  1. Property: residential and non-residential property and land
  2. Financial: includes ISAs, bonds, stocks and shares.
  3. Physical: such as consumer durables like cars or appliance
  4. Private Pension: money in your pension pot

So, how do the rich manage their money?

The top 10% have about 50% of UK's wealth

The average net worth of the 10% is £800,000. But, where do they grow their money? Keep reading to find out.

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Do it like the Rich:
Track your net worth. Click here to get started.

When it comes to financial assets, the Rich hold less cash and more of their money in growth assets like savings bonds, ISAs, and Stocks and Shares. 

Poor households hold most of their money in cash or current accounts where there is very little growth.

When the rich hold money in savings bonds, ISAs, and Stocks and Shares, they benefit from:
  • Compounding and High Interest rates
  • Stock prices going up: the value of cash doesn't go up. Inflation does and so you'll need more money to get the same amount of the things you buy
  • Reinvested Dividends from holding stocks or funds
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  • Risky Assets: stocks and shares of companies
  • Safe Assets: ISAs and Savings bond
  • Savings Assets: non ISA Savings accounts
  • Zero- return Assets: money held in cash. under your pillow, in the piggy bank on the shelf or current accounts 
Do it like the Rich:
Hold most of your money in places where it grows. Choose ISAs, High interest savings accounts and the stock market over cash. Hold cash for a specific purpose  e.g. to build your Emergency fund or for a  home deposit.
The Rich have about 45% of their money in pension pots, 35% in property and 20% in financial assets (savings bonds, ISAs, and Stocks and Shares)

Financial wealth (in high growth assets) increased substantially in the last 10 years and this contributed significantly (80%)  to the overall wealth of the rich.

As mentioned above, the financial assets of the rich are held in growing assets like bonds and the stock market. The Stock Market grew substantially in the past 10 years and it made the rich richer.

​The poor held most of their money in zero growth assets e.g. cash or current accounts and even when they added more money in these places, it grew at a much lower rate.
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Do it like the rich:
Write the numbers down, how much of your money is held in: 
Cash
Current accounts
Savings bonds
ISAs
Stocks and Shares
Richer families tend to be homeowners 

Their housing costs are around 5% of their income if they own their home outright or 11% of their income if they have a mortgage

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Do it like the Rich:
Reduce your housing cost. Limit it to a maximum of 33% of your income so you can find money to save and invest
The Rich have emergency funds 

7% of the rich would have a hard time if their main source of income is impacted as opposed to 44% of the poor.

An emergency fund allows the rich to stay afloat if a shock like a pandemic or job loss takes place. Young females who are not degree educated were the most at risk if their income ran out.
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Do it like the Rich:
Build an Emergency Fund of at least 3 months.
There you have it. Some insights into the habits of the rich. Of course there are other ways to get rich, such as owning a successful business, investing in start ups, inheriting money or owning art for example. The options above are the accessible ways to start to build wealth which is also the reality for many people. See this infographic on how to spend £2000 which highlights the step by step guide to implementing the lessons above.
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Which Rich habit will you start to use?
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Doing this has made me exceed a money goal by 4000%

8/23/2020

 
What do you want to be when you grow up? What is your 5 year plan? What are your career goals? What are your relationship goals? We've all heard this at one point in time and I wonder, why do we not also ask: WHAT ARE YOUR MONEY GOALS?

if you are the kind of person that writes your life goals, does it include money goals? Research has shown that writing your goals down can make you reach them faster. Keep reading to find out how you can incorporate this money habit for success.

What you need to know
  • See the money goals 5 readers want to achieve
  • Writing money goals make you save and invest faster
  • You can choose a amount or a lifestyle
  • 4 ways to make it stick

I asked 5 readers to share their money goals:

I asked 2 questions:
​1. What makes you want to save and invest 
2. What DOES NOT make you want to save and invest

Click on the images below to see their responses.
The research and experience of writing money goals

Every year, I write my money goals down. So far, I have found that I met them before or after the deadline I had initially set. I believe that there is some magic to writing things down. Once you write it down, it is autosaved in your brain and then somehow, you start to focus consciously or unconsciously to  make it happen.

My experience aside, research has shown that setting goals makes you more confident, motivate and in control - no wonder employers use performance reviews to set and monitor targets- they know that if done well, it motivates employees and can also help their business grow. If you want to actually make it happen, start by writing them down. 'A study by Gail Mathews, found that you are 33% more likely to meet your goals if you write them down, share it with a friend and review it frequently'.
Want to meet a money goal? write it down.
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How to Write a Goal that you stick to (4 ways)

1. Choose an exciting goal
According to Business Insider, 'Instead of being afraid of your finances, focus on the goals that excite you'. Why? when you choose an exciting goal, you stay motivated to make it happen. Here are the types of goals you can write down:
Types of Goals
  1. Travel
  2. Comfortable living
  3. Comfortable retirement
  4. Homeowner
  5. Retire comfortably
  6. Create an education fund
  7. Wedding
  8. Financial Independence
  9. Increase savings  by 1%
  10. Reduce debt by 50 a month
  11. Save 500 this year
  12. Save 3 months in your emergency fund
  13. Increase my net worth by 200
  14. and more...​
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2. Break it down into small bits
Big goals can feel overwhelming and when it comes to money goals it is important to break it down. A Harvard study explains, 'When we’re judging the difficulty of a goal, the first thing our brains see is the size of the gap that separates the goal from the baseline. The bigger the gap, the more difficult the goal'

For example, if you are planning that trip to tour the East Africa and it would cost 2000. Saving 2000 might today can feel challenging. To make progress, you can break it down to save 100 a month and add more in months where you can. After 5 months, you'll have 500 saved and have covered 25% of the cost. With an exciting goal ahead of of you, you can celebrate the small progressive wins and that is key,
3. Make it Challenging
If the goals is too simple, you won't be satisfied. Research has shown that you achieve 'greater satisfaction from achieving goals that help you improve as opposed to maintaining the status quo'. So, If you  are dedicated to clearing your  3 credit card debts of 2000, 1000 and 300, you'll likely be more satisfied clearing the 300 than paying off the minimum for each month which would make you feel like you are not improving.

Going back to the readers response on 
 What DOES NOT make you want to save and invest? I noticed most of the response was about making sacrifices today so they can enjoy tomorrow. I think this is another crucial element of satisfaction, delaying gratification, allows the reward at the end to be more enjoyable.
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4. Track It
Truth session.  Years ago I began tracking one specific money goal. Since then, that number has increased by a whopping 4024% to be exact. How come? What you cannot track, you cannot measure. Remember the research I mentioned earlier, it said, if you share your goal with a friend on a monthly basis, to keep you accountable, it happens. My friends are my spreadsheet, MUTAZ, and you readers of this post. I review my spreadsheet monthly to check how I am doing. Tracking helps me to stay focused and also allows me to think of new ways to reach my goals faster. Grab a copy of the WealthSquats smart budgeter to write and track yours.
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Need help on where how to start tracking? Use Financial Success Map to make a plan.

In Summary

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I found the Financial Success Map I wish I had 5 years ago

5/10/2020

 
With COVID-19 restrictions easing up in the UK and around the world, many of us are left asking - what's next for me, my career, my health and my finances. Some of us are unsure, confused and looking for clear answers.

In my previous post, I wrote candidly about how this pandemic has made me re-think and replan for the future. Since then, I have spent the last weeks trying to define the milestones of financial success. Specifically, what could it feel like or look like?
​

I tapped into research and my personal experience and I have designed an interactive financial success map​ lets me assess how I am doing with my money goals. 
  • Where are you on the Map - click on the boxes below.
  • Plan where would you like to be at the end of 2020? 2021? 2025
create your financial success map

I asked 5 readers to share their financial success Map...

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COVID-19 has reminded me that my health and finances are VERY important

4/19/2020

 

Over the past weeks, two things continue to dominate the news: health and the economy. This pandemic has highlighted how important and fragile these two aspects of our lives are.

I am now left asking two questions:
1. What can I do to better invest in my health?
2. What can I do to create a financial safety-net for myself and for others?

In this blog, I look forward and explore ways we can invest in our health with the same vigour as we do our finances. 

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Because we feel good, we can easily neglect to check on our health
Apart from the regular advice to eat better and exercise, one thing we can do moving forward is to get an annual health check. In my view this is particularly important if you have a pre-existing condition, a family history of an illness or are past the age of say 35+. Many of us may think that we need private healthcare to get this but this is not the case. Last year, I used Wowcher to get a £120 health check for a family member with a pre-existing condition to make sure everything was fine. The report was detailed and highlighted some known and unknown problems in a clear PDF. This provided some peace of mind for the whole family. The NHS also provides health checks, although you have to be 40+ to qualify. Also factor in health checks for specific areas (breast checks, kidney checks etc), depending on your medical history. 

Apart from our financial investment, we should have a health saving pot that is allocated to getting needed health care. We are not only responsible for ourselves but also our friends and family and it is important that we remind and help others to invest in their health as well.

In the UK, we are lucky that we can get free health services. On a couple of occasions I forgot, or dismissed the need to complete my General Practitioner (GP) checks or vaccines - not a good idea. I got a chance to get a health check via work and the GP told me that we all should contact our GP if something does not feel right. The earlier the better.

The NHS does not cover everything however, special services like dentistry, dermatology, physical therapy can all incur supplemental charges. Again a money pot can really save you here. This is especially true if you have children who may specifically require services like braces, paediatric assessments etc. If you want services beyond the NHS, you can shop around to get the best health insurance for yourself where you can pay a monthly fee to get covered. Look at what health services are covered before you make a decision. Many people think they need a job that offers private insurance, but self pay can be as low as £15, and may actually turn out cheaper than paying out of pocket per visit.

One more thing, if you have a family and a serious pre-existing conditions/family history of health problems, consider getting life insurance to protect your loved ones.

5 ways you can invest in your health:
  1. Open a health savings pot
  2. Get annual check ups
  3. Talk to your GP about what health services you should get
  4. Plan for health services for children
  5. Get private health or life insurance (if you need it, if your employer offers this as a perk, see what services are covered
As part of our financial investment, we should have a health saving pot that is allocated to getting a health check.
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Health is Wealth

6 ways to create financial safety nets to weather unprecedented storms

Last year I explored the definition and steps that lead to financial vulnerability - last week, I read an article that sums up how this happens ' first gradually and then suddenly'.  In the news today, we see many stories of people who have been forced to lose their jobs particularly those in the gig economy and retail industries. This has been particularly difficult for women, many of who are employed in these sectors.  For the lucky ones who qualify for the government support, they can still earn up to 80% of their income. But even still, a 20% pay cut can leave people in very tough conditions.

Nonetheless, without this government support, I shudder to think of how life can be.  Here are a few things I think we can do:

1. It is very important to Build and Sustain an emergency fund. 
A emergency fund is a saving account where you save enough to cover your expenses for a period of time if you are unable to work. Everyone should have an emergency fund. Start with saving 1 month worth of expenses then aim for at least 3 months, then 6 months. An emergency fund allows you to build the foundation to have something to tap into when things get really tough. If you are able to take this one step further, build a curve ball account to cover the day-to-day expenses that WILL arise.

2. Consider insurance to cover income loss in the event you get  ill or lose your job.
This way, if your income stops, you can get covered for up to 24 months until you are able to get back on your feet. Like other forms of insurance, you pay a monthly amount and if anything goes wrong, you get an income paid to you no matter what.

3. Consider getting mortgage insurance to reduce the risk of losing your home
If you own a home, your mortgage is likely to be your largest monthly expense. In the event that your are unable to keep up with your payments, a mortgage insurance makes sure that you are covered. 


4. Have a pension pot
I cannot imagine how retirees with low or no pension are supporting themselves in this pandemic. We can be short sighted in these times and forget that we will live a long life. When we  retire, our pension pot will become the core income source to weather storms like these. Making sure you are building a sizeable pension pot for when you are older is a constant goal for us all.

5. Invest in the stock market

You are not going out, eating out or going on vacation. With the world on lockdown, the stock market is feeling the effects making some stocks/share and funds are cheaper. If you’ve got spare change, this is a great time to get stocks cheap. With interest rates getting lower (I saw one lender providing a 0.05% on savings), the stock market is one place where you can get a good return in the long run.

6. Negotiate the interest payments on your debts
We know that there are good and bad ways to handle debts. If you are paying high interest on your debts, this might be a good opportunity to negotiate low rates with your provider. I have seen many articles of companies announcing support to their customers in this unprecedented time. Reach out and see what they can do to make you life easier for the long term.
All in all, I hope we can do our very best to give ourselves and our loved ones the strongest chance of living a healthy life. Remember health is wealth!

What other things are you doing to invest in your health and finances?
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You don't want to miss this GAME CHANGING way to save for expected expenses

3/14/2020

 
Companies like Revolut and Monzo have these two neat features that have made it easy for me to set up my curve ball savings account. Using one account, I am now able to split my expected expenses (such as travel, phone replacement, transport, beauty service)  into different pots. PLUS I get interest payments.
 Read more about  why you must have a curve ball account
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Curveball accounts help you manage the WHEN and IF it comes!
The problems I was having
Up till now, I used one savings account to save for curveball expenses. This account did not let me split my expenses and so I set up my automatic savings to hold it all in one go. if I wanted to split expenses into a savings account, I would need multiple savings accounts to track each of my curveballs. 

For me this was too much overhead. I don’t want too many savings account to track and maintain.
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Saving pots with Monzo and Vaults with Revolut 
My new curveball best friends are these saving pots and vault features from monzo and revolut.
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Why I like them
  1. I already have an existing account with these companies and so I do not need another account number
  2. I can open as many pots as I want (I opened 6)
  3. I earn interest on my savings
  4. I can set savings goals
  5. It’s all neatly tracked on the app
  6. I can set up recurring payments and top up as I wish

6 benefits! I am abuzz. At this time, I decided to go with Monzo saving pots because Revoluts saving vaults is only available to members with a Metal card which is available at £12.99 a month. At the time of wring this article, the Revolut interest rate is  higher than Monzo'.

If you have a Revolut Metal Card, watch the video below to see how to set up your Vault 

How I have set mine up 
  1. I decided how much I want to allocate to curveballs from my income. Watch how to budget
  2. I set up savings pot on the Monzo app with a recurring date for monthly payment 
  3. I set up a standing order from my bank account to Monzo (Note if Monzo is your current account, this step does not apply)

Now I can track all my curveballs in one place and this has significantly made it easy for me to be on top of things. If I want to save for another thing maybe a trip next year, I can set up the a new travel pot and start saving so it does have to be a worry.

Watch the vido below to Learn more about Monzo

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12+ guilt free ways I cut my spending to save more

1/19/2020

 
If you are looking for super smart ways to pay less for things you need, this post is for you. I have and continue to look out for easy ways to reduce my spending allowing me to save more guilt free.  Keep reading to see the tips I use to cheer up my finances!
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Cheer up your finances guilt free in 10 genius ways!
1. My credit card pays me for spending
If you have a credit card, get or swap to credit card that provide cash back on expenses. I have cards that provide 0.5% on all spending and if I pay with contactless,  I get 1% . So for every £100 I spend, I get back up to £1. Sometimes, the bank has deals with retailers who provide more than 1% cash back. This may sound like a small amount but it does add up. Since getting my credit card 2 years ago, I've gotten back around £500. Remember to read terms and conditions and to payback your credit card in full.

2. S
witch providers and get cash back
Many companies want you as a customer and will pay you to get your attention. Look out for ads from utilities companies, banks etc. who will pay you if you for instance to switch from BT to EE as your telephone provider or from British Gas to Utility point for your electricity and energy. Before doing this, check how long you have to stick with the company and use this approach to get the cheapest prices for your needs. I negotiated and have cut my monthly broadband bill by 10% for 12 months. Go further and use Cashback Apps to save even more.

3. Use companies like Quidco and Top cash back to get paid while spending
Companies like Quidco aggregate all cash backs provided by companies. Last year, I was looking for a new internet provider and a friend introduced me to Quidco. I signed up in 5 minutes and  I was able to get £65 cash for choosing my internet provider. Even better, once my transaction had been confirmed I was able to send my Quidco cash back directly to my bank account.  I always check Quidco to see if they list a retailer when I want to go shopping so I can get a cash back from Quidco and via points via my credit card (see number 1).
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Some retailers that offer cash backs via Quidco
4. Split costs with people
Anything divided by more than one is cheaper! If you use 
Netflix, Spotify, ASOS (premier delivery for £9.95 a year) split the costs with friends or family. Where possible get one account and share the costs and services. If you want to travel to exotic places, split costs like hotel, transport and more. To keep track of each person's share use apps like Splitwise where you can record all costs, include your friends and track your spending.

5. Use websites like Groupon/Wowcher/Amazon to get cheap bulk products
Since time is money, I've stopped going through the hassle of getting toilet rolls from physical stores. Plus it all get delivered to my door saving me time. I go through Quidco for all my Groupon purchases (see number 3). The same applies to Amazon, I get my long-life milk for 25p less in bulk delivered to my door. No more do I need to carry 5, 1litre liquids for the sake of enjoying my cereal.
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Bulk products advertised on Groupon

6. Travel the world and pay only £99 for flight & hotel
If you have dreams of travelling the world. It does not have to cost a fortune. A friend introduced me to Wowcher's  Mystery  £99 all inclusive holidays with flight and accommodation for over 2-3 nights covered. It works like this, you buy the Wowcher voucher and then an agent calls you to tell you which country you have been allocated (if you do not like it, you can change the dates and location with the agent). If you do not like the hotel provided in the package, you can pay a supplement to upgrade. I visited Budapest and Porto, Portugal using this method. This allowed me to meet my goal of visiting at least 2 new countries per year.

If this is not your cup of tea, in general you can always save money by booking up to 6-9 months in advance so you have something to look forward to. Also if you want a local tour in these locations, look up free walking tours to find a local guide. At the end you pay what you like - if you want.

Bonus tip: Get Air miles or AVOIS points when you travel and spend them on 'free' or cheaper hotels, flights or entertainment.
PictureTravelling does not need to be expensive. You can do it.










7. Make a Packed lunch​ for work or class
On Sundays I spend 1 hour to create my lunch for the week. I can be as simple or as elaborate as I want. This way I save up to £10 a day which amounts to £200 a month on food. If I want to treat myself I have zero guilt doing so. If you want some quick 'meal prep' ideas- check youtube for easy meals to make.

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Meal prep to save!
8. Need Free Entertainment- Yoga, Comedy, Arts?
There are so many free things to do in this world. I have gotten autographed books, visited the House of Commons, took Shorinji Kempo (Martial arts) classes, attended really good comedy events without paying a dime. I use websites like eventbrite to find free classes for yoga, arts, dance and more.

9. Scroll through Gumtree for big items (2nd hand shopping)
Since furniture does not appreciate in value. I used gumtree to get great deals on furniture. For instance, I got a really great sofa for £350 (retail was £1200) and it was used for only 2 years. I also got my armchair for £50 with free delivery! Using gumtree saved me hundreds of pounds. If you find something you like, go with a friend to see the product before you buy. Also remember to haggle to reduce the price on offer.

10. Use CEX to get cheap but durable Electronics
I don't buy new phones anymore. Why? again, they don't grow in value and in my case, Apple will be replacing them every 3 years anyway. So to significantly reduce the cost of paying for a new device, I get phones and other electronics from stores like CEX that also provide 24 months guarantee. CEX sells games, TVs, earphones, cameras etc. They also always have the latest phones as a discount and describe the condition of the product if it is in good or mint condition.
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Price of iPhones on CEX
11. Sign up for warranty on all appliances
I learnt a tough lesson with this tip. I bought a kettle last year and it started to have loose parts this year. I wanted to get it fixed and found that I forgot to sign up for the 3 year warranty which would have entitled me to a free fix or a new kettle. When buying appliances, make sure it has a warranty and most importantly activate the warranty.
12. Get a homecare plan to reduce out of pocket costs for plumbing, heating, white goods damage and more
If you want to reduce the headache of paying the sometimes large sum of fixing a broken boiler or getting a plumber to come around, consider a homecare plan. These plans are monthly payments you make such that if you need to fix these type of issues, the provider will cover the repair costs. I have seen as little ar £2.81 for oven, fridge/freezer, coooker hood and hob cover. Read ther terms before your apply.
13. Switch ON the ROUND UP feature on your app. Monzo and other money Apps have this option and I am using it to make little progress towards my goals.
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14. If you don't need it, Cancel it review your subscriptions and direct debits to services that no longer serve you.

15. Save load by paying annually: I saved 25% on my white goods insurance by choosing to pay a one off annual fee instead of making monthly payments. If this option is not presented to you, just ask.
In summary, find ways pay less or  get paid for spending!
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I've just found out that I need £900k saved to be happily retired

10/6/2019

 

It is the  year 2056, I am age 62 and have just retired. I have paid off my mortgage, I have healthcare coverage and I need £3000 per month (net tax) to be happily retired. Research has shown that UK retirees need around this amount to maintain a certain comfortable lifestyle that allows for some luxuries likes holidays, fine dining and more.

So if I want to be a disco dancing queen at 62 , living it up on £3000 a month, where would that amount come from? The answers I found are well… huge and I must start now. See it all here.

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Why did I choose £3000 as my happily retired monthly figure?
At 62, I envision a life where I can spend on luxuries, management my expenses and retain or increase the lifestyle that I had when working. An undesirable scenario for me is a position where I am used to a certain lifestyle and then in retirement, I find that I have to downsize significantly.

So if I was living on £2500 while I working, In retirement, I don't want to have only £1,500 as income. Studies show that most retirees want there income to be around 70% of their working income in retirement.

My £3000 will cover, healthcare, bills, food, clothing, travel, donations and a few luxuries.
It is very crucial that my mortgage is paid off or at least close enough to being paid off (2 years away). This way, I will not have to work to discharge the loan or feel the stress of using my savings to cover meet my debt obligations.

My ideal situation would be to have my primary home paid off and to have a rental property where I can continue to hold assets. We are likely to live longer and with a retirement age at 62, I can expect to live till I am 85 or longer. This means that my income must last for at least 23 years.

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What is your aspirational lifestyle at retirement?
My income at retirement will change from getting a whole UNSCLICED PIZZA on day 1 to getting different pizza slices on different days

Today, I work for a company and each month on a specific date, I get a salary. That salary is provided once and it funnelled into my expense, savings and investment. Fast forward  to age 62, my retirement age. My income will no longer come at a specific date but it will come from different sources to make up £3000. It could look something like this:

£750 from Company Pension received in on 8th of each month
£450 from State Pension received in on 8th of each month

£450 from Personal Savings account received in on 8th of each month
£450 from rental income received in on 15th of each month
£300 from SIPP received in on 17th of each month
£300 from LISA 
received in on 17th of each month
£300 from part-time job received in on 23rd of each month

This reconfiguration of my potential income at age 62, changes the way I think of a pay-check. It will mean that for instance, I'll have to organise my spending not around one date but multiple dates. This is a mindset shift that I have to be aware of and start getting use to as the retirement age comes closer.

The above is an example. The £3000 I estimate is for an individual. If that amount covers a couple, adjust your income sources to​ reflect your cirumstance.
umm Did I say £900,000?
Now that I know how much I want to live on at 62, I now had to figure out how much I needed to save in order to get £3000 monthly. See the table below for full details.
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To estimate how much I need to save, I learn of the concept of '4% drawdown rate'. This the rate at which I can take out of my savings in order to maintain my pension pot and not run out of money.

Let's take my LISA, each month, I need £300 from that account to live on. In 1 year, I need £3600 = £300 x 12. If I want to withdraw 4% of my LISA account at 62, I need (£3600/4% = £90,000 saved in my account upon retirement. 

So the Ideal scenario is that my LISA will grow annually at 4% and if I withdraw 4% annually, I actually NEVER run out of that £90,000 saved. This is called the natural yield.

So if my annual income i £36,000 net, I need (£36,000 / 4%) = £900,000 saved at the age of 62 to maintain the lifestyle I desire. This calculation is based on a number of assumption related interests rates and inflation. However, it gives me a view of the size of the pension pot I'll eventually need. 

Seeing this figure, I can spend all the £900,000 in 25 years (£900000/£36000). However if I anticipate that I will live longer than 25 years, I need that £900,000 to last much longer.

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Want to simulate your pension pot?
Have a go at the Wealthsquats calculator shown in the table above. Alternatively you can do a quick search and find other like the People Pension calculator 


At what age can you access your pension?
For each of the pension sources I have mentioend above, you'll need to keep in mind when you can actually start to withdraw from them. For instance, the age when you can access State Pension will differ depending on your birth year, so if that age is 68 years, and you wish to retire at 55, you'll need to find ways to cover the income you would have received from our state pension.

So part of my pension plan is looking at the age and time when I can access these income sources.


Some Interesting things I found out:
  • £1 million is the maximum size the UK allow for your pension pot excluding state pension. This is called the Lifetime Allowance. If you go beyond this, you will be taxed.
  • £40,000 is the maximum an individual can pay into pension each year. This is called Annual Allowance. If your income exceeds £150,00, your AA will reduce up to a maximum of £10,000 at £210,000. The more you pay in your pension, the lower your taxes.
  • £4000 is the maximum Amount I can save in a Lifetime ISA  per year if I allocate the savings for retirement. If I save the full £4000 the government will give me a bonus of £1000 (25%).
  • 25% is typically the amount you can withdraw TAX FREE from company pension or SIPP upon retirement. The remaining 75% is taxed as income but you can vary your withdrawal rate to pay lower taxes.

Know the Pension Carry forward rule. 

I learnt this from a friend.


Every year I put in  £40,000 into my pension this is the maximum annual allowance permitted by the government. I also manage my wife’s finances and she currently has around £160,000 in her pension pot. For the years where we do not put the full pension allowance, I use the pension carry forward rule where in a given year, I can pay the difference from the annual allowance for the past 3 years. This looks like this;

Year 2016 I contribute £30,000 into my pension (I have £10,000 left for my annual allowance)
Year 2017 I contribute £20,000 into my pension (I have £20,000 left for my annual allowance)
Year 2018 I contribute £20,000 into my pension (I have £20,000 left for my annual allowance)
Year 2019 I contribute £40,000 into my pension  (I have maxed out my allowance, nothing is left)

In 2019, I can contribute a total of £90,000 into my pension because I am able to carry forward £10k+20k+20k= £50,000.
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Know your pension status!
I want to get my pension situation sorted
There are many variables that impact your growth and longevity of your pension pot. Keep these in mind when reviewing your circumstance.


  • When you start saving
  • How long you save for
  • How much you want to live on
  • Interest rates
  • When’re you hold your investments
  • How you manage your taxes and tax free pension

What you can do now?
  1. Calculate the value of your current pension
  2. Simulate your expected income
  3. Agree on your savings plan
  4. Track your progress monthly

Options avaliable for you
  • Save more
  • Reduce your expenses
  • Work longer
  • HOPE for a better interest rate


More information
Read our full guide on pensions here to get started. I also found this website from The People Pension to be useful.
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Use this cool method to set up your bond savings like a pro

9/6/2019

 
Recently I came across a new idea called Bond Ladder which allows investors like us to arrange our bonds in ways that provides ​flexibility with regular returns.

This can be an attractive option if:
  • You want regular income in the form of interests
  • You want to access to your money at certain intervals
  • You are happy not to touch some of your money for a while
  • You are retired​
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I am actually going to rename these bond trees as they money bloom all year round. Who doesn't like that

How a bond ladder works

Say you have £1000 to save. You can either put the whole amount into a single fixed bond for 10 years with a 2.33% return. With this option you will not be able to access any part of the £1000 for the duration of the 10 years. If you feel that this ties you down, you can also opt to create bond ladder.

With a bond ladder, you split your £1000 into different amounts  across different bonds that mature at different times which also offer varying interest rates as return.
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With your £1000 bond ladder, you get the amount you invest back at different times so the first will be £200 + interest after 6 months. You can use that amount to sort our any expenses or you can reinvest it into for example, a 6 year bond to keep the process of building your ladder and getting a guaranteed income each time.

As normal with bonds, you'll get the highest interest rate with a longer maturity period. Essentially the issuer or bond provider rewards you more the longer they hold your funds as a loan.

If you are retired or you know someone who is about to retire
A bond ladder is a good way to manage your savings or lump sum pension while you retain your capital. With a bond ladder, you are guaranteed a monthly
(if you bond provides this) income via interest payments across multiple years.
Remember

Do keep an eye out of the interests you get to ensure that you are getting the types of returns you want. You can also create bond ladders using:
  • Bond savings accounts only
  • Stock market bonds only
  • A mix of bonds savings accounts and stock market bonds

Click here to learn more about bonds. 

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Why you need the 'Oops Account'- Managing the Unexpected (curve ball)

8/6/2019

 
Recently I came across the following key words Financial Vulnerability, Financial Capability and Financial resilience. I generally attribute the words vulnerability, capability and resilience to life, emotions and an overall wellbeing.  In the articles spewing these words they explored the following how easy is it for you to weather a sudden financial storm? In other words, how ready are you to manage curve  balls. In this blog, we discuss the need for a new savings account to cover unexpected however large or small.
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Imagine this, two individuals Niya and Hurley receive an email that says you owe £450 from phone contract which you did not formally close if you do now address the cost, it will continue to increase.

Niya and Hurley's response to this curve ball event

Niya's response:  damn I should have done this, I kept putting it off.  I can resolve it in 24 hours using my own savings

Hurley's response: oh no, I'll have to borrow from Shane again and I have not paid him back and I can't ask Leo again as I still owe her as well.


Niya is less vulnerable, More capably and more resilient as she has the funds to attack the issue immediately. Hurley is highly vulnerable, less capable and less resilient as she was in an already difficult position and this new phone bill has added to her worries.

This is how people become suddenly poor 

I read this article that mentioned that the number of people who are at risk to becoming poor is actually higher than the number of poor people. I thought eh!?

The scenario above is the simple view of how poverty happens. You are less likely to be poor because you have ONE bad event. You need combination of multiple events for it to happen- like a domino effect that makes your situation more and more precarious. 

If we understand this cycle, then we know that if we can manage these multiple series on unfortunate events by having a sufficient financial cushion, we are more likely to survive it or at least come out of being poor in no time.

A key goal of WealthSquats to encourage ourselves to build financial resilience, the ability to progress with our financial goals in the face of the unexpected. It is about building a strong finical muscle. 

What are examples of curve balls
​
I found the table below from UK's MSE report where they list out all the most frequent unexpected events and it associated costs. From their report, the average amount for unexpected cost is £1545, the highest category is lending to  family/friends which amounts to £2,482.

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How am I building my resilience?

After reading this report, I promptly reviewed my finances to see how I can start to prepare myself for just in case situations.  I converted one of my saving accounts into an oops account where I make a monthly deposit.

This account is for managing any expenses and I am perfectly fine knowing that it will go to zero at some point and I will continue to top it up. I want to be part of the survey that has funds to solve problems that can be prolonged if I am unable to take action.

​It is important to note that the oops account is part of building our overall financial resilience  imagine a future where you have a robust emergency fund, a diverse asset class that includes bonds, funds, pensions and an oops account. That to me is holistic financial resilience- you are taking care of yourself today, you are prepared for tomorrow and you have a starting point to handle the unexpected.



I encourage you to open your curve ball account today and start with something however small and give yourself additional peace of mind.

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How to make sure your loved ones are cared for when life happens #Life insurance

7/6/2019

 
I have been thinking about what financial products are available to support individuals when the unexpected happens. In this post, I explore life insurance and find it can be a useful investment allowing your dependents to benefit from an additional source of income.
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The combination of your savings, investment and life insurance payments, can provide a very stable financial foundation for those you care about.


About life insurance
Life insurance is a financial product that provides your dependents with income in the event that you pass on. This is particularly important for parents with children and individuals with partners/spouses. As part of my exploration into wealth protection, I have found that life insurance allows you to continue to provide for your dependants so that they do not have a lower quality of life. Using the insurance payout, your dependents can pay mortgage payments, pay for education, manage other expenses as well as continuing to save and invest.


How to get life insurance...

With your employer
Typically, employers provide life insurance as part of employee benefits package. In this scenario your employer will ask you to identify your dependents and sometimes you can allocate the percentage that should be allocated to them. Having an employer provided life insurance package provides coverage if you pass on while you are an employee of the firm. If you move to another job, you will lose the coverage. So check the terms and conditions carefully.

On your own
If you wish to have life insurance coverage that is not dependent on your job, you can shop online from providers such as Vitality, AIG, Scottish Widows, Virgin Money and more. My research has shown that you should seek life insurance policies that is at least 12 times your annual income so if you annual income is £30,000, you should seek coverage of £360,000.

How much does life insurance cost?
The monthly cost of Life insurance varies substantially and can range from £2,50, £6,  £12,  £30. This is variation can be due to a number of factors:

1. Your age:  typically, the older you get life insurance, the more expensive it will be

2. The term of the policy: What length of coverage are you seeking, is it 25 years or unlimited?

​3. What will the policy cover: do you want mortgage cover and/or financial payments to your dependents? The more you cover, the higher the monthly costs.


4. The payment plan you choose:  Level or decreasing term

Level Term The payout will remain the same over your chosen term. So if you elected a payout of £360,000 over 25 years, your dependents will get that amount if something happens to you over the selected term.

Decreasing term: The payout decreases over the term of the policy and is typically used to cover specific debt like a mortgage. If you obtained a decreasing policy of £360,000 over 25 years, your dependents will get a higher payout at the beginning and as the 25th year approaches, the payout will approach £0.


Your own monthly payments will be advised by your insurance provider and there is also no limit to the number of life insurance policies you can purchase.

Is life insurance for you?
I like the idea of allowing my investments and savings to continue to grow and have my dependents benefit separately from life insurance payments. The combination of your savings, investment and life insurance payments, can provide a very stable financial foundation for those you care about.

 Should you get life insurance if... (my view)
Yes if,  ​you have dependents- children, a spouse or parents, it is beneficial to get life insurance. 
It Should at least be 12 times your annual income 
And is separate from your job so it follows you and does not end if you leave a job


Spread the word!
After reading this, do check if your parents have life insurance and discuss why it matters. If you know of parents or individuals with dependents, inform them as well so that they are armed with the right options and information. 



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The truths I am learning about controlling Debts

6/6/2019

 
It is year X and you owe Family 119 a loan.. Knowing that you are unable to pay back, you pledge your services and that of your entire family of 5 to repaying this debt. Family 119 agrees to this arrangement but will not tell you what type of service you will provide and for how long.

You are now age 73 and frail. The 119s now own your land, where your modest home sits (you are now a tenant) and they are also aware that you can no longer continue your services. You instruct your children to inherit your debt repayment services to the 119s. What will they do?

Luckily, Debt Bondage, as described above is illegal according to the International Labour Organisation but it provides some historical insight into how debts have been managed in the past.

Today, the 119s seem to be replaced with banks and other lending organisations. Additionally in some parts of the world, your debts can still be passed onto your dependents.
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Unsurprisingly, Debt is about affordability. Can you afford to have Debt?
So, what is your debt relationship status? Friend, it's complicated, separated?

In the UK, research by FairMoney found that typically, women own 25%  more debt that men. This reality is taking place in a world where a woman wage is statistically lower than men due to wage gaps and the increased number of women in part time jobs. One positive news is that women are more likely to speak about their debts than men showing that we have less guilt or shame about this subject.

With an open approach to discussing debt, this blog post looks at, what we can do to reshape a women's debt reality. I seek to understand the nature of debt, what it is and how to manage it to yield positive outcomes. And if you are already in a difficult debt situation, I share some views based on research on how to get address it.

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Credit Card is a type of unsecured debt
Debt is a sum of money that is owed or due to a lender. 

There are two types of debts - Secured Debt and Unsecured Debt.

Secured Debts are backed by an asset. This means that when you take on a secured debt, the lender (who is providing you with the loan) has the right to asset e.g. a car or house upon as collateral. The typical types of secured debts are mortgages and car loans. If you are unable to pay the loan taken to obtain these assets, the lender can get the asset also called a collateral. As a borrower, you are able to own the asset only when you pay off the loan in full.

Unsecured Debt are not backed by an asset and the lender does not have rights to any collateral. These debts typically have a higher interest rate and examples of this type of debts are credit card loans, student loans, medical bills, pay day loans, overdrafts etc. If you obtain one of these types of debts, the lender can get repaid if your default in a number of ways- garnish your wages, send a debt collector to retrieve the funds or find a way to get access to your asset.


The Stats
Across the Britain, Unsecured debts have increased by 50% since 2008 and make up around 30% of a typical household income. Why? these increases are attributed to public spending cuts and wage stagnation. In light of this, individuals are using debts a resource to manage their expenses. Unsecured debts are easier to access (online) and loan providers are able to typically charge higher rates and thus reap significant rewards particularly when borrowers are unable to repay them. 
​​
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Wealth builders handle debt with extreme care
Understanding Debt for Wealth Creation, Growth and Protection

From my research, I have found that people hold debt for a variety of reasons, to purchase phyiscal assets, knowlegde assets such as education via a student loan, to deal with sudden changes, build their credit score and more. Some others choose to have ZERO debts and manage their lifestyle with their own savings.

However, most wealth builders handle debt with extreme care. This is because:
​
  • If it is too high incomparision to their income, it does not free up funds to make additional investments
  • It impacts their wellbeing. A debt free life is a stress free life​
  • It can impact their credit score- a representation of their ability to pay back a loan. If you have a low credit score, lenders including banks will likely charge you high interest rates to lend to you or will choose not to provide you a loan. You can check your credit score for free or for a fee using services like Experian, Equifax, Noodle or the Information Commissioner office. 

For each debt type, I share my finding what what a good behaviour looks like and also list out which bad ones to avoid.
We hold debts for a variety of reasons
Credit Card

Bad Debt Habit:  
  • Spend beyond what you can afford.  
  • Take cash out of your credit card
  • Pay only the minimum amount- this means you'll pay more than you borrowed e.g. If you borrowed 50, you can pay back 150 depending on the interest rate per lender.

Wealth building habit:  
  • For each amount you spend on your credit card, clear it (pay it back in full) every month. 
  • Get a credit card with low or zero interest rate payments 
  • Have only 1 credit card that rewards you for spending (if possible) 


Car loan
Bad Debt Habit:   
  • Buy a brand new car beyond your means and pay a large proportion of your income to pay back the loan

Wealth building habit:  
  • Buy a second hand car and pay in full using cash which you have saved this way you also avoid making monthly payment.
  • Use public transport, Walk, get a bike (if possible) 

Mortgage
Bad Debt Habit:
  • You purchased  your home and you cannot meet the monthly payments. 

Wealth building habit:  
  • Have an emergency fund that covers around 3-8 months of expenses before purchasing a home 
  • Make sure the monthly payment is equal to or less than 30% of your monthly income.  
  • Make monthly or annual overpayments to reduce the amount of interest you pay and your mortgage term.
  • Rent out spare room(s) to supplement your mortgage payment


Student loan
On average, It takes women 16 years to pay off student debts. By contrast, it takes men 11 years.​
Bad Debt Habit:
  • Get a high student loan that will take more than X number of years to pay. 

Wealth building habit:  
  • Go to a significantly cheaper university 
  • Take out low cost loans so you can start your career with very low debts.
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I am thinking of taking on (more) debts
(Discuss this in DETAIL with your loan provider )
  • Seek low interest rate debts
  • Ask for ability to pay it off early with minimal penalties
  • Make debt repayment less than 20% of your monthly income
  • Use comparison sites to consider all suppliers - family, friends, government, banks
  • AVOID pay day loans (see more below)
  • Do not take on debts for things that do not grow in value (e.g. a TV)
  • Find out what happens if you default​
I am already in debt
Not to worry, you have multiple resources avaliable to you to acheive a postive outcome. Speak to your bank or financial advisers to get more information. You can consult resources and charities that include:
  • Money Advice Service
  • Citizens Advice
  • Money Advice Trust

​Here are a few steps that may help:
  • Create a debt payment plan
  • Speak to the lender to reduce the interest rates and repayment amount(s)
  • Use the snowball method (pay off the smallest debt first)
  • Reach out to debt management charities (see above)
  • Overpay when possible
  • Stay positive


Whatever you choose, DO NOT Use Pay day Loans
Payday loans refer to loans provided by pay day lenders who lend an amount of money which borrowers typically pay back on the day they receive their monthly salary-hence the word pay day. These loans are typically  sought after as a last resort. Due to this, they typically carry very very high interest rates. These loans are unsecured and can negatively impact your credit score because they signify to the lender that you are not financially stable. This can  make it more difficult for you to get other loans e.g. a mortgage in the future.
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The easiest trick to saving more money while you sleep

4/6/2019

 
As an evergreen financial and wealth student, I am always on the lookout for new ideas, tips and time saving ways to manage my finances. One tip that many wealth builders apply is using an automated standing order. This tip allows me to build wealth by significantly reducing the hassle that is required to manage my funds. ​​
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Set up Automated instructions for your funds to grow wealth and meet your goals

H​ow do I use an automated Standing order?

Every month when I receive my salary, I have set up instructions to my bank to automatically allocate a given amount to multiple asset classes. For example, If i receive £100 on the 30th of each calendar month, the minute the £100 reaches my account, my bank automatically sends:
​
£8   to my emergency fund
£10 to my  P2P account
£20 to my  H2B ISA
£17 to my  Mutual fund account
£10 to my  LISA
£5 to my  travel account

£30 remains in my bank account to cover my expenses



Out of Sight, Out of Spending Mind

Allocating my funds in this manner allows me to effectively meet my monthly or annual financial goals. In this scenario, I am applying out of sight, out of spending mind.  It is very easy to be tempted to spend when you do not have a plan for your funds and I have chosen to be structured and disciplined with my own goals.

You may say, but I can do this every monthly manually and that is ok if it is helping you reach your own goals. Using this easy tip, has allowed me to be very careful about unplanned spending. If you find that new reasons arise where you want to spend the money you want to allocate to  your asset class, it become very easy to derail your goals.



The Surprise

After doing this for a while, you'll find yourself checking one of your accounts surprised at the amount you have accumulated without having to do too much. This is exactly the experience one of my friends described- 'every month, I send £50 to my savings account and at the end of the year, I go and look at it and £600+ is just sitting there and I do a little dance'. 

How can you set-up your automated standing order

The great thing about an automated standing order is that the hard work takes places only at the beginning when your set up your instructions. There are many ways to set up your own automated instructions and it takes only a few minutes. 

1. Identify how much you want to allocate to your asset classes

2. Contact your bank and set up your instructions. You will need the receiving bank account details. Alternatively, you can set up your instructions via online banking or your banks' phone App. 

3. The typical details you'll need to complete your automated instructions:


Bank details of your receiving account
​
The date when you want the instruction executed (make this the day you receive your salary)
​
Amount to be allocated




​
Automated standing orders is a great  and easy tool that allows me to build wealth over time with the right discipline. Remember, you can always amend your instructions to match your plans.

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Clues on Taxes

3/6/2019

 
One of the wealth mantras that has always remained with me is it is not how much you make but how much you KEEP​.  ​When I heard these words the first time, it shattered my beliefs that in order for me to have wealth, I would have to make  a significantly higher income.
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Keep more of your income by understanding your tax position


Knowing that I did not need to be a millionaire before I could start investing and saving, I began to learn about ways to keep more of my current income by saving and investing wisely, controlling debt and understanding taxes. This blog will focus on taxes.

Why we pay taxes

Taxes are payments citizens/residents of a country make to their government who will typically use such funds to secure social goods like maintain public parks, provide state pensions, provide national healthcare and many more. There are different types of taxes but the one that significantly impacts your wealth goals are income taxes. 


What is your tax bracket? 

Income taxes are typically deducted from your monthly or annual pay check. Depending on where you are in the world and your occupation type, you can pay up to 70%+ taxes. If your income tax is 50% it means that 50% of your income is going to government and that amount will not be available for  you to build your wealth. The 50% that you get to keep can also be subjected to taxes on the interest earned via savings so it is very important to ensure that you are not taxed twice when planning for your financial future.

​Many individuals, use banks and tax planners to help them identify ways to legally reduce the amount of tax they pay so that they can hold more of their wealth. 



So what can you do today to protect your wealth?

1. Look through your assets classes and identify if you do pay taxes. For instance, if you are using a retail savings account that is not a cash ISA, you will be paying taxes on your savings.

2. If you get a monthly pay check,  look through your pay slip and understand how much tax you pay monthly. If you want a holistic view, visit HRMC to see how much income tax you pay annually.
 

​3. My favourite: Start using tax friendly products to safeguard your wealth

The UK government allows wealth builders to save up to £20,000 tax free in any of the three ISA wrappers available. You can save your cash, invest or use Innovative finance products.

In addition, if you invest in Private Equity companies that are covered under the EIS scheme, you can get up to 30% back from the government. You can also get similar refund using a VCT.


If you donate to charity, you can also claim a tax relief on your donations. Furthermore, if you are saving for your children, you can use the Junior SIPP or Junior ISA to protect your savings.

As you can see there are numerous opportunities for you to keep more of your income by understanding how to manage your tax situation. Most importantly, t
he size of your income is not a blocker. Remember, it is not how much you make but how much you KEEP​.

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it is not how much you make but how much you KEEP​
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Keeping a Monthly Record

10/20/2018

 
One of the positive financial habits that I am learning to develop is to perform a monthly check of my finances. Blackrock, an asset management firm found that women who are considered Smart Savers spend more than 7 hours per month reviewing and making changes to their savings and investments.
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Develop your own record keeping practice set a date, use a spreadsheet or an App and GO!

How do I apply this practice?
On the 12th of each month (I have this set-up as a recurring calendar appointment), I spend at least 1 hour where I pull up my networth tracker (download your copy here) and answer 2 questions:


  1. How did I do this month?
  2. Do I need to make any changes?

How did I do this month?
To answer this question, I open all my savings and investments accounts, look at the current values and add them into my networth tracker. Where the investments have grown, I mark them in green and where there a losses, I mark them in red. This allows to me visually see how each asset is performing month to month. 

​If you have any liabilities like a student loan which you are slowly paying off, you can also use the tracker to make a record of your financial performance.

To finish up, I sum up (automated via the tracker) the values of my assets and liabilities to re-calculate my overall networth. This singular figure allows me to know how I am progressing towards my own financial goals.

Do I need to make any changes?
Once I have updated my networth tracker, I look at each assets/liability and decide if I want to make any adjustment.

Example of adjustments:
  • Moving some savings to a new high interest account
  • Increasing the monthly amount I put towards reducing a debt
  • Adding new funds to my brokerage account
  • Reducing the amount of money I save
  • Increasing the amount of money I invest in bonds

This month (October 2018), I chose to add new funds to my brokerage account that focus on investing in small sized businesses around the world. I also chose to add bonds to my LISA account which I have chosen to be my personal pension savings account.

I began record keeping in November 2015. 
This practice has provided me with better control of my finances. It has also enabled me to plan and to be flexible with making changes which contributes to making me a more confident investor. 


I truly believe that if you do not know where you are, you cannot decide where you are going. I encourage you to develop your own record keeping practice set a date, use a spreadsheet or an App and GO!​

Do you keep a record? Which Apps do you use? Let me know.
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Where did I learn my money habits?

9/23/2018

 

One of my friends asked her dad about how to save and he told her to google it

Looking back it is very likely that my friend's dad did not know much about saving and investing. To begin my own journey into understanding how I could plan and manage my money better, I had to go to the beginning and be honest about the following question-What do I know about money today and how to make it work for me?

To unravel this question, we must first understand where individuals learn habits in the first instance? As a child, you learn your speech, behaviors and values from your surroundings which is made up of family and friends. In just the same way you also learn your money habits from your surroundings. Your money habits include how you spend, save and think about money.


“Your money habits include how you spend, save and think about money.”

Your surroundings can have a profound effect on how you manage your money. It also defines your path to wealth. It is therefore critical to assess how much your money habits is attributed to what you have learnt from your surrounding in line with evaluating your current circumstance. This insight will allow you to understand how a family can have wealth for generations, because the rich teach their children rich habits and the less well off teach less well off habits. Teach can also be observation.

Take for example, if you lived in a household where there was always a scramble to pay rent and meet monthly expenses, you could accept this a normal and find yourself with very little to spend at the end of each month as a working adult. But you can make another choice, you can take the time to assess why the scramble took place and plan how you can make money work for you and not fear it.


“Your surroundings can have a profound effect on how you manage your money. It also defines your path to wealth.”

My middle class parents did not teach me about money and financial management. This was in part due to the fact that they did not get an education from their parents. To be frank, money is not a subject that most families or friends discuss in open. To some any topic about money is  best held in private or not at all. But if you want to manage money successfully, you need to understand it and you need to talk about it in order to develop successful money habits.

WealthSquats is intended to help others understand that they can start their own path towards financial with the right information, patience and discipline. There is no complex jargon about finance-it is basic, it is simple and it works.

It all starts with knowing that with what you have today, you can make the most of it by starting small.


If you want to manage money successfully, you need to understand it and you need to talk about it  in order to develop successful money habits

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“Your money habits include how you spend, save and think about money.”

Take Pleasure in saving money
~Suze Orman

​

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How do I nail down my expenses?

9/22/2018

 
Managing your expenses is good way to find money that you can free up save and invest.

What is an expense?
An expense is something that takes money away from your pocket. This is my favourite definition provided by Robert Kiyosaki. An expense is in contrast an asset or investments which put money into your pocket (read Rich Dad, Poor Dad).


Taking note of your expenses is about making you aware of what things, actvities, or people that are taking money away from your pocket.  The table below provides a sample list of expenses. You can also use this simple spreadsheet to quickly calculate yours.
Types of Expenses
Description
Amount I spent per month is..
Rent
Money spent on housing. This should be circa 30% of your monthly income
...
Mortgage
Money spent on owning a home. This should be circa 30% of your monthly income​
...
Groceries
Money spent to buy food
...
Gym Membership
Money spent on fitness
...
Recreation
Money spent on socialization including theatre, concerts, dining out, going to the movies etc.
...
Electricity/water/gas bill
Money spent on your home utilities
...
Telecom
Money spent on phone credit, phone payment plans and phone upgrades.
...
DSTV/Television
Money spent on television packages
...
Clothing
Money spent on clothing,bags, shoes,sneakers etc.
...

An example of expenses

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The 70:30 Rule

As part of my research to gain a PHD in understanding money management, I always remember one rule that I carry around. It is called the Millionaire rule which states that Millionaires save or invest 30% of their income after tax and spend 70% on their expenses. This is called the 70:30 rule.
If you are able to save 30% of what you make on a monthly basis in line with the compounding effect  you are truly on your path to managing your money.
The 70:30 rule is a guideline for managing your finances. Depending on your situation, you can define what ratio works for you and that can be 80:20  or 75:25. You can even start with 90:10 and then work up to a ratio that you feel comfortable with. The goal here is to ensure that you do not feel strapped or have to struggle to save. If you start to struggle, you will dip into your savings frequently and that is not likely to help you achieve your financial goals.  
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