Why you need to be smart with Money.
In the past year when we are all in lockdown many of us lost our jobs or had our income get restricted. Many of us were waiting for that little help from our governments or organisation to ease that pain in the bank. During all of this we all remembered moments when we used to have big account balances. Reminiscing those pay days and wondering when they would come back. Wishing that we had saved or invested just a little bit of that amount so we’d be so much more comfortable.
Well that was a mistake many of us made, not saving! We went out on shopping sprees as soon as we got paid, buying that new iPhone, dining at the finest restaurant, getting that LV Bag to match with Supreme shirts and all other things that now sit idle. In this blog we’re going to reflect back and learn how we can be smart with our money from now on. So that we are more than comfortable and ready for a rainy day.
The first thing that most wealthy people have that we don’t is discipline. Just like you all of us get a pay check but the difference between the broke and wealthy is that the wealthy have discipline. Instead of rushing to the Apple store to get the new iPhone, they stick with their three year old model and deposit the money in a savings account or anywhere else where their money will grow and stay safe. And if we don’t want to go through the same pain of seeing a negative bank account we need to start doing the same.
Lets go over this concept in three simple steps that can help us to get smart with our money.
Step 1: Determine your Goals.
Without setting financial goals we are as good as these barefooted shoes. We don’t know where we are going and every step is going to hurt us.
So yes we need to set goals! These goals need to be according to the life you want to live and they could be anything. Here are some examples:
- Save up £5,000 as an emergency fund.
- Buy a new house by the age of 30.
- Pay of student loans.
- Save up £100,000 to start my business.
- Make £1,000 a month through investments.
- Retire by the age of 45 and travel the world.
Now that you have set your goal, the way you spend your money should be directly related to that goal. So you can decide how much risk you want to take with your money.
Step 2: Researching and Putting your money away!
Now just like how you research before purchasing a new Laptop or a Smartphone, you need to research the avenues you can put your money into.
Before that, make notes on how much you will be able to put away every week or month. This could be any figure you choose but most people put in approximately 10%-25% of their income each month. This could vary from person to person as each have their own responsibilities.
Here’s a good way to think about the money you save…. Don’t invest the money that remains after you spend it on things you want. Rather spend the money that remains after you finish investing. 🤔
Now that you’ve decided on a number it’s time to research. Most people don’t save or invest for the same reason many don’t play golf; they don’t know how to….🙄🙄… So you need to put in this little work to keep your money secure and ever-growing.
Start with a couple google searches and start learning where to invest and how to invest. Here are some Google and Youtube search idea’s
- How to start investing in stocks
- Best broker to buy stocks
- Best savings account UK
- Most safe investments 2021
- Best stocks to buy for new investors
- How to decide where to invest
Get started with some of these searches and after you take the first steps the rest will follow through.
Going back to what we spoke about earlier, discipline. You need to be disciplined enough to invest consistently. No excuses if you want to meet your goals! Here is a rough representation between two investors, one disciplined and the other… eh not so much.
Step 3: The Bonus you did’t ask for!
Now you are putting you money away consistently for quite some time. Here’s a bonus you get that you never asked for: Compounding and Freedom!
Compounding basically means your money growing by it self and working for you rather than you working for it and the results of this will give you freedom to fulfil all dreams you had for your own life!
Hope this image brings some perspective to how your money will keep compounding for you. As you see in the image above, the earlier you start the better it is.
Imagine this, you put away £100 on a stock that consistently grows at 7% a year. The following year when you stay invested you’ll now be making 7% on £107! And this keeps growing on!
I hope this is the starting point for some of you who haven’t considered it before. It never hurts to have an £XYZ amount growing for you while you sleep! 🙂
Wow this is so interesting! some people need to learn how to save money! xD
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This is great, I should really start getting better with my money! No more postponing, thank you Rohin!
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This blog post is what I really needed rohin , is like the complete guid for me and I love that.
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