Learn to control money but do not allow it to control you

Firewalker

I have another star!!! This is an occasion to celebrate and because I am becoming a new me, I am not going to add ‘yes, but it did take you four months to get it’.

A glorious Sunday – sunny, bright and worm! OH, little boy and I went to a large nearby park and flew kites. We had a great time and it did cost us only the cost of petrol (about £3, I should imagine) and an ice-cream for the littlie (£0.95). Only eight months ago and outing like that would have been £30-£40. Did it make a difference? Not a bit. Life is life and can be fun – with or without spending money. In fact, thinking about it, in many walks of life, the thinks that money can’t buy are harder to get. Let see...culture, spirit, positivity, happiness (and I know where to go shopping...).

I have been reading the ‘Nice girls...’ book and found a table on the differences between men and women and their relationship with money. The author mentions twelve differences but three of these I found particularly interesting – and relevant. One is that men invest and women save – not convinced whether this is a straight forward gender difference but certainly is a difference between people who achieve financial health and the ones who just build a ‘bit of a safety net’. Another difference, according to Frankel, is that men buy what they need and women buy what they want. I disagree on this one – I think men buy what they want, as well; nobody needs a fast car. It might be that men master their wants better. And the third difference is that men use money to prepare for the future and women use it to create a lifestyle.

How is this relevant? Well, I’ll start from the obvious one – wants. Here, loads of progress has been made – I know what my core and peripheral wants are and that deals neatly with the spending addiction. I have almost stopped wanting.... Lifestyle – yep, these are the coffees, lunches and dinners out, and buying stuff for others, and the shoes, and the Smart car...Check – been there done that, lifestyle is not important. Moved on to substance and the meaning of life (and the answer is not 42). Despite moving considerably towards a very male relationship with money there is an important area where no progress has been made – investments.

Tackling investments is crucial if financial health is to be achieved...In this area ‘lack of education means extermination’. Any suggestions as to how to educate myself in this area?

And the saying for today is:

“October: this is one of the particularly dangerous months to speculate in stock. The others are: July, January, September, April, November, May, March, June, December, August and February.” – Mark Twain

Firewalker

savingwannabe

Hi Firewalker, all i can suggest are cash isa's, good for the risk averse but the interest is not always great. See the banking section of this thread.

Whilst studying Economics A level we were asked to invest a fictitious £100 on any shares of our choice. Of course, it was the week of the Black Wednesday in 1987 - put me off shares for life. We all lost money except the girls that asked their father's investment managers for advice and chose to invest in Gold!!!!

Someone may disagree with this but i always find them to be like gambling. Something i would rather avoid.

williamD1964

Good evening, the weather here was a bit overcast, but spent some time weeding the garden and sorting the crops we planted this year in our little patch. Can't wait to fly kites with the kids. We have the south downs to go to.

I can't agree with the book, there seems to many generalisations. I know as many men that buy what they want, not what they need. I also know a few women that buy what they need first. I believe it's all about the individual. I think that this generation that is all want, want, want, not need, need, need.

Firewalker

This is it: no more delays, no more excuses – I am officially in training for Lausanne marathon. This is a very important one because I have set myself the goal to run it in under 4h 30 min. – which I have never done. This is a dream – to become a reality I need to lose weight (quite a bit of it) and to train really hard. Interestingly enough to run fast one has to do much more than running – so loads of resistance training (weights) and other cross-country training. Much less eating, of course, particularly eating of the wrong kind (sweets, chocolate and home-made biscuits and ice-cream) – now this will take some doing.

Sometime ago I did a post about creativity and the Walt Disney approach to it. Have been thinking about it and the more I think the more convinced I become that most of us have completely forgotten how to dream – I know I have. I also remember mentioning being optimistic in ‘I’ll survive’ kind of way. I would like to retract this statement – aiming to survive distracts us from the aim to thrive and prosper. For my part I refuse to survive any longer, I will prosper and my family will prosper and my friends will prosper – and the hell with the government, budget deficits at different levels and the like. Regaining the ability to dream – and be proud of it – is a part of thriving. Prosperity, whatever each of us understands by it, often begins with a dream; then the dream shapes into a plan; and the plan works through dogged determination. One measure bloody minded, two dozes foolish...

We made a start on the dreaming. Yesterday OH and I took turns to dream. Fascinating exercise – it turned out that we dream about completely different things. Interestingly, materially my dream was to pay off the loan, the mortgage, do up the house and have a bit stashed in the bank. But I also saw myself delivering a lecture to a very large room full of people. Yep, a very ‘nice girl dream’! OH, on the other hand, was dreaming about obscenely large yachts, sailing holidays with sons and friends and a life of leisure. His dream, of course assumed that all I dreamed about is there.

My dream appears modest – but as OH pointed out it is only different. I dream of fame and he dreams of comfort and leisure. One day...

And finally the saying for today is:

“Part of the $10 million I spent on gambling, part on booze and part on women. The rest I spent foolishly." - George Raft

Firewalker

savingwannabe

Good luck with training. V inspiring as usual.

ixwood

Firewalker wrote: »

Not a very good day - quite a lot of scoffing, I am afraid. Mostly chocolate and mostly for little boy and a frown up boy coming home from University tomorrow.

Let me get on with the last point on my list - the one about the balance between increasing one's earning and reducing one's spending. Even if I, as a 'debt free wannabe' manage to crack the regular and variable spending, the scoffing, the impulse buying and the rest, this is a real challenge. Why, you may ask?

How important, and how difficult to achieve, this balance is can be read in the sayings that most people around the world have. Cut your coat according to your cloth. Spread yourself according to the length of your blanket. Sound familiar?

From very early age we are given this ‘wisdom’, in fact it is likely we are weaned on it. Now, sayings or not, there are different kinds of people. Some cut their coat to large for their cloth – and these people are in debt, loads of it, and very likely will not get out of debt until they start thinking differently. But is cutting your coat according to your cloth the solution? Obvious as this might seem it is not – people who cut their coat to match their cloth, or even smaller than their cloth, can live within their means but are vulnerable. What if the boiler breaks and the coat suddenly ought to be bigger? What if the roof collapses? In short there are a number of ways in which demands can be made on the coat and if the cloth stays the same the outcome is no different from cutting your coat big to begin with – you are still in debt. It is only that the people with the big coat had some fun while getting in debt and the people with the small(ish) coat didn’t.

And there are people who while watching the coat try all the time to increase their cloth. My gut feeling is that this is the way to go. In other words this means that expenditure ought to be watched and income should be grown.

It is time for rest now. Will write more tomorrow – probably.

Firewalker

Sorry, I couldn't let that go. It's really not that hard. Lots of people live within their means and aren't at all vulnerable.

If my roof collapses or needs repairing, I'll use the money in the house maintenance account. Same as if/when the boiler goes.

These aren't unpredictable events. Houses need maintenance and repairs, cars need MOT's, repairs, tyres, exhausts etc, Boilers have a finite lifespan.

Christmas and birthdays spends come out of the xmas and birthdays account and hoildays out of the holidays account. Again, these are all perfectly predictable events that for some reason seem to surprise some people.

The key to budgeting is taking into account all possible spends and not just ignoring anything that isn't paid/due monthly. Some people seem to think whatever's in the bank can be spent that month. Forgetting about all the other (often quite major) expenses.

I have standing orders that go out at the start of each month to different savings accounts which cover these things, as per my budget. It's a lot easier to put £50 a month into a dedicated account than it is to find £600 one month. Especially when you're become used to spending everything every month.

Firewalker

Thanks for your comments Ixwood – they are the kind that makes me think so I really highly appreciate it. So, apart from waiting for the budget, listening to it, reading about it, churning over different consequences (mainly for the country and for the children of the nation) I have been thinking about what you said.

Technically, you are absolutely correct – living within one’s means is not that hard. In fact, I recently came across and filled in a test in financial awareness and health and guess what: three months down the line I scored absolutely the highest mark for spending my money wisely. In other words, I have become pretty good at living within my means.

Living within one’s means is commendable. But what I tried to draw attention to in the post you quoted is that concentrating exclusively on living within one’s means distracts from the fact that the means don’t have to be constant. Means can be extended and I for one, whilst leaving within my means, am also determined to extend them. If one has more cloth, one can cut a bigger coat. And by bigger coat I don’t mean consumerism – but access to culture, erudition and experience. I love the ballet and the theatre – at the moment attendance is not within my means, except as a very rare treat.

I regularly and with great admiration read Memory Girl’s tread entitled ‘Make do and mend’. It is mostly, although not exclusively, about what it says in the title. There are two things about the tread I find deserve reverence. One, the tread whilst about being MSE is to a large degree a reaction against wild and untamed consumerism. Second, and more importantly, Memory Girl mending and making do never assumes that her means are limited – on the contrary she is constantly expending them in her name, the name of her children and the name of her community.

So this is what this post was about – the fact that we should live within our means but should never accept that our means are a constant.

I would agree entirely with you that one needs to build a cushion of savings – even before paying one’s debt (debt only means that it is sensible for the cushion to be rather thin and all else should go off the debt). Multiple accounts don’t work for me – but there are many people for whom these are perfect.

Thanks again and sorry for the long post – it is just a testament of the amount of thinking your comments provoked.

Firewalker

ixwood

Obvously, it's best if your "means" (income) is sufficient for the lifestyle you choose/desire. Mine is and I'm very content with my life. If the only way you have of increasing your income is too sell more or your time, then you have to consider whether the extra things you desire are worth sacrificing more of your time to have. Everyone's different in that respect.

Basically what you're saying is that you don't earn enough to have the lifestyle you want/are used to and need/want to earn more cash.

I'm not sure how that relates to your original point about people that spend less than they earn ending up screwed anyway, and in the same position as the people who spent more than they earned.

Whilst everyone would obviously like more "means", living within your means allows a higher standard of living, as less money is wasted on debt interest and charges (and impulse purchases in a lot of cases) and more money is gained from savings interest and investments.

Debt (living beyond your means) is a mugs game and effectively reduces the amount of lifestyle available from your income.

Seperate accounts may not be an option for you, but you still need to include the money in your budget. Mine are just saving accounts with my current account provider. They're basically saving "pots" for each thing I need to have money set aside for.

You need to think of living within your means as your total life spend being less than your total life income. it's not only spending what you earn each month and then being screwed when something "unexpected" happens.

ixwood

You seem to assume infinitely growing lifestyle/outgoings and therefore income.

You can't do the things you enjoy so much now, because that you spent todays money yesterday and are being forced into living below your means. That's what happens when you live beyond your means. You're spending your future.

ixwood

"Annual income twenty pounds, annual expenditure nineteen six, result happiness. Annual income twenty pounds, annual expenditure twenty pound ought and six, result misery."