How to have more money

Personal budgeting: How to use budgeting tools and tricks to save £1000s

Posted on April 8, 2017

Budgeting is the simple but powerful technique used by all the successful companies and people so why don’t we copy this and implement in our daily lives. You do not need an extensive accounting background , software or books and if you follow the simple 7 step process below you will have much better visibility of your money and you can start saving £100s if not £1000s. This is my simple 7 step strategy:

  1. Write down how much money you have

    This seem obvious but many people do not even know how much they are in debt or how much money they currently have. Having outstanding balance on credit card and mortgage do not help but I would advice to ignore the amount of mortgage and concentrate on monthly spending only. Check the balance of your :

    • credit cards
    • current account
    • short term loans
    • cash
    • ISAs
    • all other accounts which are changing on the monthly basis and write down the final sum.
  2. Estimate what you will need in the next month

    since the direct debit use it is not simple to know how much money we are actually spending. they just disappear from our account which is convenient but somehow we end up with no money.  In this step you have o make sure to include every single amount of spend which you are planning to spend in the next 30 days including:

    • all utility bills
    • all taxes
    • TV licence
    • mobile bills (including insurance)
    • car bills (MOT, taxes, insurances, etc)
    • petrol
    • clothes
    • food
    • lottery
    • gifts
    • special purchases
    • any ebay or amazon purchase
    • any Paypal spending
    • estimate of at least $200 for back up (in case you have the above number wrong)
    • any amount you spend
    • estimate you small purchases such as: drinks, sweets, cigarettes if you smoke etc
    • Estimate what will be your nett income for the next month
  3. Estimate how much you are going to earn in the next month

    This should be simple step if you have only one job that pays the same amount monthly however there are people on different contracts with many jobs and they can not estimate therefore I would just guess based on historical amounts from previous month and apply some kind of probability factor.  Any amount is better than nothing. So write down the sum.

  4. Always have the affordable back up amount in your budget

    I always suggest to have £200 as the back up when you are starting this budgeting process. You will need a few month to get this right. also it helps in managing unplanned spendings such as: repairs, impulse buying etc. The good news is when you don’t use your back up fund you can have some savings. Remember this process is not to limit you in anyway, I always believe that you should buy what you want. This process will enable you to buy what you want. All you need is to plan it in advance. There is plenty of tools and apps you can use starting from simple spreadsheet to some sophisticated apps you can use but it is very easy to surround yourself with fancy tools, plann it ll and …not use it. So to start this process I would suggest to start simple and teach yourself the budgeting approach. Backup is the key to fine tune your budgeting skills and master them. If you need some apps you can use these:IPhone apps, or these are other apps

  5. Calculate he balance

    The amount of money earned should be the same or higher than the estimated amount of money spent. This is the simplest possible way of laying down the principle of budgeting. There is no more to be said in this area but many people just hope to have some kind of magical powers to create more money or are waiting for the Family or an angel to hand them some money. I would suggest don’t join these people. If what you are planning to spend is within your reach and below your monthly earnings you will be OK, If something unexpected happened and you will have to pay for something unplanned at least you will have a better position because you planned all the rest.

  6. Make sure you spend only what you planned

    This step requires some discipline. You need to stick to your plans. Be careful with small amount spendings such as: drinks, sweets, icecreams, newspaper, bus tickets etc and make sure you allow the amount for such in your monthly plan. The first month will be your best teacher and use it as lesson learnt.

  7. Calculate the actual money earned and spent at the end of the month

    Look what happened in the first month and see how much far from your plan you ended up. Use it as lesson learnt and try to improve your budgeting skills for the following month. It is never ending learning curve but it will help you to control your money without nasty surprises at the end of the month. Remember: it is about doing what you want and spending money on what you want

Using banks: Great ways to make make banks paying you money to use their service

Posted on April 8, 2017

We all have to use banks whether we like it or not.  Regardless if we have money, a good job we have to use banks, current account, credit cards, debit cards etc. As you already know I always think about using service and getting paid by it. As the customer I know that I am the great assets for banks. Without customers banks would not exist. Therefore why don’t we get paid if we are so valuable assets. I developed a lit of at list 10 strategies that you can use and be actually paid by banks for their service

  • Number one is – and always will be – make sure that interest paid in your account is the best on the market. Even when interests rates are very low there are always banks that offer us some great rates. So if you have any money use them. At the time of writing interest rates are at the historical lows and you can find a number of banks that offer some kind of interest. there are not impressive but they are better than nothing. you will get from 1-5% per year paid on the monthly basis. Anyway don’t go as yet as you have to read other tips and use them in conjunctions with this one.
  • Number two: Make sure that you choose the bank with services you actually need. Strategy no. 1 is great but if you don’t get service and products you need you will loos. I was paying from £8 to £12 per month for mobile phone insurance and since we all have mobiles, I paid 4 x this, nearly £40 per month. I also paid breakdown cover from AA or RAC at around £120 per year so I was looking for bank account that would offer me these services included in the banking service. And guess what, I did find it. Nation Wide bank had the Current account with a few nice products: mobile phones insurance, travel insurance, breakdown cover and some others for a fee of £10 per year. On the top of that they pay 5% on the balance up to £2500. This simply means that for the £120 per year I have all my products for which I paid: £600 per year. On the top Banks pay me interest on the monthly basis, which is about £8 so the actual fee is nearly paid off.  Do it only when you need these services
  • Strategy number three is: NEVER USE OVERDRAFT. There is no need for this as there is so many better ways to fill the gap. Overdraft is always expensive and not controlled well can lead to financial problems.
  • Number four: Use credit card with extended interest free purchasing credit. If you pay the minimum and understand that you have to pay it back you can use this strategy to your advantage. The most important rule with this strategy is: Whatever you owe to credit cards company have it on your savings or current bank account. This is not your money!!!. Simply find good accounts, ISA or other SAVE ways to keep money that pays some kind of interest and start earning. Remember: pay minimum payment monthly and make a note of when the free introductory offer ends. It is  agoos strategy but risky so if you can not read the small print and keep your notes organised don’t use it.
  • Strategy Number five: There is plenty of rewards banks offer for just switching to bank with them. You can easily be paid from £75 – £150 just for switching.
  • Number 6. There are a lot of credit card companies that pay you just to open the credit card account and start using them. they pay from £25 so apply for a few credit cards. Make sure you read the small print and pay your bills on time. You can close your credit card a few month later.
  • Number 7. Make sure you are aware of all your bank account and credit cards. If you are not using them, close them and cancel. This rule will help you to avoid many problems in the future
  • Strategy number 8: Use loans if you need them. There is a lot of loans out there. Make sure that they are better than interest free credit cards. If you have to pay the loan at 3% per year and you need £5000, you might be better off taking the credit card with interest free for purchases for 24 months and if your credit is good you could take up to £2000-£8000 limit card. When you come closer to expiry of you interest free introductory period you can apply for another credit card. So you don’t actually need the loan.
  • Strategy number 9: Make sure you maximise your ISA. Using it even for small amounts helps a lot. don’t keep your money in current account if it does not pay
  • Strategy number 10: Always, ALways read the small print. You can actually loose a lot of money. Also make sure you have the journal where you make all the notes and criteria for your decisions. You can this post where we will explain the budgeting process in details.

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