Not just money, but hassle too!

After going through the exercise of finding the cheapest airline tickets to my destination, I was faced with a simple problem.

We had far too much luggage. It was going to cost us a huge premium over the plane tickets to get our stuff to where we were going.

How does an exercise like budgeting miraculously transform your monthly finances from a source of anxiety and stress into a solid platform for achieving your goals as an individual or as a family?

The short answer is that it doesn’t. Budgeting, and it’s bigger sibling, Financial Planning, are merely tools. Properly applied, these tools allow you to take control of your finances by organizing how you will earn and spend money. They allow you to identify opportunities for recurring savings and give you a way to plan your way out of a financial deficit, or into a position of financial strength.

Let’s take a closer look at the process and how it can help transform your financial situation.

You know how you spend your money, right? After all, every time some money leaves your account or your pocket, it’s due to a decision you made.

Well, it turns out things aren’t quite that simple. For a number of reasons your grasp of your finances is likely to be a lot less precise than you think. In fact, unless you’ve carefully measured your own spending habits, you probably have quite a misleading idea of where you can save, and what you spend too much on.

This first step is designed to get you a little distance from your spending, so that you can take a new look at what your cash is spent on.

The first step in taking control of your spending is understanding where you spend your money today.

At the bottom of this post is a link to a simple spreadsheet that is designed to make it easy for you to do just that.

It’s one of those things we tell ourselves we can dramatically reduce. Unfortunately, the truth is that cutting out all the things you enjoy to save money doesn’t exactly lead to a fulfilling life. It’s important to spend time with the people you care about, it’s important to indulge occasionally in activities that we find satisfying. Saying “I’m never going to eat out” is unrealistic.

You can, however, say: “I will eat out only once or twice a month.” You can also decide to make it worthwhile when you do eat out. Most of all, you can make sure that when you go out, you get the best bang for your buck.

You should have an entertainment budget set aside each month. If you don’t, you’ll still spend money on things like drinks in the pub, the occasional meal in a restaurant or a comedy night with your colleagues, and those events will be guilty pleasures because they’re out of budget. Accept you’ll spend money on luxuries, so that you can control that spending.

When you spend part of your budget on entertainment, you should still be getting value for money. In this article we’ll look specifically at how to spend less on eating out.

Imagine for a minute that you had a mirror through which you could communicate with an earlier version of yourself. What would you tell your younger self? Did they understand how their decisions would impact their life, which is now your life? Would you tell them how a little effort at their moment in time would go a long way to improving your situation in the present?

Now imagine this mirror can only allow you to speak to the person you were last night. Would you say, “Go to bed now, not at 2am, I’m too tired to work,” or “Just spend 20 minutes planning out your day tomorrow because it’s 11am and I still haven’t managed to get anything done!” Perhaps you’d say, “You really don’t need to see another episode of Game of Thrones.”

We are not the same person at different points in time. At our most constructive, we regret the lack of productivity, self-control and motivation we have at other times. How can our optimal self influence the behavior of our more child-like self to get more done in the time we have?

This article deals with rentals, another article will talk about mortgages.

First a disclaimer: There is no magical technique that can turn a £1200-per-month apartment into a £1000-per-month apartment. You can’t reduce the rental cost of an existing contract. I wish it weren’t so, because it’s typically the biggest single item we pay for each month, but once you’ve signed the lease, you’re locked in.

That lease, however, expires at some point, and then you’ll be faced with a decision. To move or stay, to accept a proposed increase or reject it. To try to renegotiate or to sign without making a fuss.

One of the easiest ways to reduce recurring costs is to take a close look at your contracts and consumption and find ways to spend less on your utilities. That’s gas, electricity and water.

Utility bills sometimes feel like a permanent chunk of cost that you can do nothing about. Water rates, gas and electricity. We’ve been paying for them forever and we can’t live without them, so we just put up with them. In fact they’re an easy place to start saving money.

There is so much you can do to reduce your monthly spending it’s sometimes hard to know where to begin. On the other hand, when you want to save money, these obvious savings can be difficult to spot. That’s because your spending habits are so ingrained it’s difficult to see what you can change. It takes a conscious, guided exercise to re-evaluate your spend.

It’s also not enough to measure how much you’d like to spend and then just arbitrarily spend less – if you spend £400 a month on groceries, you’ll find it hard to halve that without completely changing the way you shop. That’s a massive change. Don’t underestimate the difficulty of reversing what is basically a large collection of bad spending habits.

In this series of posts I’m going to look at the spending categories that are common to most budgets and examine each in turn. I’ll point out how you can generate extraordinary savings by taking a fresh look at how you spend in each of these categories. You’ll see that even small changes that don’t look like they’re very significant can, over time, add up to major improvements to your finances.

Did you know that companies exploit your loyalty?

You’d think it was the other way around. In a “normal” world, companies would offer incentives to people for staying with them over time.

For example, your insurance costs would reduce, or you’d get a gradually better deal on your gas or cell phone because you’d been with the company for a few years.

The opposite is actually true.

You probably think of micropayments as a huge convenience. You walk into the coffee shop, order a coffee and then with nothing more than your phone and your thumbprint, the coffee is paid for.

It’s so easy. The phone was in your hand anyway! And there’s that satisfying “ping” and the little tremor in your phone as it signals its acceptance of the payment. So cool. The future is here!

Everything about the experience is satisfying. It’s frictionless, didn’t involve handling cash, or calculating change, it only took six seconds and with a smart watch, you didn’t even need to reach into your pocket.

Contactless micropayments are so easy!

Hello world, as they say.

Have you ever felt trapped by the day-to-day grind of going to work to earn a wage?

All the time you tell yourself that as the meaningless promotions add up and the workload gets heavier, you’ll be able to free yourself from the system. The promotions come, the work gets harder, you earn a bit more each time, but somehow you’re never any closer to that freedom.

It’s not a rat race. In a rat race, there’s a winner. This is an imaginary race where you run faster and better your whole life without ever reaching a finish line, because there isn’t one. The only prize is that you get to keep running.

This is a website about achieving that freedom. I’ve taken from a lot of different disciplines and movements, from finance and economics to psychology and minimalism. Think of it as distilled common sense with a spritz of motivation. Use it as a toolkit to opt out of the race and reach financial freedom.

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