Apparently, more money than ever before has been saved in Ireland during the pandemic. This should be a good thing, giving some a little more breathing space when it comes to paying the bills.
As we move back to levels of real living, how will we treat our money again? Will there be a big splurge, or have we become more savvy with our hard earned cash?
Why not have the best of both worlds? Is it possible to mind your money and have a good time? It absolutely is, but it can be tricky. Below I will look at:
- saving your money for a rainy day.
- enjoying your hard earned cash.
over two different blog posts.
Let’s start with how to mind your money. You don’t have to be earning huge amounts in order to save. My wife and I were lucky enough to go through a mortgage process over 2 years ago. I remember our bank manager saying to us “I know people earning twice what you are earning and can’t save half what you save”.
Saving takes discipline and sacrifice, but doesn’t everything worth having? Read on for some real life tips to help you out.
Money: How to mind it.
No matter what you earn, you can save.
Some of us may think that saving is only for those who have extra cash, or have no big bills to pay. That’s simply not true. Everyone can save, you just need to know how much your income allows you to set aside. Look at the below grid:
Putting aside just €5 per day can get you to over €18k in 10 years! You don’t need to make huge sacrifices to put aside €5 per day, but long term it will be of great benefit to you.
Save for a rainy day.
No matter what stage you are at in life, unexpected costs will be just around the corner. There are so many:
- new tyres for your car.
- car repairs.
- phone breaks.
- weddings.
- something needs repairing in your home.
My Money Coach says that half of us will experience at least one “unexpected cost” each year. Having a reserve fund to deal with these means you don’t need to dip into your overdraft or credit card, which will be great for you.
Clear your debts.
I’m speaking from experience here. In my early 20s, I was always in my overdraft and maxing out my credit card. Thankfully it wasn’t because I struggled for money, it was because I enjoyed myself a lot! Medium to long term it’s not a good place to be in financially.
There is little point in putting aside money if:
- you are in your overdraft.
- your credit card is in use regularly.
- the car loan is big.
and any other reasons you may need to pay money back. The reason being, interest rates are so high on these payments (especially credit cards), any money you save will not make up for the interest you are paying back on the bills. Clear them, starting with the smallest debt first, then start to save.
Save, then spend.
Many of us will do it the other way around. We tend to spend what we earn, then possibly put aside what’s left over. Why not make out a plan of what you want to save, stick to it, then spend what is left over? This way you could see your savings jump. 
Don't touch the money you put aside.
We save for lots of different reasons, depending on what’s important to us at any given time.
- A debs dress/suit.
- A weekend away.
- The dream holiday.
- Rental deposit.
- New car.
- Mortgage application.
- Pension.
- Investments.
Things will always crop up too, it’s never straight forward. Whatever amount you set aside, don’t dip into it week to week. You will end up frustrating yourself and maybe derailing the whole saving plan you have in place.
If you can't afford it, don't buy it.
Lots of us buy certain things to impress others (which is totally pointless). This can be really damaging financially. Here’s some reasons we spend money:
- I have to have a new dress for that wedding.
- My car is 5 years old, I need to upgrade.
- I’d like a new flat screen TV.
and so on. If you can easily afford these things and it doesn’t impact your finances too much then great, good for you. However; if you can’t afford it, don’t buy it.
Apply the 30 day rule.
We always end up buying way too many “things” in our lifetimes. You get home and wonder, why did I buy that? It’s because stores, both physical and online, are designed to get you to purchase there and then, even if you don’t need it. That’s the power of marketing.
Instead of picking something at random and buying it, wait 30 days…if it’s still something you want to buy, there is a good chance you need it…now you should consider buying. More often than not though, you’ll find you can live your life just fine without it.
As an example, if my wife and I are in an electrical store I might say to her “we need a new TV”. Thankfully she has a strong head on her shoulders though and will say, “what’s wrong with the one we have?!” Nothing at all is what’s wrong with it…and once you leave the store and get home, you realise it would have been silly to buy a TV.
Imagine spending €600 or more on something you don’t need? Apply that 30 day rule and watch your savings rise.
Discipline and patience is key.
Here’s the thing. All of the above sounds pretty straight forward and will work, but if you don’t have discipline and patience it can become very hard.
Let’s say you want to save €20,000 but you earn €400 per week. You need to understand this could take quite a while. You can try in the meantime to decrease the length of time this takes by working hard to increase your salary. As with anything you aim to achieve, patience is so important.
Discipline will mean cutting back on some of the things you may think you need, but in reality you don’t. Remember, as little as €5 per day saved equates to over €18K in 10 years.
If you go to the shop for milk and bread, just buy milk and bread. Getting petrol or diesel? Don’t pick up the bar of chocolate or bottle of drink. These sound like tiny amounts, but it will all add up.
in conclusion.
Money brings such stress to our lives, but a lot of it can be self inflicted. By not doing the right things financially, we put extra burden on ourselves.
No one is perfect, we will always make mistakes with our hard earned cash. If we set a good foundation of what we should be doing with our money, it can help us get the balance right.
Patience and discipline are crucial. The right mindset will ensure we have a healthy relationship with money; it shouldn’t control us, we should manage it.
Money isn’t just to be saved by the way, it’s a tool to help you enjoy life. Join me next week as we look at how we have a good time with money, alongside minding it.