Posted on 13 Jan, 2010 -
Why I say Have More’ is the new ‘Spend Less
* Why ‘Have More’ is the new ‘Spend Less’ in 2010
* Time to know what you want and get what you deserve
* Plus: some of the very best Tips for Financial Success I’ve found for the year
When it comes to your money, 2010 is desperately in need of a change of tune.
While I was happy to continue along with the ‘how to spend less’ theme of the past couple of years, I think it’s time is up. You’re good at that already. It’s lost its newness. And it’s not very good for the economy anyway.
‘Have More’, I say, is the new ‘Spend Less’. And by ‘having more’ I mean more financial comfort, more financial confidence and the financial gain and reward that you deserve.
I don’t mean that we should fill our houses with stuff we don’t need. But rather that we should feel amply rewarded for the good work we do… and sufficiently well off not to feel constantly worried about how we’re going to pay all our bills, now or in the future.
Short of standing for parliament in the next election (which I have to admit to contemplating), there is not an enormous amount I can do to make this a new ethos for the country. If you’re still lacking for a financial goal for the next few years, however, then I don’t think it’s a bad one.
The wages we receive should feel like a good reward - not a compensation or a right. The taxes we all pay and have paid should allow us to feel that we have a comfortable standard of living - and that we never need to fear poverty.
Understand where you are now - and know what it is you want. It is estimated that we are something like 20 times wealthier than the average Victorian, a hundred times richer than the average ancient Briton. They work this out by calculating things like how many slaves you would need to eat the meals you do, do the work your washing machine does and own the amount of clothes and goods you do.
So why do we complain? Because we human beings have a fundamental urge to always make things better. What we’re not always so good at is giving sufficient thought to what ‘better’ should actually mean.
Don’t be afraid of asking for what you’re owed. We Brits - particularly those of us in the middle classes and under - often suffer from a certain timidity when it comes to money. We don’t really like talking about it. We would like to believe we think about it a lot but what that normally amounts to is just fretting.
This year I’m advocating a financial confidence that involves believing your own worth and getting what you deserve. When my husband was made redundant several years ago, for example, he didn’t claim the unemployment benefit he was entitled to. I know he had his reasons but I don’t know whether they were right…
* Make sure you’re claiming all the benefits you’re entitled to. 1 in 4 people over 60, for example, do not claim their Council Tax benefit. Many people also do not claim the housing benefits they’re entitled to. It may also be worth checking whether you could get a reduction on your Council Tax payment. A good place to start looking is the Directgov website.
* If your family income is under £66,350, you may be entitled to benefits and tax-credits. There is a very useful tool on the http://www.moneysavingexpert website.
* The main unclaimed disability benefit is Attendance Allowance, sometimes referred to as AA, which is a tax-free benefit for people aged 65 or over who need help with personal care because they are physically or mentally disabled. For carers there is the Carer’s Allowance which is a taxable benefit to help people who look after someone who is disabled. You do not have to be related to, or live with, the person that you care for.
* Don’t be frightened of asking for what you’re worth at work as well. The recent recession has made us all somewhat reticent about asking for a pay rise or looking into better-paid employment. With news that the economy is picking up, however, and many businesses still doing well, start getting used to the idea that wages can rise again - and that companies may need hard-working, enthusiastic people with skills like you.
HOWEVER: Beware of bogus job offer emails and scam adverts. One of the biggest areas of frauds and scams at the moment is in online scams aimed at graduates and job seekers. If the job sounds too well-paid to be true it probably isn’t. Also look out for badly written emails or for jobs for which you apparently need impressive skills but no experience. Beware of paying any money upfront or to register - or for sites offering to improve your CV for a payment.
Make Really Big Difference Moves. When we feel like we’re struggling just to make ends meet and keep up with our current lifestyle, it’s easy to take your eye off the bigger picture where much bigger differences can be made.
Rather than concentrating your efforts on 20p savings here and there, your efforts may be better off concentrated on the larger outgoings in your life - and the bigger areas of your finances.
Make a list of your biggest outgoings and make sure you are making the most astute financial decisions in all those areas. Take the bull by the horns. Kick the habit of complacency. Don’t be an ostrich.
Try, for example, to pay off your mortgage quicker. Take advantage of lower interest rates if you can to reduce the term of your mortgage. If you could reduce the term to 15 years instead of 25 years, for example, you would end up paying as much as £40,000 less on a £100,000 mortgage. Which would surely go some way to helping your concerns about the future…
Be aware that the value any cash you have in savings may decrease rapidly. I certainly don’t want to discourage you from saving for the future but it is worth bearing in mind that if inflation carries on rising sharply as many predict it will, you may be able to buy a lot less with any money you have now in a few years’ time. There is also the consideration that the value of the pound may drop sharply compared to other currencies if our government doesn’t get itself out of its fiscal hole.
On average, the typical ISA has not paid you a single penny in interest or income over inflation across the past decade.
Be very wary of banks or accounts offering interest rates higher than all the others. It’s amazing how quickly people are already forgetting the lessons of 2007-2008 when the collapse of Northern Rock, Lehman Brothers, HBOS and the whole of Iceland sounded more likely something out of a Charles Dickens novel than something that could happen in ‘our day’. BUT REMEMBER: Northern Rock was advertising 6% savings accounts in the national press barely 1 week before it went under. Icelandic “high yield” accounts were so enticing even bright people in Council finance offices couldn’t resist them…
Where are the best places to invest right now? I’ve asked around some of my old contacts in the investment industry and I’m told “China looks like being a hot story again, as is Brazil and Australia (they’re selling China the raw materials it needs to be the world’s fast-growing economy)”. “In the UK, boring-but-safe investments like utility shares (water, gas, electricity) will still get to raise their prices and so offer a dividend to shareholders, even if the rest of the economy stays weak.” “You may still feel wary about the banks but they’re simply printing money right now, borrowing at next-to-nothing from the Bank of England (and cash depositors!) and then lending it out at 5% or more per year.”
Buy Silver? Cheaper than gold and hasn’t seen the same massive price hike yet. Many people still believe gold is a great place to put your money. While you’ve probably already missed out on the biggest rise in price it will see, it is still seen as a safer store of wealth than cash.
The new craze for this year, however, may well be silver. It’s a lot cheaper per ounce to buy than gold and hasn’t seem the same rocketing price that gold has been experiencing in the past decade.
It is good to diversify but most investments still all go down together in a crisis… Any decent financial advisor will tell you to be “diversified” to cut risk. The idea being that as one thing falls, something else will rise. But in a true panic like we saw in 2007-8, most investments tend to collapse together. The key is to ensure you can get out quickly in time of panic.
One market which never goes down! Not for the faint-hearted but one market where traders can make money in any market is in currencies. As the dollar falls, for example, the Euro goes up. China rises, America sinks… Potentially highly lucrative but also potentially highly risky. You need to know what you’re doing and learn not to expose your overall pot of money to risk
