How to find the money you never knew you had
This is only going to be a short guide hub to help you to find the money that you possibly didn't know you actually had tucked away in your own bank account. I am going to show you how I personally discovered that I had thousands of pounds that I was wasting each and every year. You can do the same by following my own example, even though your own situation might be a little different, so that you will be able to use that money as pump-primer-funding to be able to get your own business going.
If, for example, you are looking to write content for websites that specialise in content so that you can monetize them with adsense, do you really want to use all your time writing? No, far better is to pay someone else to do it. It's called investing. But you don't want to go just taking money (which buys food) out of your kids mouths. So I need to help you to find that money from somewhere. This is what I did...
Finding money: stop spending!
Amazingly it's true. So many people spend their money. Ok, so there are things you have to buy, but after the essentials, what is truly essential? Not as much as you think.
Secondly, the reason you might be reading this is because you read my article on getting started in the adsense business and I suggested that you pay other people to write content for you. This is good and will work. But there is also a possibility that you will already be, or at least considering, joining one of those membership sites that promise to teach you all the secrets of making money. Trust me, I have belonged to them in the past and they all say the same thing. There are certain advantages to belonging like camaraderie and advice, but nothing you couldn't get by just asking me (post comments at the bottom!). One thing that some do offer is extra tools that are, to be honest, useful. But don't get your wallet out just yet. You need your cash to pay your writers... you need to save. Time enough for spending money later!
Lets get on with the money saving tips.
First budget considerations: the essentials list
Did you know that you could have $8000 every year? I am going to work this out in UK pounds however because I am a Brit!
Factoid number 1: most people will be millionaires by the time they retire, but they spend it on the way through their lives.
Factoid number 2: anecdotally, everyone would be happy if they had just £5000 ($10,000) more in their wage packet every year. And that doesn’t seem to matter if you earn £15k a year or £30k.
I would love to be able to help you to find the £5k, but it would be hard. But I could help you towards that figure simply by making a few suggestions and pointing you in the direction of a couple of useful sites and ideas. And don’t worry, they’re all free!
I often show people that they could save money by simply not spending as much. That sound kind of obvious, but have you ever tried to do that? I mentioned before that we have this strange sense of ‘standard of living.’ I could happily go into the psychology side of it about actual need and perceived need, but it would bore you. Instead realise that not all the things we call essential actually are essential.
This is a very interesting article on what it means to be poor.
For example, the mobile phone. When I started work I had no mobile/cell phone. That was 20 years ago, and life worked pretty well. Now I feel naked if I don’t have it. The internet, just today it was reported that kids lose their temper and get angry if a webpage takes longer than 10 seconds to download. I remember dial-up, very few years ago. We now pay for blistering broadband packages so that we can watch movies on our computers and televisions. But do we need them?
This is the first place to start when you are trying to get your finances in order, look at all the things you think are essentials and ask if they really are. Are they essential to living, or are they added extras: life improvers.
As a Christian I set a lot of store by the Bible, and St Paul said that he had learned to be content whether he had much or little. I think that is good advice. Here are the results of downgrading a little – excuse me while I use UK pounds!
Cell phones, cars and coffee shops
How much do you pay on your mobile phone? You may be able to lower your tariff now, or else wait until you can end your contract. As soon as you can either open up a cheaper contract, or better still keep your old mobile, and get a pay as you go version. Send more emails, and less texts. Get people to phone you.
If you feel you need a camera on your phone, get a cheap digital pocket size!
Saving: up to £30 a month.
Journeys by car. Cut them down. Get the kids to walk to school. You should value your journeys at a commercial rate of £0.40p a mile. That is meant to cover keeping you car on the road, maintenance, tyres, windscreen wash and petrol. It’s not just what you put in your tank. If you have insurance, then you need to add this into your calculations as well.
The average school journey is ½ a mile one way. You are travelling 2 miles a day, which is £4 a week, or about £18 a month. How about shopping trips? If you go to the super/hyper market twice a week then it could be costing you £5.00 a week more than it needs to according to average journey times. Instead do the journey once and buy what you need.
Total saving: £38
Coffee shops are big business. I have seen small 10 seater bistros on London’s highstreets – they must get enough clientele to make it viable! Your cappuccino costs around £2.50 a shot, and who can resist grabbing one on the way into work. That’s £12.50 a week. Possibly £25 if you have a lunchtime one as well! So cut it out. Take a flask to work.
Possible saving: £100 a month!
Information, the weekly shop, utility bills
We devour information. We love it. We get it everywhere. From books to magazines, who can resist? Well it could be time to. Looking at the average household of children and parents, even conservatively their could be one technical/gadget magazine (£5.00, twice a month), one gossip glossy (£5.00, twice a month), puzzle magazine (£2.50, weekly), a daily newspaper (50p, so £3 a week, give or take), and a children’s comic every week (£2.50 a time). A book (£5). You already have your internet service, why not try finding all that information on the web, and go to the library for all your books?
Total saving: around £57 (I am keeping the sums easy here! So you don’t have to reach for the calculator)
Now for the big one – the weekly shopping bill. Most people are paying way over what they need to on many items, so lets examine this. On many ranges of product in your local supermarket, hypermarket or even convenience store there are options. Namely premium branded, branded, shops own best quality, and shops own cheapest value range. Between the premium branded item and the value version there can be literally pounds! Of course the taste of a the value versions can really differ – sweet and nasty in some cases. Which mean that many people ‘stick to what they know’ without trying the cheaper option. It is suggested by many thrifty money savers that where a cheaper option exists, go for it. Now you don’t have to go straight from prime to value, you may well notice. Instead, why not try going for the range one level below the one you are currently using. So premium brand would drop to branded, and branded to shops premium own label etc.. If that works, then next shop drop again if the range is available. You many find that there isn’t a noticeable difference between one tin of baked beans and another, or a box of cereal. And if you do notice a difference that you can’t live with, stick to the more expensive option.
Just one tip: don’t tell the kids. For some reason their taste buds are linked to the labels…
Other ways of saving on the weekly food bill include:
Buy your shopping in one go rather than going back to the store 2 or 3 times a week. Every time you go there will always be the chance you could just pick up something else ‘by mistake’ on the way.
Buy frozen and store larger quantities. Buying in bulk is often cheaper. There is also less waste as you cook only what you need rather than opening the whole packet and cooking too much.
Don’t take the kids shopping with you (or husbands, my wife would say!) because they always want little extras. Have you ever noticed how the sweets are placed at kid-eye level at the checkouts?
Go to farmer’s markets.
Use other markets in towns, but go towards the end of the day just before the store holders are closing up – that is when they will want to get shot of any produce left over. Don’t be afraid to haggle at this point and make an offer.
Using all these different tactics you may find that you can save on any weekly shopping bill of £100 for a small size family around £25 or more per week.
Total saving: £100
Next it’s worth checking through your utility bills and getting some price comparisons for suitable websites.
Potential saving £10 a month
Insurance and the internet
What insurance policies do you have? Ok, now here there are many people who suggest insuring yourself as much as possible. My own personal opinion is that that is a good thing. However it might also be true that some of those policies you are paying for more than you actually need. It could be some of items which you have insured are luxuries, not essentials. If you didn’t have them your life wouldn’t end and you could buy a much cheaper item that would do the same job. Think of that aged computer that you keep insured with the original insurance from the dealer. New it cost £1000, and the insurance was £10 a month. But now, 4 years later you are still paying £10 a month, having never claimed. The excess is £100. Lets say you pay 12 months more and it goes wrong. You have paid £120, and to replace the machine you have to pay £100 excess. The insurance is new for old, like for like – it doesn’t insure your costs. It will cost the insurer £300 to replace your computer because technology has dropped in price! They have paid out £80! You in the end have paid a lot of money out to them over the period. All items come with a 12 month guarantee. You need to balance the excess costs and insurance amounts intelligently with whether or not it is a luxury item you could do without, or meet the cost of replacement out of your own pocket. I have been offered insurance for a £20 cd player before now…at £10!
Potential monthly saving: £10
Finally your internet connection. I would be showing my age to say that I remember slow internet connections. We all want superfast connection which is wireless. Our laptops and desktops come with wifi, and right now I am connected to it. But what are the options?
A friend of mine recently abandoned their broadband connection in favour of PAYG (pay as you go) mobile broadband. Expensive? Far from it. She discovered that rather than the £25 a month she thought she was having to use and pay for, she was only using about £5 a month, and was still watching video online, researching and browsing. Taken another step further, why not use a local coffee shop’s broadband service which is becoming increasingly common, and free? Do what you need to at home, and for heavier use go out. And idea later will suggest how you could get the coffee for free too!
Alternatively, get a broadband package that combines phone and broadband connection. That will often give you free phone calls. If you want to stay in touch with loved ones, getting on the same network will sometimes give you free phone calls even on a mobile. If you have international calls to make, use skype. Use skype in the coffee shop for free!
Approximate saving per month, £10.
Lets add all those smaller ideas together:
£4,260 saving a year.
Spending less strategies
My personal opinion is that money is far to easy to spend. Psychologically, reaching into the wallet or handbag is easy. We don’t really notice that we are spending money, racking up the debt and paying more in the end for those so-called essential purchases. What we need is a way of noticing what is going on. There is a way of noticing very clearly how much we have spent, and how much we have left when we go shopping, it’s a very quick ready reckoner and many well off people use it.
That’s it. Stop paying by card and use cash. Make sure you don’t need your card with you (fill the car up with fuel before you go shopping) and only take cash. You can’t get more out, and you won’t need more. It becomes it’s own way of stopping you from paying more than you have because you just don’t have it! It means you can budget for how much you are going to spend and have to keep to it.
What about those credit cards? If you are looking to consolidate a loan you may be asked to surrender your cards. You certainly might consider cutting the one’s you have up I suggest. Once you have consolidated your debt the last thing that you want to do is to put the same amount back on the cards.
And if you think that is harsh, just remember that if you do go bankrupt this will be reality for you anyway, so why not be self disciplined in the immediate future?
Old fashioned budgeting
I was listening to an old guy who was advising some younger folks on how his mother used to budget. She would have a row of jars on the shelf. To the left would be the essential items – food, heating, rent. To the right the less important items – sweets for the kids, holiday money. As the month went on and the funds in the essential jars dwindled and so she took money, starting from the very far end of the row, and put it into the essential jars. So there would often be less sweets. No borrowing apart from your own jars.
Whilst we wouldn’t want to use jars and have thousands of pounds knocking around the house, you can certainly do this with a spreadsheet on the computer or good old fashioned pencil and paper!
Even a diet needs a few treats!
Dieticians suggest that it is really hard to stick to a diet if you don’t have a few treats along the way. Rewards. A diet is about changing habits, not ignoring the option of an occasional blowout, and controlling your finances is similar. But overspending in one go can affect your overall finances, especially when we talk about buy now pay later. But you still need treats I think to be able to keep on the straight and narrow.
I hope that all this information will give you a different opinion of your cash flow!
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