Enjoy your cheat meal, avoid the yoyo, be financially fit!

By Julie Helary

A lot of us have gone through many diets in our lives. Whether we are skinny or round, we have at some point noted down what we eat in a week and made our own little diagnosis: Today I had too many carbs, I shouldn’t have had that chocolate barre. More importantly, a lot of us have tried to restrict ourselves to the bare minimum in order to achieve our goals quicker and suffered consequences: in general, the weight (and more) is put back on a few weeks later and we developed bad food habits…  Exactly the same applies to personal finances. 

 

When it comes to democratising money and finance talks, social media is seeing a surge of accounts giving budgeting tips, explaining the jargon and educating people towards better decisions. This is partly because during the pandemic, Household spending has been lower than usual, and savings have risen substantially in the UK. Lower spending has meant that we have wondered what to do with that sudden extra cash. Of course, this is aggregated data and in reality, if we were not on the lucky side and lost our jobs or suffered a pay cut, we have struggled, accumulated debts and wondered how to get out of this nightmare. The time spent at home checking with fear or appreciation our bank account made more of us realise that financial wellbeing is part of our health, and health means different things to different people, doesn’t it? If we want to have a budget in which a healthy savings and investing strategy is fully embedded, it needs to be built by us, it has to work for us, it should be sustainable for our lifestyle, just like our diet.  

 

“I can’t imagine a life without chocolate” = Identifying our spending patterns

 

If we want to save or invest more money, we have to spend some time analysing our past finances. There is no other way. And facing the truth about our finances shouldn’t just be looking at numbers, it also requires identifying what we feel about these expenses. Did we forget we bought this or that, are we slightly ashamed at the numbers that we see? An easy way to do this is to use budgeting apps, such as Yolt or Emma. Once you have connected your bank accounts to these apps, they will automatically identify these patterns for you. This is a good way to get you started with budgeting. Whether you chose to use these or just a simple pen and paper, looking at the data and understanding your emotions towards your spending will help to build a financial plan that is entirely tailored for you and you only. Being financially fit is about the small steps that we take each day, it is not about skipping meals. What you can control is what happens now, your definition of financial fitness on the other hand will change many times between now and retirement. Every person is different and if we don’t try to take control of our finances today, we will end up with a serious financial hangover tomorrow! 

 

“Should I have the double cheeseburger or just the cheeseburger?” = Understanding our attitude towards risk:

 

Risk is such a broad term that we usually use for investments. It is also very relevant when considering the amount of savings we want to have (the famous emergency fund) and how we think about our budget. Our attitude towards risk is impacted by our personality, our cultural beliefs, emotions but also knowledge. Whether it is for the amount of money you wish to have in your saving accounts or in your Stocks and Shares ISA, it all depends on the level of risk you want to take which is impacted by your past experience and your knowledge of your money and the financial markets. You might think it is safer to keep all your money on savings accounts, when actually, with inflation at just under 1% and 0% interest rate, you would basically be losing money. We are advised to save in an emergency fund equivalent to 3 to 6 months of living costs. But, what if we just changed jobs and we are in probation period. should we not save a bit more? When it comes to investing, more risk equals more return. However, there is never certainty on when this return will be available. Again, these decisions should be thought through by you in order to fit your short and long term plan. Building up your knowledge on these topics will help with impediments to investing. 

 

“I can’t see the result of my efforts on the scale” = Ask for help: 

 

Not everyone is keen on numbers, not everyone is interested in financial markets, not everyone has the time to be. It doesn’t mean that your money shouldn’t work for you, and it certainly doesn’t mean you should stay in debt. There is so much help out there! A session with a money coach can help you with your budgeting and setting up goals. If your mindset is more mature or your amount of investment is large, why not speak to a Financial Advisor? They are competent and have built a business that is all about supporting others, promoting success and helping to grow wealth. They are here for you, to help you build your consistent approach to your own finances.  

If you are not ready to ask for help and don’t feel confident with where your money goes or should go, there are plenty of resources online to help you: online events, podcasts, you name it. It is important to do your research, get familiar with the terminologies, but also to take the online advice for what they are, advise not rules and they may or may not work for you, only you can decide. 

 

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