Posts tagged ‘finances’

March 24, 2014

The Latte Factor.

I first read about David Bach’s ‘The Latte Factor‘ through Guy Kawasaki on Twitter (who, incidentally, you should follow, he shares great stuff) and I’ve spent the weekend thinking it over.

The Latte Factor, for those of you who don’t know, is a financial theory that basically says we’re all spending money on lattes or other small, daily things, without them really adding value to our lives and if we put that money into a savings account instead, over time it would make us rich.  Whilst I’m not sure of the whole ‘Finish Rich’ element of this (does it just mean I get the fanciest coffin in the graveyard?) I am pretty convinced that I do spend money on small things without really thinking about them. Perhaps at the expense of my real financial or life goals.

In the past couple of months, because of big changes that are happening around here, I’ve been using YNAB to track all my expenses and pretty soon I shall have a really clear record of where my money is going each month. I already know that there will be a few areas that I need to focus on, and cut down, in order to achieve what I really want for the year. I’ve really enjoyed using YNAB, and genuinely think it’s worth the financial investment as it’s making me focus on my spending and saving far more than all my other methods have ever done. I can reconcile it against my current account and the smug feeling of knowing where every last penny is makes me feel so much more in control. It’s a good feeling. They do a month’s free trial if you fancy giving it a go.

Anyway, back to those lattes…

For me, it really boils down to mindful expenditure. Often, a cup of coffee represents time spent with friends and in that case, it’s absolutely worth the money, and a lot more besides. But the coffee I buy every time I wait for my daughter to finish ballet class is purely bought out of habit. I could wait for an hour without one and it would be just the same. So those are the times I could put £2.50 towards my real financial goals for the year. It may not be much, but it will all add up.

To note, and so I don’t back out of them, this year’s plans include: spoon making workshop, circus trip, Amsterdam, floristry, a new DSLR, taking the kids to the seaside in the summer, a myriad of short trips and a horticultural course at college. And that’s before I start on the blog plans and worrying about my ancient little car breaking down! So, those lattes could pay for a lot more than an hour’s wait at ballet class…

October 23, 2011

Expecting the expected.

I had a lesson this week in expecting the expected.

There is a hole in the roof of my house and it’s come as a bit of a shock. In order to get it fixed, I’m going to have to spend the money I was saving up for my trip to Rome in the Spring. I was talking this through with a friend at work, someone who I consider to be something of a mentor, about the situation and the conversation went something like this:

Me: ‘There’s a hole in my house roof! I cannot believe this has happened, it’s a complete disaster. I have no money to fix it, so I’m going to have to spend my holiday money. I just don’t believe that such a horrible disaster has happened, I’m in complete shock..etc etc’

Him: ‘ When was your house built?’

Me: ‘1878, I still have the original deeds.’

Him: ‘ Has the roof ever been replaced?’

Me: ‘No’

Him: ‘Well…it’s not a huge surprise, surely that a roof that’s been around since 1878 might need a bit of work doing on it, is it?’

Me: (In a manner approaching stroppy teenager) ‘Er…no. I suppose not.’

Him: (Knowing that he’d crossed the ‘colleague’ line a bit by now, but going with it anyway, mostly because he knows he’s right) ‘Maybe you could think a bit more about what might go wrong in life, and then you can prepare for it a bit more?’

Afterwards, I’ve spent a bit of time thinking about this. I have come to the realisation that he’s right. Over the past few years, I’ve spent more time thinking of what I would do if I won the Lottery (buy land and several Chanel jackets, build community orchards and set up a charitable trust) than how I would fix a broken boiler (still no idea). Which, given that I don’t even buy a Lottery ticket, is crazy behaviour.

My friend is right, dark times come to us all. I need to get out of a complete Pollyanna state of mind, without giving up on my enthusiasm for life. After all, there are some things we can never plan for. Illness, accident, disease, natural disasters and death. Cheerful stuff like that. With a bit of forethought though, I could plan and therefore cope better with the smaller things. Broken boilers, missing roof slates, worn out car tyres. Those kind of things that always come as a shock, even though they are really to be expected, because life doesn’t always go according to plan. So, even though the really deepest darkest things will always be horrific, the smaller, more everyday problems should become things I can take in my stride. I basically need to save for the ‘missing roof slate’ type things as well as the ‘eating own bodyweight in Italian gelato’ type things – which I’m far better at saving for.

So, I’m finally, setting myself up a ‘home emergencies’ savings account. It’ll be different one to my ‘holidays and sunshine’ savings account because even though it’s all coming from the same salaries (mine and the lovely and long-suffering husband’s), I still like to keep things in little pots, dedicated for a sole purpose. Which is why there are little caches of cash all around the house. Some is food kitty, some is bus fares and never the twain shall meet. Unless I forget to expect the expected!

On the strength of this, I’ve started a list of other things I never expect, and yet should…

  • Christmas. It’s on the same day every year. So, why do I always panic? And why do I spend money in January on things like ponchos in the sale, instead of Christmas cards, wrapping paper and gift tags? It’s always struck me as a bit tight-fisted to do that, but given the number of times I have worn said poncho (once, even though it’s John Smedley and therefore as nice a poncho as you could ever hope to meet) I have come to the realisation that it’s merely being more organised.
  • Half term. It’s always nearly half term. I should know that I need to organise childcare before the day it actually arrives.
  • Other annual, regular things – MOT, insurance renewal, dentist appointments…they’re always on the horizon, so I should be better at planning for the expense.
  • Summer holidays – I will always be rushing to try and lose a few pounds and get a bit fitter, because in the Spring, it feels like it’s ages away. It’s not!!
  • The months between April and June when half of the people I know, and most of the people I’m related to, have a birthday. Feels like a major birthday extravaganza – which thankfully finishes for a few weeks with mine (yay!)
  • But then again -My birthday…booooo. I struggle with my birthday. I always want to do something amazing, and often have to settle for a glass of prosecco and a takeaway. Mostly because I’m not a multi-millionaire with my own private jet ready to whisk me off to Italy at a moment’s notice. (Although my real birthdays are actually lovely, if only I didn’t have to get a year older each time, I’d love them. Especially the home-made cards from my children)
  • Cat ownership. If I expected the expected, I would know that they usually come with the odd flea and the desire to shower you with gifts of the rodent variety. So, it should come as nothing of  a shock to find yourself creeping out of the back door of your house, in your pyjamas, carrying a mouse filled children’s saucepan (only thing to hand) to carry the gifts back outside to the field near your house…apparently!

Looking all innocent now…

Is it just me? Are there things that you should really expect, but don’t? Let me know…