10 Steps to empower you to look into your finances

 Hello, 

When I turned thirty I decided to look into my finances and to design my future. Please note that I am not a financial planner and do not have financial qualifications. This is purely my own experience of my own finances and advice that I would give to myself if I was doing this again. 

1) Open your wallet/Purse

Take out all your cards and then go through them one by one. I know this can be a bit gut wrenching but putting things off can only make things worse. Try to break it down to doing one thing each day and be kind to yourself. Money does not define your worth and things can change. No one is coming so you can rescue and empower yourself to be in the driving seat with your finances. You can do this. 

2) Source your Logins

If you are like me then at the age of thirty, I had six pensions, one credit card, one current account, saving account, premium bonds and then an ISA account. It took a few months but each week I would email human resources and the pension provider to track down my logins. Once I was able to gain access to all the accounts I felt empowered to look into my finances and made a note so that I could easily login once again. 

3) Seek Guidance from an expert

I had no clue what to do with my pensions and after searching through google I decided to take the plunge and get a Financial Advisor. At the appointment, I was greeted with a young trainee Advisor and a Senior colleague who asked me for some initial details and said that he would review my pensions and get back to me. 

I researched the company thoroughly and you should do your own research if you decide to take this step. The Trainee adviser explained that he had used my case for practise and said that it is something that I can do myself so he did not charge me in the end. He also stated that my pension fund amounts would not make me eligible as a client as they deal with people with much highest net worth's.  He advised that my pensions were not special and that I would be okay to put them all into my current pension so that they were easy to keep track of. 

He clarified that in the UK a lot of the pensions are part of a master system called Origi and that like switching banks you can switch pensions over pretty seamlessly as long as they are part of the same system. One of my pension providers was not a part of the system and they made it very difficult for me to transfer but the fact that they made it arduous made me more determined and after a year I got my funds moved over. I dread to think what they would have been like if I was in my 70's and needing the funds! 

                                

4) Look into your pensions

Once you look into your pension providers it will be shocking how different they all are. One of the worst realisations was that a particular pension provider was charging me money for every transaction I was paying into the account. Please do look into this before it is too late. There is no business in the world where people are paying vast sums into an account, asking no questions and then waiting 40 years before taking the funds. My experience has been that some pension companies seem to thrive on the lack of awareness so please look into this before it is too late, your future you will thank you!

5) Awareness

Once you have a grip on your finance logins then you can then take stock of what you have. Every two weeks I like to login to my current account and download the transactions in an excel spreadsheet and then go through the transactions line by line. This helps cultivate self awareness and also enabled me to track what I am spending money on. 

6) Set it and forget it

I would separate out your necessities (mortgage/rent, gas, electric etc), wants and then savings. A good rule of thumb is for 50-60% to be on necessities, 30% on wants and 20% on savings and investments. At different times of your life this may be different percentages but setting up direct debits to your savings account is an incredible hack as you won`t be able to spend what you don`t have. You can also take it further by having the funds in an account that is not easily accessible and is NOT linked to the your current account. Therefore it will be harder to switch over money and you will need a wait. Please do make sure that you are covered for any emergencies. 

7) Create an emergency fund- aka F*ck Off Fund

Once you have a solid understanding of your finances I would definitely advise working on your F*ck Off Fund. Even if it is just £20 per month, I would pay whatever I could spare into a separate savings account that can be accessed quickly. Ideally you should have between 3-6 months of funds available if you have to leave a toxic job, get laid off or have to leave difficult circumstances. Your future self will be so happy that you have the funds available to get out of situations that are not good for you. 

8) Pay off any debt

For me I like to take the approach of "yes and" with finances, in the sense that I like to try to have everything ticking over and not chose one thing. I have been lucky enough to not have accumulated any credit card debt and would use my credit card to pay for petrol and then pay off the balance in full each month to build up my credit rating. I know that there will be situations where life happens and think that I would like to have started an emergency fund as well as paying off credit card debt so that if anything happens I am not still relying on credit to get me out of situations. 

8) Physical Money

Sometimes the allure of having to use a card for everything makes it incredibly difficult to stop spending. My friend recently introduced me to the idea of taking out the amount of money you want to spend each week and then physically putting it into envelopes marked for the designated cost. Therefore once the money is gone you cannot go and keep spending. 

9) Reading

Once I began this journey of looking into my finances, I started to look at people I admired. I watched "How to get Rich" on Netflix with Ramit Sethi and ended up buying his book "I will teach you to be rich". I know, I know, I can feel the eye rolls. I am planning on posting a book review as I really enjoyed it and found it to be a good starting point for looking at your finances and it also covers investing. Another book that I found useful was "How to Own the World" By Andrew Craig and this goes deeper into the world economy and talks about the differences between countries and how they manage their money. I found it very enthralling and it seemed to explain a lot of what I could see in the modern day UK economy and how we got here. 

10) Investing 

After researching books you could also start to look into investing. I have wet my feet this year and first started with a robo investor  with £20 per month and then moved over to a target date retirement funds with Vanguard- £100 per month. I picked the year that I was set to retire and checked what the money will be invested in. It suited me because it was balance of a mix of stocks and bonds and was invested in funds all over the world. You could also attend online courses, look for groups in your area or discuss this with a financial advisor. My understanding after reading the above books is that our money does not buy as much as it used to and that by keeping your money in a bank account it is losing its value over time. Therefore the books advise that you can invest that money so that it grows over time. Please note that I am not a financial advisor and do not have qualifications so any decisions made will be your own and please exercise you own judgement and do your own research. I hope that you have found this useful, take care!