BEAT THE SQUEEZE: It’s time to think like a MILLIONAIRE – it will save you money
The best way to manage your household finances is to start thinking like a millionaire.
Hear me out. I don’t want you to start spending money as though you have it to burn. No, this is about being as financially savvy as someone who’s got great wealth behind them.
Think about it: millionaires are clever with cash — they know how to hang on to it and make it work for them. They’re well off because they take a proactive approach to their finances, regularly analysing what’s coming in, and, just as importantly, what’s going out.
They don’t waste money, and only spend it on what they want or need.
Every millionaire I know goes through their personal financial statements quarterly, if not monthly, looking for inefficiencies, waste and money leaks. Today, I’m going to show you how to do the same. Trust me, this could save you hundreds, if not thousands of pounds.
The best way to manage your household finances is to start thinking like a millionaire
MONTHLY MONEY DATE
Millionaires meet regularly with their accountants to audit their expenditure so it pays to go through yours with a fine tooth comb at least once a month. Go through all your bank and credit card statements, utility and general bills and get a full breakdown of all your direct debits and standing orders. Don’t forget to include those easily forgotten regular payments that come out via PayPal or a bank card.
CALL TO ACTION: Look out for the free trials you signed up for then forgot to cancel and any duplicated services (how many TV streaming accounts does anyone really need?).
POTENTIAL SAVING: According to Citizen’s Advice, consumers waste an average of £640 a year on unwanted subscriptions.
DON’T PAY UP FRONT
People with money know that their cash works better for them if they hang on to it for as long as possible. That fancy car they’re driving — it’s on 0 per cent finance. And if the option’s there, then they’ll be paying for their next holiday in instalments.
CALL TO ACTION: Be clever about how you spend — only purchase on buy-now-pay-later if you can, categorically, trust yourself to stick to the repayments or put aside money to pay it off in full before the deal ends, otherwise you’ll get landed with huge interest fees.
And, of course, don’t be seduced by a deal — if you weren’t planning to buy something, but got tempted by a BNPL offer, you didn’t really want or need in the first place.
Check when any BNPL deals you’ve taken up are due to end —when you’ve had something for a year it’s frighteningly easy to forget you haven’t actually paid for it yet.
POTENTIAL SAVING: I recently bought a £1,200 sofa on BNPL, putting that same amount into a 2.5 per cent interest savings account instead. I made just over £30 in interest and still had the cash accessible for emergencies.
If you did this on every big purchase, think how much money you could make.
IDENTIFY CASH LEAKS
These are the gym memberships that aren’t being used; the phone contracts you took out years ago for your kids and still pay, even though they now have jobs and homes of their own; or the late payment fees you’ve been charged because you forgot to pay. Rich people have accountants to flag these things — you need to be ruthless with a highlighter pen and identify the money you’re allowing to slip through your fingers.
Identify cash leaks including gym memberships that aren’t being used (file photo)
CALL TO ACTION: Make sure any regular bill which will see you penalised if you pay late goes out by direct debit — you can ask to be billed so that payment will go out on or soon after payday, which will help you to keep on track.
POTENTIAL SAVING: The average gym membership costs £500 a year — great if you use it, but a money leak that will be sabotaging your finances if not.
Meanwhile the average monthly phone bill is around £25 a month, so if you stop paying for just one phone you’re not using then, annually, that could save you £300 a year.
INVEST IN CLOTHES
Are you paying cheap but paying twice? My millionaire girlfriends buy quality clothes — never disposable fast fashion — then when they want to spruce up their wardrobe they sell what they don’t wear any more on sites such as Vinted to fund their next shopping trip.
My millionaire girlfriends buy quality clothes — never disposable fast fashion — then when they want to spruce up their wardrobe they sell what they don’t wear any more on sites such as Vinted
CALL TO ACTION: Be more intentional in your spending and buy the best you can afford. Quality products last longer and retain value, so you can often sell them on. The same applies if you’re looking out for second-hand bargains — go for quality brands and they’re more likely to be in better condition.
POTENTIAL SAVING: I once sold a second-hand pair of Jimmy Choo trainers which had become extremely hard to get hold of as they were so popular and made £75.
I have five kids and last year I bought them each a pair of second-hand trainers from vinted.co.uk in the summer, and then again for winter. The bill would have been £500 new — so it saved me £450 on shoes alone as I didn’t spend more than £50.
THE VALUE OF MONEY
Rich people use leverage to get what they want and aren’t embarrassed to haggle — your power lies in the fact that service providers and retailers want your custom.
CALL TO ACTION: Look out for any annual contracts coming up for renewal, for example car and home insurance, and go on a price comparison website to see who will look after you better. Call up your broadband provider, and the company you get your mobile phone through and tell them you’re going to leave unless they can save you some money.
I recently phoned Sky and said I couldn’t justify the expense any more — they instantly halved the bill for six months and added Disney Plus for free, which I was paying £7.99 a month for on a separate account.
During maternity leave I went on topcashback.co.uk and used the site to compare deals then swap all my insurance and mobile phone accounts, saving me money and earning cash back on top.
POTENTIAL SAVING: The cheaper Sky deal, being able to cancel Disney Plus, reducing my insurance and phone costs plus the £300 cashback that earned me, came to an incredible £400 saving while still having access to all of the same things that I had previously.
THE JOY OF SAVING
Spring cleaning your finances doesn’t mean stripping out every pleasurable thing in life. It’s about rooting out waste. In the spirit of tidiness guru Marie Kondo, look at every non-essential outgoing and ask yourself: Does this bring me joy.
POTENTIAL SAVING: If you enjoy the ritual of a takeaway coffee, then that’s fine. If it’s just a habit, you can save around £1200 a year on that daily medium latte. Identify your wasteful habits, weed them out and see how much you can save. It’s addictive once you start.
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