“Now what…?”

Simonne on how to make sure your future's a dream ...not a nightmare.

We love hearing about how Sheconomics changes lives. An inspiring review on Amazon recently told how it transformed one business woman's life. She cleared her debts and felt huge excitement about being back in control financially. 

Often clients are in crisis when they call up Simonne at Wise Monkey. She helps them plan their ‘debt free day’ and says it’s positively exhilarating when that day arrives and they suddenly look out at the expansive horizon and new possibilities.

But then, frequently, the next question is where do I go from here?

A little financial planning could help you achieve your big dream.

In answer to this question, Simonne has three suggestions:

Step 1) Build a contingency fund
When money is no longer going into debt repayments it can be all too tempting to rush out and spend it. Start to build an emergency reserve now so you don't plunge back into debt. Enough to live off for three months is ideal, saved somewhere accessible (e.g. in a cash ISA).

Build this fund by arranging a monthly direct debit to go out soon after you get paid.Then the money is automatically saved each month, before you can get your hands on it and spend it.

Step 2) Take a long view
Next look to that horizon and see how your financial future looks.

If you have an employee’s pension scheme review it regularly, especially the contribution rate. Sometimes the employer will match contributions up to a maximum limit. Simonne found that clients who were paying 1% of their salary into a pension pot, and the employer likewise, could get matched funding up to 8%. So by finding that extra 7% (as little as 4.2% after tax for higher rate taxpayers), they could be putting 14% more into their future.

In fact Simonne found one client for whom an extra £60 per month would result in having £238 per month invested (counting in the added contributions from her employer and top-ups from tax/national insurance savings)! Fortunately all companies are being forced to pay into pension schemes for their staff over the next few years through auto-enrolment. So check this out if you’re eligible.

Some people reduce their contributions during an expensive period in life, like buying a house or having a baby, then simply forget to increase them again.

And self-employed people, under the current rules, have to finance more of their future for themselves. Many of the self-employed hope their business will be their pension, but that can be risky. Starting to make small amounts of savings, with the power of compound interest, can make a big difference.

Simonne says it’s all about having a strategy and not necessarily at any extra cost. With some careful strategic planning now you can make a massive difference to your financial future.

Step 3) Mind the gap

Most people's financial strategy is to drift along, put a bit of money aside when they can and hope for the best. But doing some simple maths could take your future planning a step further: 

A = Assess where you’ll be a a future date. Maybe the mortgage will be paid off and the kids might even be off your hands? Work out how much income you'll need per month in today’s terms.
B = Then simply check out what state pension you'll get, and any company pension. And add in any other income, or circumstances, such as a property downgrade for instance.
Calculate A – B and you've got your shortfall

Once you know your shortfall online pension calculators show you what you would need to be saving to generate enough to provide the income you identified at A.

Pensions are boring and the future's a long way off, right? 

If that's how you feel, think of it instead as a gift to your future self. 

‘Know tomorrow comes’ is the 7^th Law of Sheconomics. That needn’t be all doom and gloom. See it as a gift to the woman you’ll be in 10, 20,30 years time. Look after her, make sure she’s ok, and she’ll be immensely grateful to you. The steps you take now could dramatically effect whether her life is a dream .... or a nightmare.

What can be more exciting than knowing the dream life you want in the future ... and planning how to get there?

Losing trust... or... would you frisk your friends?

Looking back over the past year of economic doldrums, how has it most affected you?

Are you saving more for a rainy day?

We all should be. But we’re also a bit more worried about who to trust with our savings (more so if we live in Cyprus).

Are you cutting back on spending?

Again, a sheconomical strategy. But there comes a point where you can’t cut back any more. The point where you feel so miserable you have to buy something to cheer yourself up.

Are you less trusting?

Let’s do a quick trust check. Who do you think is most trustworthy?
a) a banker enjoying a massive bonus while taxpayers bail out the bank

b) a journalist with an unhealthy interest in others’ mobile phone activity

c) a politician with a bad memory for policy pledges

d) a sleazy disc jockey

e) none of the above

It’s no wonder, given recent events, that we are all eyeing high profile figures with more suspicion. In fact a third of us say we are less trusting than we were a year ago, according to a Trust Study published by the Yorkshire Building Society* today.

You do trust me don't you Vera ... I mean Joan..?

Trust matters. Why? Because we need to know those around us have our interests at heart. That they won’t harm us, lie to us or let us down. To believe that those in positions of power won’t abuse that power. When trust is broken we feel shaken, vulnerable and panicked into looking after Number One. In fact, trust is so important that humans are hard-wired to decide in a micro-second whether or not someone is trustworthy.

Imagine living in a world where nobody trusted anyone.

Just buying a coffee would be a nightmare. The barrista offers the cup but won’t let go until he’s got your money in his hand. You won't part with the cash until you’ve got your coffee in case he whips it away. It'd be like being caught up in one of those perpetual childhood games where neither side will give in.

Imagine not trusting friends who visit your house and frisking them as they leave.

Or having to pay for everything you order from the restaurant menu before you get it.

Or finding out the bracelet your husband gave you on your anniversary is actually an electronic tagging device.

It’s good to trust others. It's nice to assume positive intent in everyone we meet. Because I truly believe that most people are kind and caring and trustworthy. 

Unfortunately though, we tend to hear a lot more about the minority who aren’t.

More on the Yorkshire Building Society Trust report here

Banks or building societies?

It’s worth noting that Yorkshire Building Society is a mutual, which means they’re owned by and run for their members. Because they have no shareholders to answer to, any profits they make are used to maintain the financial security of the business and then returned to members in the form of better rates and service. That's nice to know.

You can't turn over the corner of a Kindle page...

We’ve finally been Kindled. 

It took a while but this year Sheconomics came out on Kindle edition. 

As it’s four years since our book was published it's fabulous that people still want to buy it. Even last week a PR contact popped this at the bottom of her email:

 Ps I think your book is working. I went into Space NK last weekend and bought one thing instead of 3 so I think that's progress

How do you feel about Kindle books? As a voracious reader I’ve been pondering the pros and cons…..

Pros

• ·       I can hear Mariella Frostrup raving about a book on Radio 4 and have downloaded it before she’s done gushing.
• ·       I can take 14 heavy books abroad with me and stay within the measly baggage allowance that punitive airlines inflict on passengers these days.
• ·       With my Paperwhite Kindle I can read at night without waking my husband by flooding the room with light so he thinks there's a police raid. I can even adjust its lighting levels depending on where I am.
• ·       Kindle editions are usually cheaper than printed books. In fact I’ve downloaded hundreds of classics for free.
• ·       I can highlight away to my heart’s content and view my clips in an electronic version on my computer later. I used to laboriously copy our favourite passages and quotes.
• ·       (I know others say an advantage of the Kindle is that others can’t see what you’re reading [in a Fifty Shades kind of way] but I don’t care who sees what I’m reading. It's just not racy that anyway).

So would I eschew printed books in favour of my electronic friend? 

Here are what I see as the cons of the Kindle …

• ·       I love the feel, smell and completely tactile experience of a real book; technology doesn’t offer the same sensual pleasure as a much-loved paperback with turned-over corners.
• ·       I like reading in the bath. And, yes, I confess I do take it in there with me sometimes. But I know it’s only a matter of time before it slips through soapy fingers and stops working. I'd read in the shower too if I could.
• ·       I love passing favourite books on to friends. I still do that sometimes, but that means buying them the real thing after I’ve read it on Kindle (and how sheconomical is that?).
• ·       With non-fiction I love to dip in and out or flick through the pages for bits that catch my eye. That's tricky to do on a Kindle. 
• ·       I have read whole books on Kindle without having the foggiest idea of the book’s title. Or the author. That’s because I see it once –at the start – but it never appears again. At least with a real book the cover gets imprinted on the brain and you know what you’ve read.

So, the choice is yours. If you’re a Kindle kinda girl you can buy Sheconomics on Kindle for £4.99  

or if you want to see it in all its pink glory and dip in and out of real pages, then you can buy the print copy of Sheconomics on Amazon, where the average rating is still five lovely stars.

I'd be interested to know whether you think these electronic devices spell the end of the real book. Or whether we'll always want the thrill of crunchy pages, musty smells and jazzy jackets..... 

20 money milestones for kids

As school exams get underway there’s a lot of stuff being digested in teenage bedrooms all over the country. I don’t just mean chocolate hob-nobs, but maybe some geography, german and algebra too.

Are modern kids prepared for the money world?

However,  one subject that’s notably absent from the modern curriculum is financial literacy. 

In a couple of years hoards of these youngsters will be managing their own finances, perhaps while saddled with student loans. And research shows that a big chunk of them won’t understand the money basics, like the difference between AER and APR or how compound interest works, by the time they reach adulthood.

That’s why I welcomed the launch this week of a website aimed at helping kids understand money. Moneyasyougrow.org is a site that features 20 essential money milestones that kids go through from the age of three to eighteen.

OK, it’s a US site but loads of the common sense stuff applies here too.

As do the key activities that help kids to learn at each age stage. I’ve selected just one for each age group here:

3 – 5 year olds need to understand that you may have to wait before you can have something that you want (see my earlier blog on one thing to teach your kids)

6-10 years olds need to know that it’s good to shop around and compare prices before you buy

11- 13 year olds are advised to save a dime for every dollar they get (for kids in the UK that would be 10p in the pound, although I suggest a third is better)

15 – 18 year olds are advised to use cash rather than credit cards for purchases and the over 18s are told they should only use a credit card if they can pay off the whole balance in full every month.

Many of the money problems we see in adults have their roots in childhood. 
So many of us had little or no financial education as kids and grew up into financial illiterate adults. Others had parents who handed down such strict money rules that money strikes fear in them years later and they avoid responsibility. 
One way to stop this pattern repeating itself if you have kids is to start a simple money education as soon as they are old enough to reach up and hand their pennies over the sweetie counter. The moneyasyougrow site is a good place to start; there are also lots of tips in Sheconomics.