Have a money mindset and make it anything but your source of stress…
During the COVD-19 epidemic I was living in Beijing, China, and my family lived back in Scotland. I had great contact with my two kids who were 16 and 22 years old at the time of the breakout, but things were stressful at work, also stressful in health and stressful in just dealing with the strain of supporting others that I worked with during the virus breakout.
But, and this is key to me, the one thing was that during the stressful time of managing my life in a foreign country and in the country where the pandemic broke out, was that the one thing I was not worried about was my personal finances.
The reason for being a whole lot less stressed about my finances in comparison to everything else was that I was already on a journey towards Financial Independence. I had been on this road for a couple of years and so I had a decent amount of savings and backup in place already just in case if anything was to happen that threatened my income or the care and support for the family that needs the back up of good old fashioned money.
I will come back to the FI or the FIRE movement on another post, but it was that movement that had sent me down the mindset of being so much more cautious with my spending and so clear on my saving intent.
I suppose I had always had a Money Mindset. I was frugal by nature and always made sure I had money in the bank or at hand in case anything cropped up. I probably got this from my parents, who were not rich in any shape or form other than the fact that they had 12 kids and we all worked as a team and in doing so we learned the beauty of being sensible with things such as resources and money.
To put food on the table consistently back in the old days meant that you had to know how to cook the hell out of a very small amount of money… and thanks to the smartness of my parents, we never went hungry.
• Been there and done that…
Don’t get me wrong. I have been there and done that when it comes to being on the very edge and having no money, a few years back, that was me.
With mounting expenses, a struggling cafe business and a failing marriage which meant extensive child care arrangements… I had to move in with my brother just to get by and even then money was so tight I lived off Starbucks filtered coffee at a £1 a time along with some biscuits for lunch and ate like a horse when my brother and his amazing wife would feed me dinner in the evening.
It was tough and having been close to homeless or technically, I was homeless if it was not for my brother, then I fully understand the stress of what having no money can cause. I was a bag of stress back then.
I owed people money at that time… but I made myself the promise late one evening after paying back a lump sum, that I would never get in this situation ever again and that I would pay every penny to every person that I owed and that after that I would never ever again get anywhere near debt. I would only buy the things that I could afford and that I really needed and I would evolve the idea of ‘wanting things’ into the idea of saving money in order to buy back some time for me to start living my life free of obligations to an employer. Like many, I have always wanted to break that coil.
• Have the mindset to be aware of money
At that low point in my life I made a conscious effort to be absolutely aware of money. That sounds easy, but so many people just don’t understand where their money goes as they spend it or how to quantify the cost of what they are spending. It is an old one but true to this day, I was spending hundreds of pounds a month in coffee shops on coffee and cakes…. Why？I liked to be in and around coffee shops as I could do some reading and writing or work there. But by switching to a ‘one pound a time coffee’ – the Starbucks filtered cup, it meant I was still in the coffee shop and doing work, but instead of spending five to seven pounds, I would spend a quid and still get the same amount of work done and chomped away at a few biscuits from the packet hidden away in my laptop bag.
This was the moment where I began to look at every single expense or penny I would spend and see it as a challenge to reduce my spending and increase my saving. It became a game in my head, something I would consciously count as I would move through the day and would celebrate in the evening as a real win. At the end of the week I could see myself having saved a bag of cash that I could use to clear my feet, which I was doing inch by inch…. my mind was fully focused on every penny and in my head it was a game. I had gamified the idea of saving money throughout the day and it was like a PlayStation top title game that was playing out inside the confines of my head.
• Spend sensibly
In my head, when it came to splashing any cash, there would be a wave of questions that I would ask myself and this is one of the things I urge you to start to practice. It was all part of the game.
The first question to ask yourself is ‘do you need this or do you simply just want this?’
If the answers is you ‘want it’ then do NOT buy it, put it onto a list… in your phone or on a piece of paper. Do not put it in a MENTAL LIST in your head as it will eat away at your want and you will succumb and for sure, you will buy the item regardless if you need it or not. Externalise it onto a list and leave it there. Visit the list at the end of the week, maybe every couple of weeks and you will find that your want for the item will dwindle and you can then make a clear choice on if you need to actually make that purchase or not.
If your answer is that you ‘need it’ then you have to pause and take the time to curate this purchase. What does curate mean, what do I mean when I suggest this – curate?
• The curating consumer
What is the definition of curate – amongst many definitions, the one I am referring to is this ‘…to be in charge of selecting, arranging, and presenting material….
So by this I am talking about taking the time to think through your purchase by selecting and arranging different options… in other words, SHOP AROUND.
If for instance, you need some new T-shirts so do you buy the ones that have instantly caught your eye, a nice new designer label that you have seen in the store you are passing through or shopping in, or do you pause and take the time to look at all the options around you. I would suggest you pause to take in things such as brand, price, ways to buy, including buying online or in another, less fancy store close by. Do you seek to get the best option for all your needs and that includes what is the best buy and what will last the longest including the best value for money.
I am not saying buy cheap, in fact many times buying cheap is the wrong option…. what I am saying is, pause, take the time and shop around. Even online, often we use Amazon as our one stop shop, the truth is, they are not always the cheapest online retailer so even shop around online.
• Bulk buy, but use sparingly
The other thing that I got super curious about was the idea of bulk buying. I would often find myself bulk buying items but then find that I would be using it quicker, my consumption was determined by what I had in stock and at my disposal. This is a whole other conversation in itself but simply put, I ended up buying in bulk the biscuits to take me through the visits to the Starbucks and curiously noticed that I was eating almost twice the amount, so any perceived saving was wiped out by my level of consumption.
Yes, by this time in my journey to ‘cash recovery’ I was getting a bit obsessive and a whole lot pernickety about every penny. It worked for me at that moment in time, its a choice at the end of the day… but do be aware of balancing the idea of saving money by buying in bulk versus the rate of consumption, dare I mention the bulk buying of toilet paper at this point. Nope, probably not. But I am guessing you get the idea here.
• The art of buying dumb shit
Everyone spends money on stupid purchases… that is a fact. It is to human, we buy dumb shit. I have a great example of this. My iTunes purchases, to this date I ‘own’ 393 movies on iTunes. Crazy eh. So say, as an average price of eight pounds, which is a conservative unit costs, then this invisible collection has cost me… almost 3,200 pounds and you are lucky if I have watched any of the movies more than the once. I could have rented, or even waited until they come on a streaming service and I could have saved thousands. As for the idea that this is my ‘collection’ I do not even have anything physically there to prove it, there is no shelf upon shelf of discs to present my ownership or pride in this collection. It is truly invisible and expensive, the irony is that every movie I ‘own’ is there and more at the touch of a button and for a small rental fee. As I said, we buy dumb shit.
• What is your dumb shit purchase?
Take the time now to have a look around to see if you have done a similar dumb shit purchase. Have you bought shelves of books that you have not read yet, an excess of clothing, cupboards full of media… do you have a record collection.. Why?
Now don’t get me wrong, it is good to own stuff that gives you happiness and explores your curiosity and pushes your learning just don’t forget to put the context around it. In this world of ‘instant ownership’ then ask yourself, do you need to own a collection when you can simply have it piped to you instantly online or delivered directly to you in a matter of hours. I don’t know, but all I say is do that maths, take the time to quantify what it is you own, what it is you desire to own and what you choose to hold on to. After all everything has a re-sale value or a space in a side hustle.
• Do the maths…
Take the time now to look at what you have around you, what you have in your home, in the garage or wherever. Really look at it and do the actual maths on it. How much is it worth and are you getting the value invested back as a reasonable return in whatever measurement you wish to use?
Honestly, it is cool if it has a place in your heart or in your mind, I get it. I always collected stuff and I will in the future. But for me, when I got in the zone of really having a ‘Money Mindset’ everything had a value and the value I would put against everything was the value of TIME.
How do I arrive at the idea of putting the value of things I would buy or own against the value of time, easy… ask yourself this;
What is your weekly living costs?
So just say for instance it is on average 200 pounds…. that means if you managed to save 200 pounds a month and bank or invest it, in simple laymen’s terms you have bought yourself a week back in the future. I would frame as a week off from my retirement date. This became the scoring system for the game that I played in my head. I saved a week, or eight days or whatever of life, in pounds value. This measurement was my way of saving for a rainy day, or in my minds eye, saving for a sunny day. The day where I bought myself out of the ‘life’s social contract’ of having to always work for a living.
• A conscious choice
This idea of buying back time is a choice, it is a frame work for me to work within. I love my job, I enjoy doing what I do… but that might not always be the case. Making the conscious choice to be money centric and to focus on the why behind the reason I make this choice, the idea of buying back my time, is clear to me and it is many layers of future proofing.
After all, globally, one in four people hate their jobs and six in ten are not fully engaged at work and many families could not manage a financial turmoil longer than a couple of weeks because they have less than a months expenses of cover safely tucked up in their banks saving account. This is what I seek to change by sharing my story or examples and insight. I am not there yet with my journey to financial independence but it has been a saving grace in this time of turmoil.
• It’s a way of life
This idea of having a ‘Money Mindset’ is a way of life. For me it is a way to save money and to add the money saved to my personal savings or investments so that I can buy back weeks and months of my life. Ultimately it is about protecting against an attack on my happiness. So many things will challenge you, stress you out and so much is in your control but when you stop to think. Money, your money, is very much within your control. You just have to make it a conscious and focused way of life. Make it a clear choice that you have a Money Mindset – why?, Answer; happiness.
• The reward is peace of mind and happiness
I always get back to the peace of mind I had when the COVID virus hit and the world economy unraveled. I am stressed about many things, but not about the control of my finances. I don’t have it fully nailed, trust me, but I can control so much more of what impacts on me because of the mindset I have, the preparations I have taken over the last few years and the fact I have some money that I can help to support others.
Now that gives me peace of mind and happiness.