Personal finances and the 8th wonder of the world

This week I have been working on my personal finances.

Personal finance is a topic I haven’t spent much time on, and I haven’t spoken about much.

Most of what I know about personal finance I have learned from books, business, and making mistakes.

For the most part I feel fortunate with my current circumstances, but the ambition within me causes me to rarely stay satisfied for long.

I‘ve noticed myself fall into a common trap: lifestyle creep. As one earns more over the years, it’s easy for spend to increase in line with any increase in earnings.

I don’t think I’m extreme here — I am not buying yachts, or even cars, but it’s all relative. A rare treats becomes a regular treat. Which becomes a habit. Which becomes hard to remove from your life. In my reflections this week I could see several instances of treats that had become hard-to-remove habits. It was a wake-up call.

Learning to budget

I’ve never been very good at budgeting, but I thought a good place to start would be to adopt a simple high level goal: spend less than I make.

Spend less than I make.

That sounds pretty simple, right?!

Except… in today’s world, I haven’t found this easy at all — to even know how much you are spending is hard.

There is so much to juggle and understand: get a credit card, get a current account, get a joint account with a partner, get a savings account, pay a mortgage / rent, pay recurring payments, bills, subscriptions, direct debits, transfers, donate to charity, pay tax, and maybe even go on holiday and spend money in a different currency once in a while.

Even with great tools to track my spending (I’m a huge fan of Monzo here in the UK), I still find it hard to truly know what I’m spending during a month.

Not only have I found it difficult to understand and get a baseline of my spending, but I have also found life getting more expensive. “Inflation” has been mentioned a lot in the UK news cycle for as long as I can remember, but I never fully understood its implications.

Taking action on my spending

I won’t bore you with everything I‘ve learned, but I will jump to a few realisations and actions and I have taken since drawing my attention to my finances more intently:

  • Plan my meals at the weekend for the week ahead.
  • Don’t get a coffee out every morning. Make one at home and bring it on my dog walk.
  • Make avoiding spending fun — set a budget goal for the month in Monzo and try to stick to it.
  • Buy good quality ingredients at local shops on Saturdays. Combine this with a meal plan and I have no excuse for getting a takeaway mid-week.
  • Question everything I spend on. Do I need to eat there? Drink then? Wear that?
  • Cancel unnecessary subscriptions. I’m looking at you, HayU reality TV… Gone!
  • Have a conversation with my partner: spending on a joint account can quickly get out of hand. Who calls the shots? You have to be on the same page, otherwise it’s a problem waiting to happen!
  • Crucially — have a goal in mind. To get to a point where I save even a little each month would be a huge win.

The goal to save

To be honest, having a goal to save (even just a little) was influenced by the book I‘m currently reading. I had the pleasure of attending a talk by Professor Scott Galloway and subsequently acquired his book The Algebra of Wealth. Scott is an entertaining, smart, wealthy, and opinionated individual!

In the book, Scott covers a lot of advice around investing and topics that are beyond the scope of this post. But a core piece of advice from Scott is to understand your baseline spending and saving, and to try to save, even if it’s just a little.

Because if you can save a little, you can start to earn — from investments, from opportunities, and from interest.

And if you can combine a little money, a little interest, and a lot of time, then an acorn can turn into an oak tree.

This quote sums it up for me:

“Compound interest is the 8th wonder of the world.” — Albert Einstein

A few finance books

A few books on the subject of finance that I have found helpful (the following are affiliate links to Bookshop.org — supporting independent book stores in the UK. If you buy anything through them then I’ll make unimaginably vast sums of money):

I haven’t read enough on this subject, so I’ll direct you to this thread on Reddit to find more good reads.

Any more tips for saving, spending less, or being smarter with money? Let me know!

  • Wrapping up series 5 of the EcoSend Podcast. This was fun to do — an in-person episode with Chris!
  • Peer coaching has been incredibly valuable for me over the last couple of months. Learning to be a coach, and getting coached, are both valuable to me beyond what I can put into words. If you’re interested, check out RunYourself — by the wonderful Mica who has coached me for many years.
  • I achieved a personal milestone when I ran 5km at my local parkrun on Saturday. When I started running back in my 20s I never thought I could get to this point. It was a good reminder: age is rarely a barrier — it’s about determination.
  • I recently purchased a pair of EarPods — the wired earbuds that used to come with your iPhone. Having been a fan of wireless AirPods for many years, it’s been a good way to underscore how annoying wires are. However, the EarPods microphone (and its location) is so much better. Wearing my EarPods is something I do for the person on the other end of my calls.
  • Thank you for the kind wishes last week for my partner— many of you replied to last week’s update with very thoughtful words. It‘s also incredibly heartwarming and encouraging to know so many of you read what I write!

Quote

"Rule number one: Never lose money. Rule number two: Never forget rule number one." — Warren Buffett (the legendary investor, who turned 94 on Friday)

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