I don’t understand money.
Maybe I should clarify that. As I have 1/9th of an economics degree, I think I probably understand how money works ever so slightly more than the average person. I just don’t know how to have it.
Fourteen months ago, I proposed to my boyfriend (it was super cool – I made a board game). He thankfully said yes, and that’s when I found out how much weddings cost. Brides Magazine has just put the average cost of a UK wedding as slightly over £30,000, which makes me feel a little ill. It’s a party, I thought! Who’s spending anything more than a grand on a party?
I am! It turns out my wedding’s likely going to cost almost £7,500. It became clear very early on that this was something I was going to have to save up for. I’d been alive for 26 years and I’d never really done that before. In fact, I didn’t really know how to save up for anything. Yes, I am aware how obvious it seems – just spend less than you earn, right? But, for a long time, I “budgeted” by spending until I had no more money left, and then waiting until the next pay day. Before we got engaged, my fiance and I would often have what we called “Payday Saturdays”. The idea was, the first Saturday after we were both paid, we would celebrate the fact that we once again had money in our accounts by promptly getting rid of it in a celebration of frivolity. This isn’t the way that grown-ups behave (not if they ever want to afford a dog, anyway).
Here’s the problem: when I was a kid, my parents tried to protect me from the fact that we had very little money and that meant they never taught me what to do when I did have it. They were trying to do the best they could for their kids, but joke’s on them because I turned out to be irresponsible and obsessed with short-term gain. Sucks to be you, Mum and Dad! I outsmarted your good intentions! Don’t get me wrong – my total ignorance about how people do the money thing and lab-rat-like focus on immediate joy have given me a pretty decent comic collection and some brilliant memories, neither of which I regret paying for. But they’re also going to put me at a pretty sizeable disadvantage down the road (few banks accept “more sewing patterns than I can make” as a mortgage deposit, despite my many petitions).
The good news is that millennials as a whole are saving like a bunch of bosses (and I don’t mean using large amounts of money they made off the back of your work – hey-oh!). OK, apparently it’s not actually enough, according to the FT, but it’s actually more than any other generation before us. Great work, folks! But, there’s bad news too, which is that many of us, especially those of us from poorer backgrounds, are getting left behind. And this has the potential to lead to huge income inequality among our generation (and others) by the time we’re Definitely Fully Grown-Ups.
Part of this is because people with wealthier backgrounds have grown up seeing financial behaviours that we don’t even realise are normal things to do. That part’s not too hard to fix – we just learn what these behaviours are. The harder part is that recent research suggests that experiencing poverty might actually make you more likely to take short-term gain over greater rewards in the long-term, especially if you view the long-term rewards as uncertain or risky (this could be thinking investing in stocks is too risky, or it could be feeling like it’s better to have stuff in your house than to have money in your bank, where anything could happen to it!*). Because of where we’re at in life, most of us are starting to get some of that exciting disposable income for the first time, but we’re often thinking and behaving like we did when money was unpredictable, uncertain or just super insufficient.
But we can learn! I’ve spent a long time trying, failing and trying again to put my money where I actually want it. I’ve become a minor money-saving blog enthusiast. And I’ve spoken to a lot of people about how they’ve figured out their money shit. I’m far from a financial expert and I’ll never walk around with giant shoulder pads and a brick phone (I assume all financial traders still dress like it’s the 80s), but I’m doing so much better than I was. If you also have no idea how to build up this fabled “emergency fund”, here are a few of the best tips I’ve found.
Fun Fact: for a bunch of boring reasons, until three years ago, I didn’t have spare money to be irresponsible with (it’s hard to waste your cash when all you can spend it on is food and rent). That was the worst, and it is not what I’m talking about here. If all your money goes towards keeping yourself fed, watered and sane, of course saving is going to take a back seat. There may well be some ways you can, if not get a foot in the door, at least shove a big toe into the doorframe of an ISA – but that’s really a separate post. Hmu if you would like to see said post, because I’m now really good at saving up laughably small amounts of money.
Acquire a sudden, huge expense!
Having a looming expense with a deadline was what it took to get me to save. Until then, saving seemed like something I could do ‘later’. Is there something you really want to do but you haven’t started saving for? Get yourself a deadline. They’re horrible, stressy magic.
Take away the decision to save
Just make one decision now and then automate it so you don’t have a chance to change your mind later. Set up a savings account (this is very easy and can all be done online) and then set up a standing order so your savings go out of your account on payday. When you check your balance, the savings will already have gone and you won’t even see them. (To be honest, I’ve never bothered doing this but it seems to be very popular and some of the people I spoke to said it was super important for them, so maybe give it a try?)
Start super, duper small
Starting to save can be scary, especially if you don’t feel like you have very much money to begin with. When I first started saving, I thought the most I’d be able to save a month was £50, and that seemed like a struggle. Now, I’m saving £160 a month and I’m still able to live my life – I just pay a lot more attention to where my money’s going. I’ve just realised that, after the things I have to pay to survive (rent, food, travel to work, etc.), my spending will always stretch to fill my budget. So I’ve just slowly shrunk the amount I’ll give myself to spend. I haven’t really noticed it either, because I’ve been acclimatising to things like taking my own lunches to work and buying fewer slipper socks gradually (I love slipper socks. It was honestly a significant spending habit).
Do you buy a bunch of stuff you don’t use? Take away the option.
I have a lot of stuff, and I’m fine with that because I’m secretly very materialistic. One person I spoke to also had a lot of stuff, but nshe hated it. She had a bunch of stuff she never used, yet she kept adding to it. She wasn’t in a great financial place and she said “choosing to spend was the only bit of control I had, so I took it.”When she realised this was a problem, she actually got rid of a bunch of her unneccesary stuff and then moved to a tiny studio flat. Her reasoning was, if she didn’t have a lot of stuff, she would psychologically only focus on the things she needs, plus there’s no point buying something if you can’t fit it in your home. It sounds drastic, but it’s worked a treat.
Pay off your debts first (if you want)
This is a bit of advice I hear from every single money-advice-blog I’ve ever seen. If you have any kind of commercial debt, you’re going to be paying a lot of money on interest. Paying it off sooner means you pay less interest, so you’ll have more money to save eventually. It’s good advice. I don’t follow it at all. For me, saving now is better than saving ‘when I don’t have an overdraft anymore’. You’ll have a balance somewhere – it might be to save an emergency cushion in the bank then to put all your effort into paying off your credit card. I’ve found they go hand-in-hand. The more I save, the more motivated I am to pay stuff off sooner.
Impressionable? Surround yourself with fiscal responsibility
I am very easily led by the spending habits of those around me. You might be, too. That’s a bit of an issue because most of my friends earn more than me. And I know a lot of my spending habits are based on how I’ve seen other people spending money. I’m a big old copycat. So I make an effort to find media and people who are fiscally responsible and know their shit. I know peer pressure’s always going to be a thing for me, so I’ve just chosen what it’s telling me to do.
Investing ain’t just for gazillionaires!
For a very long time, I never thought about investing, or having savings that weren’t “for” anything in particular, because that was just for super rich people. I was actually shocked when I found out that pensions were invested, rather than just kept in the banking equivalent of a box under a mattress. If you grew up without a lot of money, you just don’t see these behaviours as normal. But the thing is, a lot of our economy is set up on the assumption that most people are doing these things. Whatever you think about our economic system, you still have to live in it until we can overhaul it, so do yourself a favour and learn how to not get fucked by it in the meantime.
Stop thinking about what you deserve, and start thinking about what you’ve earned
I deserve this one pair of boots I want. I deserve fun day trips. And I work hard, dammit, so I deserve to get my favourite pho for lunch on the regular. I think you deserve all those things, too. But have I earned them? Maybe not. Or at least, not yet. It’s hard to decide not to buy something if I think I should buy everything I deserve – then not spending money becomes a damning indictment of my character. But, as I said above, we don’t live in a perfect world where everyone gets what they deserve. I can try and change it, but it’s counter-prodcutive for me to get into debt because of it.
*This is what I’ve thought for years. I feel like money in the bank is in danger of spontaneously disappearing, and that any money I leave in an untouched bank account will steadily erode over time. I have it on good authority that that’s not true.