I would like to change your perspective on money.  A change in how you view your personal finances and your relationship with money.

 

And oh yes, you do have a relationship with money.  We all do.  And it is an intimate relationship as well.  For many of us the thing we hold most dear is money, which for many of us equates into freedom.

 

A little formula then:

 

£ = Freedom

 

Money buys not only the material things we want, but non-material things as well.  It can buy holidays, which in turn can become fond memories.

 

But isn’t it ironic that the thing we hold so dear, money, which can give us great joy and freedom, can also be the source of stress, pain and lack of freedom!  True irony.

 

We have money things are good. We don’t have money things are bad.

 

That is our perception.

 

So how do you change your perspective on money?  One way, is to see money and your finances for what they are, a means to an end.  Whatever that end is for you, is personal and different for everyone.  Some people want to retire and live well off, some live by the motto, he who dies with the most stuff wins.  OK, whatever works for you.

 

Setting up and following a Spending Plan is a good first start.  

 

A Spending Plan is where you track all your income and expenses for a few months to the penny!  You physically write down, putting pen to paper, every £ and p you spend and what that spending purchased. 

 

Then after a few months of seeing exactly where your money is going, you can make a decision on future spending based upon a true history of what you have spent.

 

If you track everything truthfully, on paper, it is a physical thing you can view, see and touch.  This physical paper with your outgoings/spending, is concrete, it is real, it can be seen and touched.  This then becomes a tool, a concrete tool to effect a change in your behavior with money and spending.

 

How else can I change my perspective?

 

Look at money and your finances this way:

 

Let’s say you earn £12 an hour; that is your pay scale.  Out of that £12 an hour you have to pay taxes, NI deduction, etc.  So out of the £12 you earn each hour, you net/clear after deductions approximately £9 per hour.

 

It’s Saturday night and you want to take your best girl out for a pint and some supper.  You go to a causal little place near your flat and order a few rounds and some supper.  The cheque comes to £36.  You had to work 4 hours to pay for that meal.

 

£9 (what you earn/net) X 4 hours = £36

 

Was it worth it to you?

 

Yes.  No. 

 

Another example:

 

You want Sky TV, the full package and a nice flat screen TV to watch it all on.

 

You purchase a modest flat screen TV for £999.  The Sky TV package you want is £30 a month, so that is £360 for a year.  The total cost for one year is £1359.

 

At your net wage of £9 an hour, you will need to work 151 hours to pay for the TV and service.

 

151 hours X £9 = £1359.00

 

151 hours of your life!  Almost a month of work, if you work a 40-hour week. 

 

Again I ask, is it worth it to you?

 

Seeing things differently yet?

 

Add to that a new mobile phone every year, or a new car every few years, dinners out, movies, etc.  It all adds up. 

 

I am not saying live in a cave and never do anything or buy anything, what I am saying is be aware of what it is costing you and costing you in more than money.

 

Forgo the dinner or movie or TV and maybe become that much closer to retiring by saving those funds.  The choice is yours.

 

But now you see things differently.

 

To end things, how about a few other suggestions that may help in keeping a closer lock on your finances.

 

Asking ourselves prior to making a purchase, do I need this item, or do I want this item?

 

Have a “cooling off” period of 48-72 hours before making a purchase over £25, or £50.  The item is not going to go away, wait and see how you feel in a few days.

 

If you have a partner, you can sort of keep a check on each other.  Make an agreement that if either one of you is looking to make a purchase over £25, you will consult the other one prior to doing so.  Accountability to each other.

 

Try to go a day without spending anything, nothing.  Buy nothing.  They try to go two days or three.  Take your lunch, coffee or tea for a day or three.  Try to not spend and see how it feels.

 

There are many ways to change your perspective on money and your finances; I hope this has opened your eyes to just a few.