Phew, that was a lot. Well done. We’ve made it to the end. 🙂
There’s just one last thing I should mention.
There are some types of knowledge where we simply need to learn the thing and it starts making a difference in our lives.
That type of knowledge helps us to look at situations differently, helps us see The Elephant better. So, we automatically respond better to those situations, and we get better results.
This “Getting more value from your money” series is not that type of knowledge.
To get any benefit from this type knowledge, we actually have to sit down and do the things we’ve learned.
We need to pull out those old bank statements, create those categories, select those priorities, assign those amounts, etc., etc., etc.
Otherwise, we might as well have been spending all this time watching Big Brother reruns instead.
So, when we do put in this effort, what kind of results can we expect?
I mean, I keep talking about awesome, magical results.
What does that look like in reality?
Well, let me use my case as an example.
In the Prologue we set up the criteria.
Do we have enough money to last us three months if our source of income stopped?
My bills may have been paid on time, but I had practically zero savings.
If my salary was delayed by even a couple of days (due to late time-sheets), it would cause all kinds of problems.
Missed bill payments, failed standing orders and multiple overdraft fees.
A delay of a couple of weeks, and I would be maxing out my credit cards and scrambling to find payday loans. (Luckily, this didn’t happen very often).
On top of that, my total personal debt kept increasing every year.
There always seemed to be one reason or the other why I would need to take just one more “small” and “affordable” loan.
That was just over three years ago.
It’s now mid- 2020 and the value of this system is being sorely tested.
In January this year, I decided it was time for a big change. So, I left my job of 14 years.
I then spent Feb getting some new certifications, with the hope of finding a new job in March, or early April.
Then the Corona virus happened!
In March, the country went into lock-down (along with the rest of the world) and the job market simply vanished!
As a result, I have had to survive the last five months without my main source of income.
And, so far, I have!
All off my cash savings.
I haven’t had to borrow a single penny, or access a government grant, so far.
In addition to my main source of income, I sublet a room in my flat to a flatmate. I have been doing that for over 10 years.
It brings in a small extra income which helps with some of the bills
What will I do once my cash eventually runs out?
Well, I did some consulting work during this period. That payment will come in handy when it arrives.
However, if this situation continues much longer, I will have to bite the bullet and make myself poorer in future, by borrowing money.
I have made some adjustments, but I have still been able to maintain my spending on all my priorities during this time of unemployment!
(Well …, except the food related ones. But that is down to closed restaurants, not lack of funds. ).
That means that, in the last 3 years, I have been able to save more than 4 months’ worth of living expenses.
That may not sound that impressive at first. However, over those same three years, every area of spending in my life didn’t get worse, it actually improved!
- I’ve been eating better food
- I’ve been buying more clothes than before
- I have been able to support close family & friends through some really dicey (and expensive) situations
- I have been on the most expensive holiday of my lifetime
- I have paid off all my credit cards (and am on track to pay off my remaining personal loan in two years)
- I have spent a lot of money trying to start a business (which, unfortunately, didn’t work out)
- And, I have started saving money into personal retirement investments.
Where did all this money come from then?
My income has been the same, but I have been able to spend better and save more.
That means I must have tightened my belt somewhere, …right?
The honest answer is, … I really don’t know where the money came from.
I spent a few days trying to figure this out and remember the items I cut out. Here is what I came up with.
- I cancelled my sky sports package (I never used to watch it alone anyway, and the friends I watched it with moved out of town).
- I found I had been paying excess on my phone bill and cut that out.
- I also realized that I was paying for two very similar medical insurances. So I cancelled one of them.
However, when I add up all those big things I remember cutting out, it doesn’t even add up to the amount I put into my personal retirement investments alone!
What that leaves are those small decisions I make when doing the budget every week.
- Reducing one category by £5 or £10 because I have decided another category is higher priority and moving it there instead.
- Focusing on paying off my debts, so that more of my income belongs to my present and my future, rather than my past.
Somehow these small decisions, over the months and years, have added up to thousands of pounds in savings and a much-improved quality of life.
I haven’t even mentioned the most valuable result.
The peace of mind!
I no longer worry about money.
So much so that, at a point I started to worry that I had forgotten how to worry about money (That would be a whole different problem).
After a year on YNAB, I got so calm that I would sometimes even forget it was payday. After all, the money for next month was already sitting there in my account.
Even when an “unexpected emergency” comes up, I can look at my budget and know exactly how much I have available to spend on it.
If it isn’t enough, I know exactly how long I it will take before I will have the money.
That leaves not much else to worry about.
So, where did all this extra money come from?
To me, the answer is obvious.
It’s magic. 😀
This is my first time doing a series like this and it’s taken a lot longer than expected to complete.
Thanks for sticking with it. I hope you found it valuable.
Do let me know your thoughts and comments (also whether you think anything is not clear or needs more explanation) by leaving a reply in the comments below.
I will be returning to my roughly fortnightly schedule of posts after this. As well as a wider range of non-financial topics.
I look forward to seeing you then. 🙂
The full “Getting More Value from Your Money” series
For Further Study
The Richest Man in Babylon – A book by George S. Clason
You’ve read it by now right? Not yet?
Okay, go read it. 🙂