Chapter 4 – Own It: Get A Grip On Your Money

Articles

18 Dec

Written By Vestpod

"You're Not Broke You're Pre-Rich" by Emilie Bellet Chapter 4

These mini-money guides are based on the practical money book "You're Not Broke You're Pre-Rich" by Emilie Bellet.

“Avocado toast”. The two words that are guaranteed to provoke any cash-strapped millennial who wants to get on the property ladder. And it’s unfair to simply blame younger people for frivolous spending as the root of all problems. You could spend decades turning down brunch and still not get your hands on that penthouse with a pool - or even just that bungalow in the suburbs.

However, studies do show that many of us spend to - or beyond - our means, and the sooner we address that in our own lives the better.

When it comes to our money, we want to turn away from a vicious cycle to a virtuous one. The vicious cycle is earning, spending as much as or more than we earn and amassing items that lose their value. A virtuous cycle is where we spend less than we earn, and we save and invest for the future.

Attempting to live more frugally and appreciating what we already have in life is nothing new – the philosophy goes back to ancient Greece. (However, ancient Greece was not a subscription economy with the likes of Uber, Netflix and Amazon, and the Greeks might not have been tempted to spend £3 every morning on an almond milk latte.)

Temptation is everywhere, but a budget is crucial to get us onto the right track. To make a budget, we need to understand our spending decisions and set goals for the future. We also need to get into the mindset that we are on a continuum and what we do with our money today has an impact on tomorrow. What do you really need to buy, and where can you cut back?

One simple budgeting model to try out is the ‘50/20/30’ (here on vestpod). 50% is spent on what you have to buy i.e. rent, bills and groceries; 20% goes on your savings and investments or paying down debt; and 30% can be spent on… whatever you like! Holidays, eating out, etc. The percentages will shift and change depending on where you live and your circumstances, but the order of payments still encourages you to prioritise and make sure that whatever you have left to play with is truly guilt free.

If this system doesn’t work for you, there are other options. There are also a plethora of mobile apps that help you plan and budget, including Money Dashboard, Moneyhub, Emma, Plum, Chip, Tide, and even Mvelopes, which puts your money into digital ‘envelopes’ for your different categories of outgoings.

Of course it will be a challenge to change your money behaviour, or channel the Greek philosophers every time you see a pair of Gucci loafers. No one is suggesting that you make your own brick oven instead of buying a stove, but you might consider shopping around online for the best deals for your energy bills, packing your own lunch or going for the odd camping trip instead of a fancy hotel.

“And remember, your time is money too. In the words of Seneca the Younger, ‘It’s not that we have a short time to live, but that we waste a lot of it.’”

Cutting back and making a budget doesn’t shrink your world; in fact it often does the opposite. It’s time to stop procrastinating, ordering meals from the sofa, and start living. Whether or not that includes avocado toast is up to you.

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If you want to learn more about the book and see a few photos from the book tour, it’s here. You can order "You're Not Broke, You're Pre-Rich" on Amazon and if you’ve read the book and enjoyed it, I will be forever grateful if you could review it on Amazon or Goodreads.