A guide to keeping your money in the right balance

What the finance gurus aren’t telling you

There are a lot useful (and common-sense) financial gurus out there who tend to promise all kinds of wonderful things if you follow their wisdom. However, there is maybe one thing that they’ll probably not be too keen to share with you – and that’s the cold, solid fact that there aren’t any shortcuts to saving money and becoming debt free.

The best of these financial advice experts on television and other media are the ones with a story to tell. In a lot of cases, financially careful people were brought up in a household where money was tight – and by observing a thrifty parent they were able to learn from an early age how important it is to manage our money.

Sometimes it may seem as if these folks are financially ‘better’ than ordinary people. But off course, life can be a pretty changeable thing – and there are doubtless many financially astute people who have had their ups and downs for various reasons such as redundancy or a downturn in the economy affecting business. So if you’ve ever felt the pinch, don’t worry – you’re not alone in this. And as with all things, the lean times can be a very useful learning experience for when things are less, well, lean…

Learning from the lean times…

For instance, I grew up during a comfortable era, and in a comfortable part of town. But my parents weren’t rich. So when I packed my stuff together and headed off to college, I knew that I wouldn’t be the kind of student who’d be dining out and paying cash every night, then driving home in a gas-guzzling but low slung and aerodynamic sports car. No, a big treat for me would be a trip to the baked potato shop once a week. Or maybe some fish and chips if I was feeling recklessly spendy.

All of which might sound frugal, bleak – maybe even Spartan. But here’s the thing – it really wasn’t all that bad. No, I will take a step further than that and say, loudly, that it was actually pretty good!

Why?

Oh, so many reasons! But, I will try and list the main ones to give you an idea of how my lean times worked for me:

The learning curve of value

If I’d always had a bit of spare cash, I’d never have learnt to cook. Think about that for a second. It would mean someone else cooking or preparing your dinner every night. For a decent profit margin too. Think of a restaurant meal’s price then compare it with the cost of the raw materials. Even in great value for money restaurants, some profit still has to be made. Same with microwave-ready meals. The value is in the convenience – and that’s why you pay a premium. Now, if I’d always had spare cash, I now realise that I’d always have wasted a proportion of it.

The upside of times when money’s too tight to mention

We’ve all made mispurchases, I imagine. That bought-in-a-sale suit that never seems to get worn, or that restaurant meal that didn’t get eaten. Or we’ve maybe  overspent a little and had to endure effects of it until the cash flow is back to its ‘flow’ state. In tight times these things are somehow felt about twice as keenly. With some extra money kicking around a mispurchase or an overspend means putting up with the effects there and then. In other words, with no contingency cash (or very little) to put things right.

The upside of all this is that it provides a good learning context, and one from which you emerge much more careful with the contents of your wallet. I’m not even talking about being penny-pinching or parsimonious here. It’s about developing a better understanding of your finances, like, understanding the overdraft of your current account works. You just need to develop a little sixth sense for the things that are good value and those that aren’t – as well as instantly knowing when to shell out and when to refrain from spending a single penny.

A little bit of give and take can work wonders

A long time ago, I realised that the wider economy as well as our own personal situation is a bit like the weather. Sometimes it rains! And even the riches of rich guys probably feels poor – or at least disappointed at times – like when the price of stocks takes a dive, instantly dissolving a chunk of personal net worth.

So in the ‘ups and downs’ aspect of finances, few (if any) of us are totally immune. However there  are a series of steps we can take to ensure that things run smoothly, and here are a few that I always find to be massively important:

Cheapest doesn’t mean best. Shop around for quality as well as price. Get the best deal – it isn’t always the crazily low priced one.

Financial products – do they do what it says on the tin?’. Savings accounts may have good advertising – but many pay a rate of interest lower than inflation. In real terms, year-on-year, that isn’t saving so much as erosion! Also for any mortgages or other loans, make sure that you are clear – and I mean crystal clear – about the considerations of fees, rates, security, repayments and the like

The road is long – with many a wind in it…

So the song goes. But if you apply some ‘best practices’ in your behaviour, and get into a happy thrifty habit over the long term, you have a much better chance of being insulated against any financial shocks, and instead, hopefully, will be in good money health.