Your greatest wealth in life comes from your health, your happiness and your belief in your future
As those lessons are covered elsewhere on this site, this section sets out to teach you a little about maintaining your financial wealth
‘But, I don’t like the money. It confuses me’
You may not understand money and you may wish that we didn’t live in a society driven by money, but it does you no good to ‘stick your head in the sand’
You only need to understand a little to help you a lot. Money allows you to reduce many of the potential stresses in your life with minimal effort. Namely, you can pay your bills!
Money does not buy you happiness, but it sure does help!!
The first rule: Do not live beyond your means…..
…..whatever the banks and your government, or peer pressure wants you to do
As Western economies head toward bankruptcy, their governments are doing all they can to encourage you to spend. This helps them perpetuate the illusion of wealth, but it all has to be paid for at some time, by some one.
And that time is drawing ever closer
If you want to survive the minefield of financial policy that these same governments are confronting you with, you have to ignore the pressure to spend on things you don’t need, and have some form of structured saving plan for your future
Review your spending patterns
Life can get so busy that we lose track on what we are spending our money on. This can include things such as internet or magazine subscriptions we no longer need, and insurance policies where much better rates are available
In my case, with both my house hold insurance, and my medical insurance, I saved around 50% when I challenged the companies with whom I held the policies. Simply telling them you are looking elsewhere can lead to an offer of a substantial discount!
Check annually
It is also worth shopping around annually via some of the price comparison sites to compare the amounts you are paying for your utilities such as Gas and Electric. I saved around 15% on my utilities the first time I tried
Save even more!
One of the best sites for inspiring ideas how to save even money is Martin Lewis’ Money Saving Expert site. You could lose yourself for hours in this site!!
But I don’t have the time!
How much is your time worth?
At least look at your biggest expenditures such as Insurances and Utilities. You are very likely to find that the money saved is worth a lot more to you that the time it takes. How about £1000 for three hours work? That is what I saved, the first time I tried
And that was just the savings in the first year. Even if I hadn’t check the next year, I would still saved around £800 based on the original prices I had been paying!!
Check every penny
I recommend keeping a detailed spending diary for a month. Simply record every penny spent. It can be quite an eye opener what unnecessary stuff we buy, and don’t even notice!
In my case I saved a fair bit of money by buying some of my food in bulk, rather than buying the same item every week. I found I was buying other items out of habit, and I didn’t really need them
Credit cards?
One simple rule: Pay them off at the end of every month!!
If you can’t, it really would be worth your effort to study your spending patterns, and work out what you don’t actually need
If you know what you are doing, you can go from card to card following the zero percent deals, but typically any interest rates beyond these deals are very high, so even going over by one month could wipe out any gains you had from playing these games
Once you decide to live within your means, you can start to save for a secure future
But, there is no point in working hard throughout your life and saving towards your retirement when government and banking policy will just rob your savings from you
Explain! Are you saying that banks are not a good place to save money?
If you put your money in an account managed by a recognised high street bank, will it hold its value? Will it be able to buy you the same quantity of goods and services in a year’s time, as it does today?
In a word. No!!
Well, not if recent history is anything to go by!
With the rampant commodity price inflation taking place around the world, your money buys you less and less every day. We can all see the price of oil, clothing and food steadily rising. Currently the prices of the basic commodities such as cotton, sugar, coffee, wheat, copper and oil are rising at over 20% a year
There is a lag between these increases and the prices we see in the shops, so only some of this has been passed through to the consumer at this time. With that said, many countries are suffering real consumer price inflation of between 5 and 10%, and there is clearly much more to come
This is conveniently hidden from the public by quoting inflation figures that don’t include the cost of energy and the cost of food! I don’t know about you, but I spend quite a bit on energy (fuel and heating) and food!!
What does this mean?
From your bank account you need to earn at least the equivalent of the real consumer price inflation, plus any tax you will pay on the ‘interest’, just to break even. Somewhere in the region of 10%!!
If you know of any honest, safe, secure bank that pays this type of interest, please forward details. I haven’t found one….
Ok, so how about safe, boring Treasury Bonds?
If a country keeps printing money (Quantitative Easing), the value of its currency reduces. At any time there is the risk that significant holders of these Bonds will dump them ‘overnight’, particularly when the currency is being devalued at a rate greater than the interest earned
There is a very good article written about this by Weiss Research on their Money and Markets website on the 7 Feb
So, how about investing in property?
In specific areas, and if you know what you are getting yourself into, there are a handful of opportunities out there.
I am not researching this area at this time as I do not believe that there will be many opportunities for the ordinary investor for at least a year or two, or even longer
But I would welcome input if you know a lot more about this subject, and understand any generic investment property strategies that may be out there, that are relatively simply to get into and out of, and carry a positive reward to risk ratio
Personally, I would not get involved when interest rates have a high risk of climbing, and there are few people who can raise the capital to buy property
How about ordinary stocks and shares?
This is an absolute minefield, where trusting the wrong person can lead to huge losses
In time, I will add details of advisors I recommend, but for now, there are no shortcuts.
Your only sensible option is to do your homework on either the individual stocks you wish to invest in, or the investment advisors you wish to follow.
When you think you know what to invest in, I thoroughly recommend you paper trade for at least 9, if not 18 months or more, where you keep track of what investments you would have made and any profit or losses you would have incurred. There is a fair amount of good advice out there, but also a lot of bad advice and scams
If you choose to not take advice or do your own homework, you have a fair chance of losing significantly, due to the ways that the markets are manipulated by the powerful few
So how do I save money?
The first thing to learn here is what IS money?
Have a look at the two pages: Paper Money, and Real Money, and see what you conclude