Working Out Where Your Money Goes when You're Over 50 London
If you’re in your 50s or older you really do need to handle your finances responsibly – both for your own benefit and to set a good example for your children and grandchildren. As this article explains, practical financial management comes down to identifying what are essential items of expenditure and what are not – a straightforward and rewarding exercise to undertake.
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Working Out Where Your Money Goes when You're Over 50
The basis of good financial planning – also known as “making ends meet” - comes down to analysing your current and future outgoings into two categories: Have to and Want to expenditure. This will give you clarity about where your money actually goes, and how much of it goes where.
Obviously ‘have to’ items will be things like household utility bills, council tax, mortgage, food, clothing, transport.
There are relatively few absolute ‘have to’ items. Food is a necessity but restaurants, expensive ready meals and takeaways are not. Clothing is a must but keeping up with the latest in designer labels is not.
‘Want to’ items will be things like eating out, alcohol and cigarettes, holidays, sport, health and beauty expenditure, entertainment (films, concerts, books, magazines, DVDs CDs, etc). The list is infinite depending on your lifestyle and interests but the point is that you don’t have to spend this money if you don’t want to.
This is the area where eventually you will have to decide what you can bear to live without if you want to get your finances straight.
Honing your ‘have to’ list
When it comes to reducing expenditure on your ‘have tos’, the basic message is to shop around. The ‘going rates’ for ‘fixed’ costs such as mortgage payments, utility bills, and insurance payments are, in fact, changing all the time in the market place. So for the best deal you need to be vigilant and seek out the best offers.
There are a number of online price comparison sites to help you and you can review your position against their recommendations. That’s not to say that you should become obsessed with this but a periodic review, say once every three or six months, is a good idea.
When buying goods or services, pay as much – but not more – than you need. Buying the cheapest appliances can be a false economy if the item doesn’t last as long as a more expensive equivalent, doesn’t do the job properly or is prone to breaking down.
Absolute essentials
With other absolute essentials, it can be challenging, but not impossible, to reduce how much you spend:
• Food: Write a shopping list and stick to it – don’t impulse buy. Look for coupons and offers – but only use them against purchases you would normally make. Don’t buy more than you need unless you are sure you will use it. If necessary, ask neighbours, friends or colleagues to share – and split the benefit.
• Transport: As petrol becomes increasingly expensive, look at car sharing, and walking more. And if you’re old enough to qualify for transport concessions, don’t be too proud to apply for them.
• Heating: Turn the thermostat down a little, reduce the amount of time you have the heating on, and put on extra layers of clothes. Turn off the radiators in rooms you’re not using. Make sure your insulation is up to scratch. And don’t overlook how regular exercise – even just a couple of trips up and down the stairs - can keep you warm; particularly relevant if you work from home and sit for long hours at a desk.
• Water: It almost always makes financial sense to install a water meter – so investigate the cost and potential savings. This particularly applies as your family moves out and there are fewer of you in a decent sized property.
Weeding out your ‘want tos’
An absolute rule for saving money is don’t go to the shops unless you have to. Window shopping and browsing lead to impulse buying (for almost everybody) by exposing you to that ‘must have’ item that you didn’t need or even want until you saw it.
When you do go out, just take as much money as you know you will need and leave your credit card at home.
A final challenge is to save up in advance for any article you really want rather than buying it on credit and paying it off later. There’s nothing like the reality of having to put money by and not spend it on something else to focus your thoughts on how much you really want that item and whether you have the motivation to achieve it.
Click here for more information about finance over 50 from in my prime.
Obviously ‘have to’ items will be things like household utility bills, council tax, mortgage, food, clothing, transport.
There are relatively few absolute ‘have to’ items. Food is a necessity but restaurants, expensive ready meals and takeaways are not. Clothing is a must but keeping up with the latest in designer labels is not.
‘Want to’ items will be things like eating out, alcohol and cigarettes, holidays, sport, health and beauty expenditure, entertainment (films, concerts, books, magazines, DVDs CDs, etc). The list is infinite depending on your lifestyle and interests but the point is that you don’t have to spend this money if you don’t want to.
This is the area where eventually you will have to decide what you can bear to live without if you want to get your finances straight.
Honing your ‘have to’ list
When it comes to reducing expenditure on your ‘have tos’, the basic message is to shop around. The ‘going rates’ for ‘fixed’ costs such as mortgage payments, utility bills, and insurance payments are, in fact, changing all the time in the market place. So for the best deal you need to be vigilant and seek out the best offers.
There are a number of online price comparison sites to help you and you can review your position against their recommendations. That’s not to say that you should become obsessed with this but a periodic review, say once every three or six months, is a good idea.
When buying goods or services, pay as much – but not more – than you need. Buying the cheapest appliances can be a false economy if the item doesn’t last as long as a more expensive equivalent, doesn’t do the job properly or is prone to breaking down.
Absolute essentials
With other absolute essentials, it can be challenging, but not impossible, to reduce how much you spend:
• Food: Write a shopping list and stick to it – don’t impulse buy. Look for coupons and offers – but only use them against purchases you would normally make. Don’t buy more than you need unless you are sure you will use it. If necessary, ask neighbours, friends or colleagues to share – and split the benefit.
• Transport: As petrol becomes increasingly expensive, look at car sharing, and walking more. And if you’re old enough to qualify for transport concessions, don’t be too proud to apply for them.
• Heating: Turn the thermostat down a little, reduce the amount of time you have the heating on, and put on extra layers of clothes. Turn off the radiators in rooms you’re not using. Make sure your insulation is up to scratch. And don’t overlook how regular exercise – even just a couple of trips up and down the stairs - can keep you warm; particularly relevant if you work from home and sit for long hours at a desk.
• Water: It almost always makes financial sense to install a water meter – so investigate the cost and potential savings. This particularly applies as your family moves out and there are fewer of you in a decent sized property.
Weeding out your ‘want tos’
An absolute rule for saving money is don’t go to the shops unless you have to. Window shopping and browsing lead to impulse buying (for almost everybody) by exposing you to that ‘must have’ item that you didn’t need or even want until you saw it.
When you do go out, just take as much money as you know you will need and leave your credit card at home.
A final challenge is to save up in advance for any article you really want rather than buying it on credit and paying it off later. There’s nothing like the reality of having to put money by and not spend it on something else to focus your thoughts on how much you really want that item and whether you have the motivation to achieve it.
Click here for more information about finance over 50 from in my prime.