Warren Shute: Get ready to face the morning after

The dreaded credit card statement come January could see you facing a headache even worse  than the Hogmanay hangover. Picture: PA
The dreaded credit card statement come January could see you facing a headache even worse than the Hogmanay hangover. Picture: PA
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The New Year is just over a week away and your wallet has probably taken a beating in the run-up to Christmas. As you prepare for Santa’s arrival you might already be dreading the “morning after” – “Blue Monday” and the arrival of the credit card statement in a few weeks.

My message to you is – don’t panic I am going to show you how you can make some quick wins to help not just for January but for the rest of the new year. In 2019 more so than most, with the uncertainty of Brexit, it’s important for you to plan your money and budget for the year ahead.

To avoid the January financial blues I am going to ask you to do two key things – get financially organised using what I refer to as my Bank Account System and prepare a Money Plan for 2019.

My BAS is a system that automates your money as much as possible, taking emotion out of everyday financial decisions and giving you control over your yearly spending. Here’s how it works:

1. Set up two accounts: one for bills and another for personal spending.

2. Arrange ALL your regular payments, standing orders and direct debits to come out of your bills account – which is also where you keep your incoming money. Go through each payment and ask yourself three things: do I need this, do I want this, can I get it cheaper elsewhere? Act accordingly; you might be surprised at how much you can save.

3. Put some WAM into your life! WAM is your weekly Walkabout Money, and it pays for all your variable spending and fun: beer, coffee, haircuts and so on. Work out how much you want (or have) to spend in a month after your outgoings, divide it by four, and you’ll get your weekly WAM.

4. Set up a weekly payment for this amount from your bills account to your WAM account. Make it happen on a Wednesday, because once it’s spent, you don’t have too long to wait after the weekend, which is when most of us spend our cash.

5. Your WAM is your weekly allowance; it’s finite. DON’T dip into your bills account for more, or use credit cards if it runs out, it’s not too long to wait for the next Wednesday to come around!

Secondly, I want you to devise a Money Plan for 2019 and stick to it. Budgets don’t work, they are like diets! I need you to get financially well organised, and I share my 5-Step proven plan with you in my new book The Money Plan. I will show you how this can be done to enable you to control your money in 2019 rather than letting your money and debt control you. Alternatively, there are FREE planning and budgeting tools at: warrenshute.com.

A lot of people think financial planning is just another one of those things that rich people can get and those less well off can’t; a way to reduce taxes, or compare pensions. That couldn’t be further from the truth. A hybrid of coaching and financial advice, financial planning is all about helping individuals live the life they want to live, regardless of the numbers involved.

We’re all human beings, run by emotions, and the financial planning process is equally relevant whether you earn £10,000 a year or £1,000,000.

Financial planning is critical to living the lives we want to live; yet most of us receive little or no education on how to properly manage our money. We have to change that. Household debt in the UK is approaching levels last seen before the financial crisis, and we all still remember what happened next. Knowing where to start is often the biggest hurdle.

But realising you need to make a change is a great first step. My proven process drives you down the road to financial freedom. Success looks different for everyone – my process works because YOU drive it.

My goal is to help at least one million people to achieve financial freedom, freedom from the worries of money.

True financial planning is the process of establishing what someone really wants from life, then working with them to create a financial blueprint that outlines agreed actions on how they can achieve their goals.

A few financial quick-fixes to try in 2019

Sell unwanted Christmas presents: Gather together all of the presents you don’t want. Make sure they are in good order, with any packaging. Search online to see what you may expect to sell them for. Two good sites are: www.ebay.co.uk and Facebook Market.

Do you really need that gym membership? Think before you sign lengthy gym contracts. Read the small print. Are you really going to go? Are there other ways of keeping fit that are cheaper don’t involve contracts.

Set five specific money goals: Name five financial goals that you want to achieve in the New Year and that are feasible, and write them down. Writing down and clarifying your goals will motivate you to take the steps to achieve them. Avoid vague resolutions like ‘pay off debt’ or ‘spend less money.’

Lunch at work and save £880: If you spend an average of £4 a day on a Prêt lunch, you would be spending approximately £880 a year. Resolution – make lunch at home

Shop smart and get paid for what you buy: Remember the cash back sites. Both www.topcashback.co.uk and www.quidco.co.uk offer you cash back on certain purchases. It’s worth a search as the £s can add up quickly.

Get the best prices online: Let sites like idealo.co.uk search the internet to find you the best price for goods you buy online.

Keep a slush fund: Something — be it a car repair, an emergency root canal, or a job lay-off – always comes up to throw you off your monthly budget. To keep these incidents from running you into debt, you need to have an emergency stash in a savings account. I like to use Premium Bonds because it keeps the money out of easy access but can be called on for an emergency. If you have debt, save £1000, if you’re debt-free save three-12 months of your expenditure.

Cook more or learn to cook and save £1980: Get to know your kitchen, and you’ll save money. According to the Office of National Statistics, UK households spend more than £45 a week on eating at restaurants, fast food joints and the like. You’re going to spend less money the more you eat food from the supermarket, and it will be healthier too.

Warren Shute CFP is a multi-award winning financial planner. His book The Money Plan is available at Amazon, priced £11.79