What are the three steps I’ve taken this month?

1) Investing in Zopa: Although this peer-to-peer lending site has only been around for less than 10 years I have always been interested in different forms of investing. As with all new types of investments I’ve only invested what I can afford to lose.

2) Halifax Reward Account: This is a current account that I applied for last year but was rejected due to my credit rating. Since that rejection I took out a credit card with my local bank and have paid it off in full every month (I also only spend a quarter of my limit). I was pleased to discover this month that my credit score has improved enough to get this account. This account is simple – pay in £1000 each month and get a £5 reward from Halifax (basic-rate taxpayer). You don’t even need to leave the £1000 in there. Just transfer it out after a few days and move it to a better-paying savings account. You need the discipline to put the money in each month and take it out each month too. If you go overdrawn on this account it will cancel out the £5 reward so I wouldn’t recommend this account until you’re 100% confident that you’re on top of your finances.

3) 0% credit card: Similar to action 2 I applied for a 0% credit card back in November 2010 and got rejected. These two rejections for a current account and a credit card spurred me onto action and I took out a standard credit card with my local bank. I’ve paid this credit card off in full each month to improve my credit rating. The rationale behind taking out a 0% credit card is that I will be able to spend on this card (for normal expenses) but I will only have to pay the minimum repayment amount each month – this means I will not be charged with the interest rate and can continue to build up my credit score. With the outstanding amount on the card (that I won’t need to pay off until the end of the 15 month 0% period) and put that amount into a savings account paying more than 0%. I essentially make money from the balance without paying a penny in interest. On MoneySavingExpert this is called being a Credit Card Tart. As with action 2 I would only suggest this action for those confident in managing their finances on a weekly basis at least.

With these three actions under my belt I feel that this month has been a productive personal finance month but there’s still room for more. I hope that December will be just as productive and I have a feeling it will be as I consider the following:

• Opening a First Direct current account (in order to be eligible for the 8% regular savings account)
• Increasing my pension contributions from 13% (10% covered by my firm) to 15-16%
• Increasing my contributions to my Stocks & Shares ISA (from 12% of my net salary to 18%)
• Setting up a regular savings account (which may be covered by the first bullet point)

My overall aim is to move my money into riskier investments (in line with my desired time-frame) and to ensure that any cash investments are in accounts that earn an interest rate at least in line with inflation if not 0.5-1% above inflation which is currently at 5.2% I feel this will be my biggest challenge to date.

When I was looking at my spending since September 2011 I was more than shocked. I had spent more than what I earned each month up until this month (November 2011). So how can I continue to give advice to others about personal finance management when I’ve seemingly blown through my budget three months in a row? Even though I was shocked there was a sense of familiarity about this discovery and a sense of deja vu from a couple of years ago.

On closer inspection of my finances (looking at the spending categories) I realised that most of what I’d spent money on was a tenancy deposit, digital piano (second-hand) Japanese lessons, Toastmasters membership and gym membership. These are ‘big ticket expenses’ that take a chunk out of my salary but what I had to remind myself of was that these items weren’t ‘monthly’ expenses but more of a one-off/annual expense. I’ve written previously about the importance of saving money over the summer (if you’re a student but also if the end of your tenancy coincides with the start of the academic year) as September is when most people will find themselves strapped for cash. These expenses may be for items that last a year meaning no further spending is required which emphasises the importance of a long-term view when it comes to budgeting.

How have I ‘blown’ through my budget on big-ticket items? See below for a breakdown of my ‘large and one-off/annual expenses’:

Tenancy Deposit: £870 (annual and should receive bulk of this at end of tenancy)

Digital Piano (second-hand): £510 (including removal costs – one-off)

Japanese lessons: £360 (24 weeks worth of 2-hour lessons every week – lasts until end of March 2012)

Toastmasters membership: £100 (annual membership with bi-weekly 3-hour meetings)

Gym membership: £427.50 (annual membership)

Total: £2267.50

It looks like a huge amount of money to have spent in the space of three months but what is essential is to remind myself that most of these will last me a year or so and these all contribute to my personal development goals. It’s easier to digest the sum of money I’ve paid when I think about how much of an investment this is in myself and my growth.

I feel as though money management is more a case of maintaining what I’m doing to better my financial system and less about learning the basic (although it’s important that I keep reading up-to-date information on personal finance). As such my focus has turned to personal development. The beauty of personal development is that you can branch out in as many ways as you like. The aim to improve your skills could be in order to pursue a new career, get that promotion, strengthen your relationship with a loved one or simply to broaden your experiences.

One of the things I enjoy about my job is the opportunity for development. During a recent project management training session I learnt many tips and skills that I could not only apply to the day-to-day tasks of my job but also to my daily development outside of work. One of the facilitators talked about F.E.A.R and defined it as False Evidence Appearing Real. I couldn’t agree more that fear is in the mind but it does not mean I don’t suffer from the same nerves and anticipation before something important or unfamiliar. As part of my self development I’m trying to get out of my comfort zone whilst also working on skills that will be useful for my career and my well-being.

I recently joined Toastmasters. Toastmasters is an international non-profit organisation which improves your public speaking and leadership skills. The mission of Toastmasters is the following:

Toastmasters International is the leading movement devoted to making effective oral communication a worldwide reality.

Members gather to practice public speaking in front of the club (and guests) and receive evaluations for every speech they do. There is a manual (Competent Communicator) which helps to lead members through 10 speech projects and the content of each is decided by the speaker. Alongside this manual you can work through the Competentent Leadership manual which is how you manage to develop both public-speaking skills and leadership skills.

The great thing about Toastmasters is that you can come to a club (and others) as many times as you like as a guest. There is no limit on how many times you turn up without paying the annual membership fee. The benefit of joining is that you will be able to work through the 10 speech projects, receive feedback and receive mentorship from a more experienced member.

Last Monday, I went as a member for the first time and did my first Table Topic (a one to two minute impromptu speech on any given topic). It was terrifying but at the end of it I felt a trememdous amount of achievement and thoroughly enjoyed the rest of the session as a result. Despite taking two years to go back to Toastmasters since I first went as a guest I’m happy that I’ve finally gotten over my fear and am making positive strides towards my personal development goals.

Positive attitude Accept all work given to you and do it to the best of your ability.

Proactive attitude Our consulting work involves looking at the extent to which employees are willing to go the extra mile and how this is linked to employee engagement. In your first year you need to show your desire to do as much as you can during your working hours and sometimes outside of working hours.

Relationships at work Developing a strong, trusting relationship with your line manager can help make your one-to-one sessions more effective.

Make yourself heard This is related to the previous point about developing a good relationship with your line manager. If you can make yourself heard to the right people then you’re more likely to be given work that you’re interested in and work that develops your skills.

Get feedback The system in place at work to monitor progress is very new but surprisingly efficient. Throughout your first few months it’s important to learn how to ask for feedback and also collect positive feedback from clients. If you can get any feedback in written format then that is especially effective in your performance review. Get proactive in finding out how performance reviews are conducted.

There is undoubtedly a copious amount of resources on the internet that can give you more detailed advice but I hope that my own personal experience as a graduate with one year’s work experience under belt will give you the belief that you can also do the same in your first year of full-time work.

If you’re new to the blog then Welcome! I hope that what you read on here is accessible and applicable to your situation whether you’ve just started uni, just graduated or have been working for a few years already. My aim is to share my experiences of personal finance management back when I started as a fresh-faced 15-year-old up, throughout my years of university and finally through my 2nd year of being in the working world. To give you more insight here’s a quick guide to the website:

About Me - My biography…not really. It wouldn’t be the most relevant info but it will hopefully give you insight into who I am and what I aim to achieve on this blog.

Money (B)lingo –  This is where you will find a glossary of all financial terms I refer to on the website. If you find I haven’t explained something then give me a shout and I will happily add this. For now I have tried to keep it simple and relevant.

Money Buddy – When I started out reading about personal finance management I came across some great sites that I heard through word-of-mouth. I’ve dropped some since but have listed the ones that I read regularly here. They are US-centric because I have yet to find a great English equivalent.

Money at the Mo – I started this blog with heaps of enthusiasm and expectation. I am sad to say that this section is in need of work but it still holds the articles published previously.

Personal Development Buddy – Recent addition to the site is the sister of the Money Buddy. This blog is not just about personal finance management but about personal development too. I have two sites on here that I recommend for the novice personal development geek.

The tags on the right-hand side will allow you to navigate my articles based on topics that you’re interested in and hopefully everything else is easy to navigate. I welcome any suggestions for improving the layout and for writing requests around certain issues.

When I graduated from university in September 2010 my aim was to save as much money as possible to ensure I could move back to Central London. My aim was centred around gaining more in assets. This year I can already tell that this will be entirely devoted to investing in myself. The costs of investing in myself speak for themselves. This month I’ve spent 86% of my pay packet for September which includes my annual bonus (6% of my salary). Included in my expenses this month are the following:

- Digital Piano (second-hand)

- Japanese lessons (24 weeks worth)

- Toastmasters (public-speaking club annual membership)

From that list you can already see a lot of big expenses but this is always a factor to consider every time you move to somewhere new especially if it coincides with the beginning of the academic year. What’s great is that I won’t have to pay anything more for the digital piano or Toastmasters and will only have to start paying for my Japanese lessons after Christmas.

Whilst I was living in Surrey I didn’t have the time to sign-up for anything more than Japanese lessons and even that was tough. I would get home just before 10pm in the evening, make a quick packed lunch and then would go straight to bed. Now I get home from my Japanese class at 8.50pm and have the time to go over my notes from the class which is helping me retain information. Toastmasters has given me a great excuse to improve my communication skills and to help me become a leader. I’ve already met some interesting people and watched some excellent speeches.

Overall the experience has been a whirlwind but most importantly it has been a reminder that I can save all the money I want. The only thing I have to recognise is that it’s important to ensure I strike a balance between investing in my future and investing in myself. After a year of blogging I would like for the central message in my blog to be finding this balance.

Firstly, I have way more clothes than I’ve ever had. When I was younger and didn’t have any form of income I dreamt of having a great wardrobe with clothes that I would enjoy for years. When I was 10 I made a list of clothes that I had and a list of clothes that I wish I had. Now at the age of 23 I can see how I have inevitably given into lifestyle inflation. I have more clothes than I dreamed of (particularly dresses) and have made the excuse (more than once) that I ‘need’ the clothes for work/for partying/for life. 

Many women kid themselves into thinking that they ‘need’ clothes but if you think about it logically you can only wear one set of clothes at a time and at most you will wear two or three different sets of clothes in any given day. As a result I’ve decided to make a pact that I will not buy any new pieces of clothing for six months except if I need to replace socks and underwear. Buying clothes will be strictly on a need-to-buy basis. This is the pact that I’m making as of Tuesday 13th September which means that the date from which I can start buying clothes is Friday 16th March. Watch this space to see how well I hold out buying new clothes.

You can take advice from others but with everyone’s circumstances varying to a great degree how applicable is their advice to your situation? The best thing you can do is inform yourself. I still forget that as great as the advice is that I get from personal finance blogs and my parents there is nothing that beats a informed decision. A decision that has been well-researched and takes into account my situation. I know my personal finance situation better than anyone ever could so why should I base my decisions on what others do? Recently I was debating whether to put my bonus (the amount is yet to be confirmed) into my pension. I have until August 25th to decide how much of my bonus I should contribute to my pension (0-100%).

When renting is smarter than buying @ Get Rich Slowly: This a topic that many people feel strongly about. Myths such as ‘you’re throwing money away’ tend to transpire when the discussion gets underway. Sometimes it can make more sense to rent.

Extreme Early Retirement in Practice @ Get Rich Slowly: I’m always keen for young people and graduates especially to take their pension and retirement seriously. If you’re not contributing to your pension yet when do you expect to start? This article will help to put things into perspective.

Why We Save @ The Simple Dollar: The simplicity of everything we do. Trent’s 5 year old is saving for a Nintendo DS. If a 5 year old can save surely anyone can?

Recently I went to dinner with a couple of friends that I grew up with and went to school with. After we finished our A-Levels we took different paths and 5 years on we’re discussing money or rather the lack thereof. One friend says, “When I get my pay packet everything goes towards the bills. I have nothing leftover,” my other friend chips in with, “I feel like I working to just live. I can’t have fun.” These comments are commonplace for people in my age group but also for the entire population of the UK. It’s sad to hear that my friends feel this way but it does seem to be something I’m hearing more and more. This group of friends blames the lack of a good income and argues that if they earned X amount a month that they would be more comfortable and also be able to save. Just a few months ago I heard very similar statements. Lack of money/income means that they can’t ‘afford’ to save. The difference though was that this was a group of friends earning way above the average UK graduate entry-salary (£25000). They said that if they earned X amount more a month that then they could start contributing to their pension and saving for a house.

The pattern that has emerged is that people are focused on the amount they earn and whilst earning any income is necessary to put money aside people are forgetting that this is just one part of the equation to accumulating wealth. Simply put: amassing wealth happens when people increase the gap between what they earn and what they spend. If they find themselves spending all their income on paying bills then there are three things that you need to question:

1) Am I getting the best deal from my energy providers and mortgage provider? (necessary expenses)

2) What am I spending money on? Are all these expenses essential or can I cut back somewhere?

3) Can I earn more money somehow?

As you can see from the three questions above the focus is placed on the ‘spending’ part of the equation. If the answer to question 3 is ‘no’ then it’s clear that you need to look at how your spending can be altered. How do you think when it comes to money? Do you constantly think ‘if only I had more’ or are you thinking ‘where can I cut back and start saving money?’. I guarantee that the former is one that most people relate to.