You are here: Home » MASSIVE Winter Clearance SALE! » Finance for Women » Module 4: What suits you?

Finance for Women
Module 4: What suits you?

Welcome back to part 4 of Finance for Women. You are officially past the half way mark now and heading for the finish line. Isn’t that a great feeling?

So, how was your week?

I bet you had some interesting financial moments. I hope you also had some fun. We have probably disturbed some dormant money demons and you may even be feeling a little uncomfortable. That was the hard part. Stick with it now, at this stage you have done the nitty gritty work. Now we are going to start playing with the information to tailor it to suit your life more effectively.

Part One

How to be Your Own Financial Manager

This week you start to learn how to be your own “Financial Manager. That’s way more fun than just collecting data.

For example, now that you have all the information in front of you, you can play the “What if?” game. What if you spent more on x and less on y? What if you got a raise at work? What if you reduced your mortgage payments? What if you saved £1 per day? You just add or subtract the numbers to fit various scenarios to see what difference that would make to your financial picture.

In my experience, the missing factor with standard financial advice is just that…. it is standard. It is set. It is recommended.

And one thing we know for sure is that none of us ladies come in “standard”. We only have to look at the huge growth in the market of customized clothes and skin care for evidence of how we are demanding to be recognized as individuals. We love to fill our lives with flavours, with choices but most of all with personal tastes.

Another of the problems with standard financial advice is it’s longevity, or rather the lack of it.

How many times have you spoken to your bank manager or an Independent Financial Advisor and returned home with a document and great intentions only to put the file on the shelf and continue with your same old habits?

We might start out well, and tell ourselves that this time we’ll stick to the plan. Usually, the plan is some form of what I call a “financial diet”. We tell ourselves “I’m going to stop buying x, or cut down on spending on y, and I’m going to save (x + y) every month.” But of course the problem with diets is that they just don’t work. Or they work for a while and then we go back to our old habits and undo all the good work.

So if that doesn’t work, what will?

Part Two

Love What You Do

The key to longevity is loving what you do.

Imagine a diet where the first instruction was to make a list of all your favourite foods. And where the second instruction was that you must have a portion of all these items in your diet if you want to achieve your preferred weight.

Well, that is the approach we are going to take with your expenses. You are going to pick your own flavours, your own colours. You are going to build your financial profile around who you really are.

When we try to wear financial colours that do not suit us, we wake up the destructive emotions.

Guilt: I should have done it, but I didn’t
Fear : what will happen now that I didn’t…
Shame: I’m so useless I couldn’t even…
Resentment: it’s alright for him/her to…

These destructive emotions spoil our days, our health and our happiness.

A good plan, financial or otherwise, ought to inspire us and brighten our lives.

The key to making this happen is to make the plan suit our values. In financial terms, this means matching our expenses to the things that are important to us.

For example, take someone who loves to travel but spends a large chunk of her income on buying nice things for the house, maybe because the neighbours have nice things. The immediate gratification of looking at the new sofa and having the Jones over to sit on it will be very sweet. But the underlying dissatisfaction of not being able to afford the holiday she really wanted will continue to nag long after the buzz of the new sofa has diminished.

So, what is it that you really love?

Part Three

Think of one item that you own that you really love

Pick something that really makes you feel warm and fuzzy inside when you think of it. We all have something that we really feel good about and having it makes us feel good about ourselves.

For one of my clients that thing is a plain black, corduroy lined, DKNY jacket. She wears it regularly and has done since she bought it 2 years ago. There is nothing special about it. It is not particularly trendy and you could not tell whether it was DKNY or BHS. But what it is, is absolutely perfect for her.

A jacket may sound a trivial thing – but lets take a look at what it means in her life.

She values the environment and animals. The jacket is not made of anything that harms animals to produce and it is durable so she is not replacing it every year.
It is more important to her to be comfortable than to be trendy or glitzy. The jacket is practical.
She values her free time. The jacket is low maintenance, hard to dirty, easy to wash.
She travels a lot but does not like to pack or carry lots of luggage. The jacket can be worn with several outfits, it can be smart or casual, and it is light enough for warm climates and warm enough in cold climates.
She values value for money. She is aware that every purchase she makes has a time cost, that she has to work a certain amount of time to generate that money. Money wasted means time taken from her family and the other things she enjoys. The jacket was entirely within her price range.

It is no wonder that the jacket makes her feel good. Can you see how it matches perfectly with the things that are important to her?

Have you thought of an item that makes you feel good in lots of ways for lots of reasons? How would you like to have that feeling about everything you own and everything you do?

You can! What you need to do is to align how you spend your money with the things that are really important to you. And there is a simple way to do that.

Part Four

Introducing the 4 Way Plan

In the “4-way” plan you divide your expense list into:

“Must Haves (MH)”
MH’s are those expense items without which your life would not function such as food.
“Nice to Haves (NTH)”
NTH’s are those items that you could do without if you had to such as pot pourri for example.
“Investments (I)”
I’s are those items that you pay from which you get some kind of return such as pensions.
“Debt Repayments (DR)”
Monies you pay to repay debt such as loan payments or car payments.

The key to MH’s

We all have to pay our electricity bills and feed ourselves. And for some of you, you must have a car to get to work so your car, car tax and insurance are vital.

Less obvious yet equally vital to us ladies, as we discussed in lesson one, are some of those items that would definitely not make a standard accounting “MH.” Risking the wrath of the little men in grey suits, it has to be said, that equally important as feeding our bodies is feeding our minds and our spirit.

You can give me 3 square meals a day every day but if I don’t have a good book on the go life’s not worth living. I jest, but only just. It is absolutely true that key to my health is a monthly massage. It releases stress, unblocks pains, prevents illness, re-energizes me and is vital time out in this busy working mothers life. For me, a monthly massage is a “MH”. For someone else that may be a frivolity, for another person just once a month would be draconian.

The point is, you know what is vital to you.

We will all have similar lists up to 90%. The other 10% will be individual and reflects who you are and what is important to you. What must you have in order to feel that you are living and not just existing?

Enough information. It’s time to do. Lets get into this week’s action list and place another stake on your road to financial freedom.

Action!

Actions of the Week

1. The 4 way exercise

Take your expenses list from last week and do this “4 way” exercise.

First mark all your MH’s according to the notes in this lesson in one colour with a highlighter.
Then mark all your I’s in a second colour.
Next mark your DR’s.
The remainder are your NTH’s.

2. Improve your net income figure

Take your NTH list and go through them one by one.

Mark the items that you are paying for that no longer give you any pleasure or enough pleasure to make it worthwhile spending your hard earned cash on.
Mark items that you feel guilty paying for, (such as a gym membership you never use). And ask yourself on each item ” Is this item (or a percentage of this item) worth more than my future financial security?”
When you have examined how you feel about each NTH, make a list of the items you want to dump.
Add up the amount of money you will save by doing this. Congratulations, you have just improved your “net income” by this amount EVERY month.

Be flexible playing around with your expenses.

It’s a bit like shopping; you go into a shop, try something on, it fits or it doesn’t, you keep it or you don’t and you move on. Keep it as light and easy as that.

If you dropped your weekly mag off your Nice to Have list but find you can’t live without it, move it to your Must Have list. If you thought you couldn’t live without your ciggies but find that actually you’d rather put the money towards that round the world trip, change the numbers and see what that does to your financial picture.

Remember – YOU are in charge.

That’s all for this week. Of course I can’t stop you finding new ways to try out the latest seasons colours. It’s all very contagious this having fun with money.

Next week will be a lot of fun. Not only will you come inspired with a whole new perspective on your financial future from doing this weeks exercise, you will also be introduced to the concept of maximizing your income.