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Plan For prosperity - From The Independent On Sunday
This article was first published in The Independent On Sunday newspaper on Sunday 18th December 2005.
Matt's Question
Dear Fiona,
me and my wife have been married for 3 years now and we've both decided that we're ready (mentally not financially) to start a family. My wife will not return to work after having children as she's always wanted to be a full-time mum and I fully support her decision. Our main concern is that we will lose her salary (approx £25,000) and we have no substantial savings to fall back on.
We've become quite accustomed to living on a fairly decent joint salary (I earn £38,000) and whilst we know we can't maintain the lifestyle we've been used to I'm concerned that I alone, sometime soon in the future, will have to feed more than 2 mouths. Can you suggest any lifestyle changes, clever budgeting ideas that may help me in the future.
Matt, 38
Fiona Replies:
Hi Matt,
congratulations on your forward thinking. It's really quite unusual to see someone planning for such a life-changing event as having a baby. So, you're way ahead from the start. It's worth bearing in mind that plan as you might, there's no guarantee that your wife will want to be a stay-at-home mum just because it feels right now. But it's great to plan to have that choice rather than feel forced back to work.
Call me immature but I think it's far more exciting to think about ways of making money rather than ways to make do with less. It brings out our creative side. Let's think about that first off:
1. Assess your worth
Your most valuable asset, in terms of cash flow, is your ‘earning ability.’ You could lose everything you own – your house, your car, your job, your bank account – but as long as you still had your earning ability, you could make it all back and more. Take stock of your unique talents and abilities.
Your job is to identify your special areas of uniqueness and then to commit yourself to becoming very, very good in those areas. What is it that you do especially well? What are you good at? What do you do easily and well that is difficult for other people?
2. Money-making opportunities are everywhere
Necessity focuses the mind and gets the creative juices flowing more than comfort and coasting along. Now is the time to get thinking about turning some of yours and your wife’s combined wisdom and ‘earning ability’ into a money-making idea, in addition to your salaried jobs.
This can be a joint project that you research and begin now in your spare time that can be managed and monitored without too much hands-on involvement and gives you both the flexibility to do as little or as much as you want, and generates extra income.
This could be anything from a cleaning company, dog-walking agency, book-keeping service, whatever you can set up easily, imaginatively and can be run from home and in the evenings.
3. Plan for two pay rises!
Now that you’re aware of your stock and its value, figure out how can you offer additional benefits to your company in order to get not one, but two promotions and pay rises in as short a time as possible. Think about adding to their bottom line so that your increase is entirely and easily justified.
This is the time to get ambitious and move up that ladder two rungs at a time. You’re a young man with the incentive and wherewithal to get ahead.
4. Where does your money go?
Calculate EXACTLY what your monthly expenditure is. Begin with your direct debits; add your utilities, then your groceries, toiletries, eating out and socialising. Then take your big annual bills such as your car insurance, Christmas or holidays and divide them by 12 and add them in. List EVERYTHING. Overestimate if you are not sure. Knowing what you spend and how you spend per month is one of the most useful pieces of information you can have.
Decide where you can cut costs painlessly, leaving less of a shortfall for you to make up without your wife’s salary.
5. Curb your consumerism
Retail therapy offers a quick fix, a shot of euphoria that is over all too soon. The culture of earning more to spend more just doesn’t add up. And buying more stuff to store, tidy and take care of adds to the chores. Some of the most stressed people I’ve come across are folk whose wealth has cluttered their lives with too much stuff to watch over, protect and insure.
A simpler, pared-down life is much more refined and desirable. Think before you buy. Do you really need it or really want it or are you being persuaded that you do? Watch your motivation. Resist splurging to cheer yourself up or enhance your status. You don’t need things to tell you who you are or impress others, though some of the cleverest ad men in the world will disagree! Buy less and buy better.
A connoisseur doesn’t surround himself with masses of cheap tatt from third-world sweatshops, but carefully chosen objects that he cherishes and passes on to the next generation.
