This is an extract, taken from what I hope to be one day, my book. I hope you enjoy it! Let me know what you think. If there’s something you want to know about specifically, feel free to email me and ask.
Do you know how many lottery winners go broke within a few years of winning? 70%
Of them, how many do you think go bankrupt? 30%
To put that into perspective, going bankrupt means that you go so far into debt, that there’s no realistic prospect of ever being able to get out of it again in your lifetime. Just think about that for a second.
The reason why this happens is because they have no financial education and this is also why it is so important to learn about the game of money in order to win. Before I talk about saving and investing, we need to delve into some money psychology and basic finances in order to set ourselves up for success.
If someone wins a million on the lottery, or even gets a pay raise, what is the first thing people will ask? “How will you spend it?!”.
That’s because most people want ‘stuff’, not money. We’ll buy a house, a few super cars, a few exotic holidays for the ‘gram. Before long, that 1 million has gone. We can no longer afford to maintain the house, or the super cars, so we end up selling them off. And before long, we’re broke again and back to the 9-5 (that’s never actually a 9-5 but that’s a rant for another time).
And if you’re part of that 30% club, you’ll take out massive loans in order to try and stay afloat, it will dwindle, you can’t pay it back and then poof, you’re bankrupt. It happens to celebs all the time because they have no personal finance knowledge, and at worst, they pay for bad financial advice.
Nicholas Cage earned $150 million between 1996 and 2011 and still went bankrupt. He was not financially literate.
If only you had someone to teach you the game of money and how to win. Well, here I am! And let me tell you, the way you feel about money has nothing to do with how much you earn. I just want to point out at this point that I am not a financial advisor (neither am I a fan of them), I do not give financial advice, I’m just here to share with you what I have learned and what works for me. I just hope that I can help as many women as possible turn their finances around.
It’s usually ingrained in you from how your parents treated money. Quotes are drummed into our heads in our formative years such as ‘Money doesn’t grow on trees” or the often misquoted “money is the root of all evil”. The real quote was actually “The love of money is the root of all evil: which while some have coveted after, they have erred from the faith, and pierced themselves through with many sorrows”, taken from the bible (Timothy 6:10), which has a different meaning altogether really, doesn’t it?
My dad was an ‘expert’ in gambling, specifically horse racing. He thought he was going to get rich doing it. In reality he went bankrupt, the family house was repossessed and ultimately, he died broke and alone.
So what do you think I did when I turned 18? Miss independent here moved out as soon as I could and immediately got myself into an avalanche of debt. Banks were so free and easy with their credit cards and loans, until I couldn’t afford the minimum payments because of illness and job loss. When you grow up in survival mode and that’s all you know, it’s hard to break free of the curse. I’m not going to bore you with my poor me life story but I never really learned my lesson until I found myself pregnant.
So what did I do to turn my finances around? To be blunt, I sh*it myself that uddenly I had someone other than myself to think about and didn’t want to tell my child “no, I can’t afford it” all the time like I was told by my parents growing up. I began to educate myself. I spent my maternity leave as a low income single mother learning all there was to know about money. I mean, I work in payroll and I’m broke, not a good look is it? Quite embarrassing to be honest. In a few months, I paid off the last of my debts, built up an emergency fund, consolidated my old workplace pensions into one SIPP (Self Invested Personal Pension), set up a Junior SIPP, and a Junior ISA (Individual Savings Account) for my son and invested the lot into low cost, diversified index funds.
I also want to talk a little about lifestyle inflation. As soon as we get a pay raise we upgrade our lives; a nicer car, a bigger house, more expensive holidays. People who do this without first saving for their future, are not financially literate. Don’t keep up with the Jones’, they’re probably in a tonne of debt trying to look good. The average person spends an awful lot of money just trying to impress other people.
What was it that Tyler Durden once said? He had so many amazing quotes, I love the film Fight Club. I resisted watching it at first as I thought it was just about fighting, but it’s actually an amazing film. Here are some of his best quotes;
“The things you own end up owning you”
“Reject the basic assumptions of civilisation – especially the importance of material possessions”
“You’re not your job. You’re not how much money you have in the bank. You’re not the car you drive. You’re not the contents of your wallet. You’re not your f*cking khakis. You’re the all-singing, all-dancing cr*p of the world”.
“Goddammit, an entire generation pumping gas, waiting tables – slaves with white collars. Advertising has us chasing cars and clothes, working jobs we hate so we can buy sh*t we don’t need”.
“This is your life, and it’s ending one minute at a time”.
He’s right, this is your life, and now is the second best time to take action (after yesterday), after all, it’s ending one minute at a time. Choose your time wisely, you’ve made a good start by choosing to read this.
Now let’s look at some of the classic excuses for not saving for your future.
“I’m too old! There’s no point” some might say. Really? On average, people live into their 80’s. You don’t stop investing at retirement, you carry on. An investment is for life, not just until retirement! It’s not too late unless you’re dead, sorry. Someone who starts investing later on will always be better off than someone who never started in the first place.
“I’m scared of losing money, investing is gambling”. Don’t be, as long as you do it sensibly, the stock market has historically always gone up over the long term. Stock picking is gambling. If you pick one company and the shares go down then you sell it in a panic, you’ll lose money. But I’m not here to tell you to waste your time doing this. Remember, this information is intentionally being kept from you and made to look scary by the financial advisors so they can profit off of your fear and uncertainty.
“I don’t have time!”. Girl, send me a screenshot of the amount of time you’ve spent doom scrolling on social media in the last week and try telling me that again! Don’t worry, we’re all guilty, me included. With the right motivation, you carve out time, wherever possible. Once your system is set up and in place, you can spend less than 1 hour a month even thinking about it.
“I don’t have any money!” Perhaps you’re worried that I’m going to insist that you immediately start saving £500 a week or open complicated investment accounts with high minimum costs. Well I’m not. My own circumstances meant that I started from a low income level and you can too. I’d be lying if I said I had a lot invested, I don’t. But I know that by doing this, I’ll always be better off than those who never bothered to start. That’s why I created my spending planner so that I was able to identify and eliminate the things that didn’t provide me with value anymore leaving me with some money left to pay off debts, build up my emergency fund, invest and spend on things that are important to me.
Don’t underestimate the benefits of starting small, if you can start investing with just £50 a month, you can make mistakes without fear of completely destroying your savings. Once you get the hang of it and build confidence, you can invest more and take advantage of that compounding growth. If you start by investing £50 a month, in 10 years you’ll have £9,700.
“I don’t know where to start!”. Start here, today, with me, by reading this in full. You’re welcome.
If you want help with budgeting, you can get my free spending planner now by signing up to my newsletter where you’ll also get my articles a whole month before I publish them here! What are you waiting for, sign up here now! > https://laurenjohnston.co.uk
*Quick disclaimer – I am not a financial advisor, I do not give financial advice and you are responsible for your own financial wellbeing 🙂
Lauren <3