When you think of your current financial situation, how does it make you feel? Are you in a good place with your bank balance, income, and financial mindset? Or does it fill you with worry and dread whenever you need to log in to your online banking apps or pay a bill?
I used to fall into the second category. No matter how hard I tried, my income never quite matched my outgoings, and I was always just in the red. It wasn’t that I lived an extravagant life by any means, but I was never able to get an average paying job due to a lack of higher education. I was limited to minimum wage jobs and because I lived alone my outgoings were high just for the basics, because I didn’t have anyone to share the monthly expenses with.
When you’re stuck in a mentality of lack it can be difficult to see a way out, but I knew there must be a better way. So, I made a commitment to myself to work on my financial mindset. I had dreams of starting savings accounts, purchasing a home, and building an investment portfolio but until now I had never believed that I could do those things, so I set myself a challenge to turn my financial mindset into something I felt happy about rather than something that constantly worried me and caused me stress.
I knew other people that had mortgages, investments, and multiple sources of income so I knew that if it was possible for them, it must be possible for me too. It wouldn’t be easy but if I started being deliberate about all my financial decisions, I could make my money work for me.
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Learning to Budget
The first thing I did was to create a budget and I set a schedule to sit down every Sunday to go through the budget to make sure everything was on track and make corrections there and then if not. This habit quickly started to pay off. By doing this regularly I became more intimate with my money. I was more aware of my situation, and I was able to feel more confident about my finances and more in control than I had ever been.
By tracking my bills and my spending I could see where savings could be made and where I could switch suppliers to a better deal. With the small savings I made each month, I moved them into an easy access savings account and although it took time, they started to accumulate. It might not seem like a big deal in the grand scheme of things, but this was the first time I’d been able to make any kind of savings, so I knew I was making progress.
Becoming a Saver
As these small savings grew, I was able to use them to pay bills in full as they arrived instead of using payment plans. This made a big difference to my monthly outgoings as I was no longer using my whole income each month to pay down debt. This meant I had a small surplus of cash that I wasn’t accustomed to having. With this surplus I utilised the pay yourself first method and I deposited it into a CASH ISA every month.
As the months passed, I stuck to this method religiously. Slowly but surely the pennies turned into pounds, the pounds turned into hundreds, and eventually to my utter delight the hundreds turned into thousands. Now I really had the bug for saving but I was still worried that something unforeseen would happen and I’d be forced to spend it all on a big, unexpected bill which would send me back to square one, and I didn’t want to go back there, ever.
Even so, I had an uneasy feeling about the money in my savings accounts. While it was just sat there without a function, I felt like I was hoarding it because I was in fear of losing it all. So, I decided to give it a job. If the money had a specific purpose that could add to my newfound financial confidence, then I would feel more relaxed.
Investing for Beginners
The first thing I did was to set up a monthly direct debit into a personal investment plan via an online investment service. Investing a small amount monthly can help to be less vulnerable to market fluctuations and due to compound interest can lead to returns if invested over time.
The second thing I did was to open an Investment ISA with a small automatic payment each month. This had the bonus of the tax-free interest up to the current personal allowance of £1,000 annually.
The third thing I did was to open a Self-Invested Personal Pension (SIPP). This was a little trickier as being self-invested I had to choose the funds I invested in myself. As a novice this can be daunting but if you do your research, it is possible to make a choice that works for you, and you feel good about. I already had a workplace pension through my employer, but I felt I needed an alternative with a little more control.
The fourth thing I did was to open a Help To Buy ISA. This was a scheme run by the UK government designed to help you save for a mortgage deposit. This scheme closed to new accounts on 30th November 2019. It is no longer available to new customers.
Now I had regular payments going to different savings and investment accounts every month. I finally felt like money was working for me and my future rather than controlling my life and making me miserable.
My New Outlook
This process was by no means fast and has taken me several years but with some good financial decisions which I’m sure will bring me results in the future, I’m now confident about my finances and my financial mindset. Now my beliefs surrounding money are very different. I believe that with consistent effort and planning you can make changes that will improve your situation no matter how low your income is.
The Finance Industry is now more flexible than ever, and available to everyone regardless of your status. It is possible to invest just a small amount each month and there are products to suit all income levels and lifestyles.
I turned my situation around so that now I have an emergency fund, savings, personal pension, and several different investment plans. I’ve used a big portion of my savings to leverage my own business as a Mindset and Success Coach. I left my 9-5 job so I can concentrate solely on building a business for myself and increase my income without being dependent on an employer to provide me with a very low salary by exchanging time for money.
I never believed it possible that I could be a business owner with the opportunity to teach other women what can be possible for them. To give them the tools that will put them on a path to success. To help them establish new beliefs of what is possible for them and set huge goals for their future.
These are the six things I’d recommend you do if you want to take control of your finances:
1. Create a budget
2. Pay down debt
3. Set a savings goal
4. Build an emergency fund
5. Start investing as soon as possible
6. Do thorough research when making decisions and purchases
Mindset is essential if you want change in your life and there isn’t a quick fix when improving your finances. You need to plan and stick to your payment schedule but once you see the balance in your savings account growing, you’ll feel motivated to continue.
I used to feel stuck in my life, with no way out of my survival cycle until I realized, I can change my view of what’s possible for me. That I could transform my beliefs and I did have options. With the right mindset and an action plan, I was able to design my life exactly as I wanted it. There are infinite possibilities available to you when you start believing in yourself and have the tools to start your journey to a better life.
Ruth Cunningham is a mindset and success coach and the founder of Up and Up Life. The brand was created to provide a place where women can be themselves and realize their full potential.
Ruth helps women build the confidence they need to go after their dreams and live a life of freedom and independence on their own terms. Her primary focus is on empowering them to identify what is holding them back and giving them practical tools for success.