How many pay days do you have left?

“Better three hours too soon than a minute too late.”

— William Shakespeare from The Merry Wives of Windsor

If you’re planning on dying the month after you retire, then there’s no need to read on. But, if you want to actually live and enjoy retirement, this article is for you.

Let’s say you’ll retire at 65 years old. Today, that seems years away, decades away. You’re not even thinking about it. You’re currently doing your best to keep your head above water. You don’t have the time to focus on retirement. That’s for the future. That’s for old people. Once you get the latest financial emergency out of the way, you tell yourself, you’ll start saving for retirement. You don’t need to start saving now because your 65th birthday is a long way away.

But… is it?

I’m turning 40 soon. That means, if I retire at 65, I have a quarter of a century until it happens. A quarter of a century sounds like it will never come. It is a long time, but let’s start dissecting that time frame. A quarter of a century is 25 years. That means in those 25 years there will be 300 months. If you get paid monthly you only have 300 more pay days.

If you save only £1 a month, then when you retire you’ll have a measly £300. Maybe enough to get you through the first week of retirement.

If you save only £25 a month, then you’ll have £7,500. Better, but if you live until you’re 100 that £7,500 needs to stretch for a long time. Impossible.

If you only save £100 a month, then you’ll have amassed £30,000. Better again, but not enough.

£250 a month.£75,000. This looks better. But if you currently earn £37,500 a year, that means it will only be 2 years of your full time salary.

£500 a month, £150,000.

£1,000 a month saved will be £300,000 sitting under the bed. Better, again.

So what am I trying to say with this post?

Time is short, and time is running out. If you’re not saving then you need to start now, and you need to start saving big. The more you save now, the better it will be for your future self.

If you are in debt at the moment, then get that repaid immediately.

If you don’t have an emergency fund of at least 6 month’s worth of expenses, then get saving now.

If your expenses are huge then you need to reduce them now and free up that money to helping with the above points.

If you’re not in a workplace pension, get in it now, enjoy the tax relief and pump as much money as you can into the pot.

As the screenwriter John Hughes wrote in his film Ferris Bueller Day Off, “Life moves pretty fast. If you don’t stop and look around once in a while, you could miss it.”

On pay day

Too many people spend money they buy things they don’t impress people that they don’t like.

— Will Rogers

Pay day is the most important day of your financial month!

Here are some things I do on pay day to set me up for the rest of the month so that I don’t go over the limit of the spending planner.

Automate savings – You should have automation set up on your savings, and if you have it, paying off your debt too. As soon as I get paid I have a standing order that takes the money from my bank account and puts it into my stocks and shares ISA, which is held with Vanguard and I invest in one of their low cost index funds, I also automate the over payment of my mortgage.

Fill up the tank – To reduce expenses don’t own a car. Cars are a serious drain on your financial life. Just think, if you’re crazy enough to put a car on finance, please don’t, but if you did, you have the monthly payment along with the interest, plus you have monthly expenses like petrol, tax, insurance, and yearly expenses like MOT and service. And, all the problems that could go wrong with it, which will cost money to repair. A car is a money burner. Get a bike. I have a bike… And a car. Actually I have a SUV. Or the money pit as I like to call it. Anyway, I fill the tank up to the top so that I know, hopefully, throughout the month I won’t need to fill it up again, so I don’t need to think about petrol costs any more. There’s probably lots of studies about the optimum level of diesel in a tank to get most miles to the gallon, but I don’t have time for that.

A weekly/monthly shop – As I fill up the tank on the car, I then pop into the shops and get a weekly/monthly shop. I buy in bulk if possible, such as rice for the month, and if anything like toilet rolls are on sale I buy in bulk too.

Don’t spend – Then, once my savings have automatically left my account and I’ve filled up the tank and paid for shopping, I try not to spend anything for at least a day, and try and push that for as far as I can get it. The more days I go without spending the better it is for my bank account. If I’m really successful, and towards the end of the month I still have a good chunk of my spending money, unspent, I push a portion of that to my savings as a little bonus to myself for managing my money better. As Tesco say, “Every little helps”. And it sure does.

By doing the above it helps me to manage my money better during the rest of the month. I am able to work out how much I can spend and even break that down by day. It just sets me up nicely for the rest of the month. It works for me, hopefully it’ll work for you too.

What happens when you get rich slowly?

“Because no one wants to get rich slowly.”

— Warren Buffett

The answer to the question in the title of this post is simply, “You get rich.”

Jeff Bezos, Amazon CEO, and richest person in the world, asked the greatest investor in the world Warren Buffett why doesn’t everyone copy Warren’s simple method to investing and subsequently become the third richest person in the world like Buffett. Warren answered, “Because no one wants to get rich slowly.”

How true. In a world where food is delivered in minutes, we can fly to the other side of Europe in hours, we can watch anything we want in a couple of seconds and a couple of clicks, we can pop to the local shops and get the most exotic out of season fruit and vegetables 24 hours a day, we can see and talk to people in other continents as if they were in the room with us, as a society our patience is non-existent.

So if we decide one day we want to be rich, then we want to be rich that evening, or tomorrow at the latest. We don’t care if we’re drowning in debt, have expenses like an American socialite, and not a penny saved. We want to be rich, right now!

So instead of doing our research about how to become rich and finding out that almost every single rich person got rich slowly, we try and get rich with schemes like: the lottery, pyramid schemes, franchises, investing in individual stocks that we know nothing about, investing in bit coin or whatever is the latest tulip craze, gambling, stealing, selling Buckingham Palace to wealthy idiots who think you’re a member of the royal family.

Successful get rich quick schemes are as rare as men giving birth to chickens.

So, we’ve established that it is almost impossible to get rich quick, that then leaves us with only one alternative, and that is to get rich slowly. And how do we do that?

This is how:

  • Financial goals – set financial goals. How much money do you want, by when and how will you do it?Financially organised – get financially organised by knowing how much you receive in income, how much you spend in expenses, how much debt you’re in, and how much you spend with the money left.
  • Debt – pay off all debt as fast as you can. Debt is a right git.
  • Expenses – reduce or eliminate expenses, every pound you reduce an expense by, that’s another pound you can save to get rich.Save – set up automatic saving (standing orders) so that money leaves your bank account as soon as you get paid. The more money you can save, the quicker you’ll get rich.
  • Increase contributions – If you’re saving 15% of you net income, in a couple of months move that up to 16%. Then a couple of months later, 17%. Keep nudging it up as much as you can. And when you get a pay rise increase it again.
  • Increase income – ask for a pay rise, learn more skills, move jobs, get a second job, get a third job the earns passive income. Earn more and save the difference.
  • Invest – invest in the stock market every month, forever. Use low cost index funds like those provided by Vanguard or other low cost providers.
  • Own other assets – own rental properties or businesses to get other passive income.
  • Reinvest – Dividends you earn from investing should be reinvested.
  • Compound interest- as above. The rich person’s magic formula is compound interest. It means the money you earn in interest goes on to earn more money and then that money then earns more money and so on like that forever and ever. An army of money working for you 24 hours a day, every day of the year.

If you do the above, as the years fly by, you’ll discover all of a sudden you’re rich and you’ve enjoyed the process, which also gives you a path of how to continue to build and retain your vast wealth. People who get rich quick don’t understand about building wealth and retaining it. A shocking statistic I heard is that you’re more likely to go bankrupt when you win the lottery than you are if you never won it.

Get rich slowly. It’s a life choice.

Money means options

“Wealth is not about having a lot of money; it’s about having a lot of options.”

— Chris Rock

If you have no savings, or worse, you’re in debt, then your options are limited. Really, you only have two:

  • Option 1 is you be a mug and continue to not save and continue to burrow further and further into the rabbit hole of debt.
  • Option 2 is you set yourself financial goals, you get financially organised and see what is coming in, what is going out and how much debt you’re in. Then you do everything you can to pay off the debt as quickly as you can, and you build an emergency fund of 6 months’ worth of expenses.

If you choose option 2 and become debt free and have a full emergency fund, then you have a lot more options.

You can have fun options, such as you save for a lovely holiday; or save and buy outright a cheap, reliable second hand car; or save up and take a year off to travel Australia; you can save up and have a plentiful Christmas with friends and family.

You can have the sensible options, which is my choice, such as increase your savings rate, invest in the stock market using a low cost index fund from companies such as Vanguard, you can take a higher paying job that enables you to save more money, you can think about your future and start saving for retirement as those days are approaching quicker than you think.

With money comes options. Being debt free and having an emergency fund of six months’ worth of expenses will put you in the minority tier of the population, as people with no debt and an emergency fund are rare indeed. The majority of the population are in debt or drowning in debt and have little to no savings. Remember, 22% of UK adults can’t get hold of £100 immediately. That’s a worrying situation and best not to be one of those adults.

Pay off debt, save six month’s worth of expenses, then go outside and you’ll notice the sun is brighter and warmer, the breeze is cool, the trees are greener than normal, birds sing louder and people notice you because you’re smiling confidently, as if you are worry free and debt free. That’s the power of being out of debt and having an emergency fund.

Money really does mean options.

The Weekend Millionaire

I love money. I love everything about it. I bought some pretty good stuff. Got me a $300 pair of socks. Got a fur sink. An electric dog polisher. A gasoline powered turtleneck sweater. And, of course, I bought some dumb stuff, too.

—Steve Martin

When pay day strikes, for a lot of people, it feels like the moment when a drowning man surfaces, gasping for air, knowing, finally, after all this time of drowning, he can live to fight another day. In financial terms when pay day lands, the person who had no money gets a satisfyingly large boost. If pay day falls on a Friday, then it’s a hedonistic riot.

What often happens to the majority of those living pay day to pay day is that the first thing they do when waking on Friday is treat themselves to a nice cup of tea and a pastry at the coffee shop near work. Then at lunch they reward themselves to a slap up lunch in a fancy pub or restaurant. They have a couple of drinks straight after work as they’re out with their colleagues in the pubs and bars. Hours later they stagger out the pub, stumble to a night club and buy rounds for everyone. As the night fades into the early hours, they grab a kebab and chips, and plonk into a taxi to get them home.

On waking Saturday lunchtime they’re starving and take another taxi back to town to have lunch in a restaurant. The afternoon is spent shopping for consumer junk, just an excuse to sweat off the booze they tell themselves. In the evening, friends come over, a Chinese takeaway is bought and a mate remembers boxing is showing on pay per view, only £25! They buy the contest and made a raid on the off licence to purchase enough booze to get them through to the fight at four in the morning that lasts only two rounds, which they never saw as they’d been having too much fun boozing.

Sunday morning is a two day hangover and only a full English breakfast at a cafe can sort that out. After, they go to a multiplex cinema, pay weekend prices for the film and buy buckets of Coca Cola and popcorn. After the film there’s one hour left until the shops close and they really need a new something which they didn’t buy yesterday. In the evening, too exhausted to cook, they order a pizza, only a small one and eat in front of the TV.

Monday rolls around, they wake more tired than before they went to sleep. When they check their bank account they notice two things.

  • They haven’t paid a single bill, paid off a single debt, or saved a single pound.
  • They’ve just finished having the weekend millionaire experience.

Total cost of their weekend millionaire experience: approx £330, depending on booze level.

Now let’s look at those who don’t live pay day to pay day. How do they act when pay day lands on a Friday?

  • Pay themselves first. They pay at least 10% to their future in a stocks and shares ISA via Vanguard, in a low cost index fund. Of course they pay themselves much more than 10%.
  • They pay all their expenses, electric, gas, mortgage/rent etc.
  • They eat breakfast at home and bring in their lunch.
  • They go out for after work drinks, but drink water as tomorrow they have an early run.
  • They cycle home rather than take a taxi.
  • They eat dinner at home.
  • The next morning they have breakfast at home then later go for a run.
  • After lunch they meet friends in the woods and have a hike. They cycle to the woods and don’t have to pay for petrol or parking in the woods’s car park.
  • Late afternoon they open their rucksack and eat their dinner they prepared.
  • In the evening friends visit. They share a reasonably priced wine.
  • Next morning, again, they eat at home for breakfast and lunch.
  • The afternoon is spent in the garden, attending their organic vegetables.
  • The late afternoon and evening is spent in the garden reading the latest library book.

Total cost of their weekend millionaire experience, not including food as it was already purchased: 1 bottle of wine, £20, shared between 3 people, £6.66.

£330 compared to £6.66 is a huge difference in money. It is also vastly different between spending the next three weeks worrying about money or not giving money another thought as you know you’ll have plenty left at the end of the month. It is also vastly different as the money blown on the first person’s millionaire weekend is money that’s not being invested.

Put £330 into a Vanguard low cost index fund every month, over 20 years at 8%, and that millionaire’s weekend costs over £187,000!

So think again the night before you get paid. Hold back on that first weekend after pay day. Maybe even pretend it didn’t happen, which results in you finding alternative, healthy, and free ways to enjoy yourself on that weekend.

Murder your expenses

The stuff you own ends up owning you.

— Chuck Palahniuk from his debut novel Fight Club

Decreasing your expenses increases your saving rate power.

Income is money coming into your bank account. It’s your salary. It’s the rent your tenant pays you to live in your rental property. It’s the dividends that companies pay you for owning a share in their business via the stock market. It’s the money generated from other businesses you have. Income is a good thing.

Expenses are the opposite to income. Expenses take money from your account. Expenses are also known as outgoings or liabilities.

The trick to getting rich is increasing your income and reducing your expenses. The more money you have coming in and the less money you have going out results in a surplus of money in your bank account which you can do something with. Such as:

Debt – You can pay off more debt, if you’re still in debt.
Emergency fund – You can save more in your emergency fund until you get six months’ worth of expenses saved up.
Savings rate – You can increase your savings rate and put more money into the stock market to buy more units of low cost index funds, such as the ones Vanguard offer.
Pension – You can add more money to your pension every month to save for retirement, which results in reducing the tax you pay.

Increasing income is achievable; you can ask for a pay rise, you can find a different job paying more money, you can start a small passive income business; there are a number of options. But maybe at this current moment those options are not available. One way to create more surplus money each month is to reduce your expenses.

Reducing your expenses is in your control.

There are two types of expenses.

Fixed expenses – these are usually monthly expenses, such as gas and electricity, mortgage or rent, gym membership, Netflix, curry club monthly dinner, council tax etc.

Discretionary expenses – lunches, petrol, Friday night drinks, visiting the pictures on a Sunday afternoon when it’s raining, buying a new pair of shoes, the daily Mars bar.

What you need to do first is write out all your fixed expenses, down to the last penny. A good document to use is Pete Matthew’s Meaningful Money Budget Planner. Here you’ll be able to plan your entire financial life on a single page. Also, he has a brilliant podcast, that I thoroughly recommend, and an amazing book.

Once you have all your fixed expenses written down, put them in order from highest amount at the top to lowest at the bottom. Take a look at the total amount of what all these fixed expenses equal, I bet it’s a high figure.

Now for the fun part. Your job is to remove or reduce these expenses from your life.

To remove the expense ask yourself a couple of questions, such as when did I last use this product/service and what value is it bringing to my life? An example is Netflix. If you haven’t watched Netflix this month then go to your Netflix account and cancel it. That’s at least £8.99 a month saved from now on. That’s a whopping £107.88 a year. Over 10 years that’s £1,078.88 saved. The famous blogger Mr Money Mustache has a great calculation for monthly expenses. He likes to show you how much an expense is costing you, rather than investing that money in the stock market at 7% compounded. He takes a monthly expense and multiplies it by 173. So if you invested your £8.99 Netflix subscription into the stock market over 10 years, it’s actually costing you £1,555.27! Netflix has some really great content, but even having Nicole Kidman and Leonardo DiCaprio acting live in your living room isn’t worth £1,555.27. If you don’t use it, remove it.

Removing expenses is easy, as you just cancel the product or service. But what if you need the product, such as electricity? Most of us can’t build a solar panel station in our garden to power our homes with electricity. What you can do though is look for a different provider that offers the same service or better, at a lower cost. Use comparison websites such as Money Savings Expert to get information about the best deals. Or simply call your provider and ask for a better deal. Tell them you are considering leaving and want to know what deal they can offer. Always ask for a ridiculously low price, they can either say yes, which is great, or they can talk you up slightly, and it’s still great as you’re still paying less. Or they can say no and you move to one of their competitors and put a nail in their coffin.

This exercise should be conducted regularly as these providers have a sneaky way of nudging up the prices by a pound or two every six months, So, if they can raise them you can also reduce them. You can also do this with debt, especially debt such as credit cards. Call your credit card company, tell them you want to move your debt to another credit card company as they’ve offered you a 0% interest rate for 3 years and ask your provider if they can offer something similar. It costs these companies thousands of pounds to get a new customer. The last thing they want to do is lose an existing customer. If you can get even 12 months worth of 0%, that gives you a full year where you’re not paying interest on the debt, so you can overpay on your principal for that year and get out of debt faster.

Discretionary expenses takes a little more skill. First of all you need to know what you’re blowing your surplus money on. Is it cakes or cups of expensive tea? Is it a vinyl record habit you just can’t quit, is it getting the odd taxi to work when you get up late, is it buying pay per view boxing matches that make you wait up until four in the morning and are over in the first round, is it that three in the afternoon packet of £1.50 crisps that you buy every day?

Whatever it is, you will first need to track your discretionary expenses. Do this for a month, write down every single thing you buy, you can use a credit card or debit card for this and tot it up at the end of the month, but I find writing it down manually either on paper of tapping it into my mobile telephone works better as there are some things that don’t accept credit cards, like the vending machine at work.

Once you’ve tracked how much you spend at the end of the month add it all up and categorise the items, such as any snacks you purchased, call that snacks; any meals out in restaurants, call that restaurants; or however you want to word it. The trick is to group expenses so you can see where the damage is. If you’ve blown £400 in restaurants this month, then immediately that’s a discretionary expense you need to cut. Instead of eating lunch in restaurants five times a week, cook more food at night and bring the leftovers in the next day for lunch. If you buy a tea at an expensive coffee shop in the morning, bring your own tea from home in a thermos, or buy a box of teabags and leave them at work, if, or course, your company doesn’t supply teabags. And if they don’t supply teabags, get out of there quick! There’ll be no huge pay rise coming your way.

Once you cancel or reduce your fixed expenses, and stop or reduce your discretionary expenses you’ll find you’re floating on a sea of extra money that can go to paying off debt quicker, building your emergency fund of six months’ worth of expenses or investing in your pension or the stock market for later in life. And that’s not a one off thing, that surplus of money will be there every month. Your job is to put it to use. Make it work for you to earn more money.

One analogy I like to use is imagine your bank account is a bucket. When you get paid you fill it with water. Each expense is a hold in the bucket and the water trickles out. If you can plug those expense holes then more money will stay in the bucket until one day it overflows out the top rather than through the holes.

Murder those expenses, because they’re doing their best to murder the financial you.

Ready, aim, fire!

You must give a lot of thought to money and finances or you will have shortfalls and problems in these areas all your life.

— Brian Tracy from his book Goals!

At the beginning of your education to become financially aware, the first thing you need to do before you start planning & organising, before you build an emergency fund, before you create, monitor and stick to a spending planner, before you repay debt, before you get protection (life insurance, critical illness, income protection), before you focus on your pension, and long before you start investing, the first thing you need to do is set a financial goal or goals.

What is a goal?

I think most people understand what a goal is, but for my benefit, let me state it. A goal is something you want, which you don’t have now or you haven’t done yet. A really sexy goal, for this example only is, on Saturday morning, when I wake, I set myself a goal of cleaning the bathroom. Rock ‘n’ roll, right? Gonna live forever… in that germ free, heavily bleached bathroom.

Let’s set another goal. From today to 30th of September, I am going to run one mile a day in order to lose 3 pounds of weight.

Last one. Every Sunday evening, I will write two thousand words of a novel, which will result in one hundred and four thousand words after a year.

I think the majority of us set life goals without realising, such as cleaning the bathroom. A big portion of us set goals at work with our boss. We set goals at the beginning of the year and track them on a regular basis. Why? Well, that’s easy. Your company gives you money to do stuff. They want you to do the stuff that will help them. They want you to keep doing the stuff to help them by you staying on track, resulting in them getting stuff done by you. Elegantly put.

Oddly, I find I stick to my work goals much more than my personal goals. When I asked myself why, I discovered three reasons, which, when they were told to me ages ago, I thought the wisdom of some poor goal-training expert my employer hired for the day was chatting utter nonsense. But, in hindsight, it’s true. I stick to my work goals more because:

  1. I actually write them down and keep a copy of the goal
  2. I regularly check in/track how I’m doing against the goal
  3. I told one person (my boss) about the goal and feel I’ll let them down if I don’t achieve them

I want to be rich

You might have said this to yourself, or heard people say it, but how do you become rich? If you’ve said it to yourself, why aren’t you rich now? Try to answer the below questions.

How did Andy Murray win Wimbledon? How does my neighbour’s garden look so perfect? How did my employer become so successful? How did my doctor become qualified? How did England win the cricket world cup?

Answer: Goals!

All of the above had a clear goal, a target, something to strive for and achieve.
Yet with money, we never set goals. Why is that? We have these pie in the sky goals, such as become rich, own a mansion, win the lottery, but nothing concrete, nothing specific or measurable. Nothing we can return to monthly, weekly, even daily and keep financially focused.

A financial goal

A financial goal is the same as a work goal or a personal goal. You think what you want. “Want” is the key word here. Once you know what you want, then you write it down, then you decide whether it’s achievable, then you figure out how to achieve it.
Example of a financial goal: I want an emergency fund of £1,000.Another example: I want to pay off my credit card balance of £500.

Other financial goals

This list isn’t exhaustive, but some things I thought of.

Repay credit card debt
Increase credit score
Increase income
Build an emergency fund
Stop wasting money
Save for a house deposit
Repay loan
Understand tax
Retire early
Invest in the stock market
Reduce expenses
Learn how to create a spending planner (budget)
Leave your family financially free
Buy life insurance, critical illness and income protection
Stop borrowing from friends and family
Save every month
Pay for a holiday
You get the idea, right?

S.M.A.R.T. goals

Sorry everyone, I’ve gone all corporate. In the dreadful world of business there’s a concept of S.M.A.R.T. goals. It sounds rather pathetic like all the other acronyms, and it is, but actually, it’s not bad. It’s difficult sitting on this fence all day long.

Smart goals stand for:

If you Google them, or Bing them, haha, you’ll see different variations of the naming conventions for each letter, but they’re all the same.

Below is an example of a S.M.A.R.T. financial goal I did with someone I was money coaching. Their smart goal was to, “Save £2,000 by 05/04/2020 in order to begin building an emergency fund.”

Let’s do some groovy analysing here, shall we?

Is the goal specific? – Yes. It states an amount, a due date and a reason for doing it.

Is it measurable? – Yes. We can measure the amount of money relevant to the amount of time to save in.

Is it achievable? – Yes, but. This person who came to me for money coaching was dreadful with money. Yet they earned around the average UK salary, didn’t have any children or huge amounts of debt, still lived at home. So yes they could achieve it.

Is it relevant? – Yes. The person wanted to become financially aware. They were sick of living pay packet to pay packet and having nothing to show for a month’s worth of work apart from owning family and friends money.

Timebound? – Yes. Last day of the tax year, 05/04/2020.

The other financial goals the person had was:

  1. Repay debt (£2,500),
  2. Improve credit score from very poor to poor (It’s a slow process, but a good one).

Setting the goal(s)

You’ve got to find your want, whether it’s building an emergency fund, repaying debt, buying a house, retiring, whatever it is. Until you know your want and can produce a financial goal, you have nothing to aim for. It’s like getting in your car and just driving, it might be fun for a while, but you end up lost.

Staying the distance

Now that you have a financial goal, what do you do with it?

  • Put is somewhere where you see it often, could be on your phone, print it off and put it in your wallet, tape it to your kitchen cabinet.
  • Make scheduled appointments to revisit it. In the first two months, revisit it at least weekly. Then, if you’re sticking to it correctly, maybe reduce it to fortnightly. Monthly is too long. Remember these are short term goals, under a year. So fortnightly would mean your look at it at least 26 times in that year.
  • Tell one person. Don’t announce it on social media.
  • Track it. Every week, or every fortnight, track how well you’re achieving the goal, write down your progress.

When financial goals go bad

Occasionally, as you aim to achieve your financial goals, you might be not performing as accurate as you would like. There are a number of reasons for this, here are some of the common ones:

  • Your goal is un-achievable in your current state. This means you’ve set your goal too high. You will need to revisit your smart goal and make it achievable.
  • You’re not focused enough. This means you’re not ready to become financially free. You like the idea, like learning French, but you’re not committed enough. You maybe should change your goal. Reassess why you’re doing this. Like going to the gym, if you don’t want to go for you, then go for your family (guilt). Make your goal smaller. Maybe the size of it stops you doing it. Saving £100 is easier than £10,000. Then when achieved the smaller goal, create a second goal a tiny big bigger.

A financial emergency has happened

This is something like you lose your job, your boiler blows up, your car dies. An emergency fund will squash this and not impact your financial goal.

If you don’t have an emergency fund, yet, then there are two choices.

The first is you miss this week or this month’s contribution to your financial goal and you extend your smart financial goal by a month. Emergencies rarely happen, and often not twice in a year.

The second option is you make further sacrifices to keep financially focused on your goal. So if you drive to work and it costs £50 a month, you cycle until the next pay day. If you buy a tea and a croissant for breakfast every morning, that month you eat at home. You have a seriously frugal month. Plus, all that cycling and not eating crap will do wonders for your health. Why not keep it up and get healthy and save money? Double bubble!

No matter what happens, if you stay financially focused then you’ll weather the storm and continue to achieve your financial goal.

When you achieve that goal

There’s not many better feelings than achieving your financial goal. You worked hard, stayed focused and made sacrifices. You deserved to achieve it.

When you achieve the goal do a couple of things:

  • Give yourself a pat on the back.
  • For 5 minutes or so, analyse how you did it. What was easy, what was hard, where could you have improved, what would you do different now you have the knowledge and experience of doing it?
  • Inform the person who you told about the goal that you achieved it.
  • Lastly, either extend this goal and push yourself a bit further, such as you now save £5 more a month than you did, or make a completely new goal and use the knowledge from achieving this goal to your new one.


  • Financial goals help you to stay financially focused.
  • Without financial goals it is almost impossible to become financially free.
  • Financial goals can be constructed using a number of methods, S.M.A.R.T. goals are a good methodology, millions of office bods can’t be wrong, right?
  • Constant check in and tracking of your goals is needed, either weekly or fortnightly for short term goals.
  • Make sure you tell just one person about your financial goal so that you are held accountable.