Pay Yourself First

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Take a paycut and invest in your own financial futureA short post for this cold and wet Saturday afternoon.

To achieve financial independence you need to amass sufficient money/investment/assets to provide “unearned income” to replace your “earned income”.

Most will fail to achieve this in their lifetime simply because they spend first and then investment what is left (typically nothing!).

Those who build wealth know that you need to save first then spend what is less.

By effectively giving yourself a pay cut, say 10% of net income, you set this aside as your money for tomorrow. Only then do you spend what is left.

Whatever you decide to invest this money in, make sure it is taken from your bank account by Direct Debit immediately after payday, thus avoiding the temptation to spend it!!

Good luck 🙂

Do you wear a uniform to work? If so, here’s some free money!!

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I was reading an interesting article posted by Lee over at FivePencePiece – a UK personal finance blog – earlier this afternoon and I thought I would post about it here.

Lee posted –

“It’s not widely known that if you wear a uniform at work that you have to subsequently wash at home, you can claim a reduction in tax anywhere from £20 to £140 a year. The government will give you that figure every year to cover the expense of having to wash your own clothes! This is in more official parlance, termed the Fixed Rate Expense Allowance, which changes your tax code to increase your pre-taxable earnings.”

The HMRC (Inland Revenue) has published lists of occupations here which qualify for the Fixed Rate Expense Allowance. This is basically money you won’t get unless you ask for it – you are entitled to claim it if you fall within one of the occupation classes listed and have to wash your own uniform at home.

Visits Lee’s post to find out more details about how to go about making a claim for this money, together with a handy draft letter to request this from the Inland Revenue.

Five Wastes of Money to Cut Out

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As part of my ongoing frugal blitz of my finances I have now identified 5 things I waste money on on a regular basis which I will now cut from my expenditure going forwards. These are common items which most people will buy now or at some time.

By opting for an alternative I can save a considerable amount of money each month!

Pre-packed Sandwiches

This is big business – everyone is selling them – supermarkets, newsagents, petrol stations. I usually buy a sandwich for my lunch as there is a large supermarket near my office. When you add the cost of the sandwich, a packet of crisps, a drink and some fruit I am easily spending upwards of £5.00 per day for lunch.

A typical pre-packed sandwich will contain the following:

1 Slice of bread
Some margarine
A filling (normally more salad than filling)
Plastic packaging

From now on I will buy sandwich bags from the supermarket and make my own sandwiches.

Bottled Water

Crikey – this stuff is more expensive than petrol! If I am in dire need of buying a bottle of water I will always opt for the larger 1.5 litre bottles as the smaller bottles are prohibitively expensive in my opinion. I have invested in a water filter for the office and keep it in the fridge.

Monthly Gym Membership

I signed up for the local gym about 18 months ago and, at first, I was very regimented and went 3 times each week. The monthly subscription started at £60 per month, which, based on my initial usage was £5 per visit, which I considered good value for money based on use of the gym, sauna, steam room, jacuzzi and a few lengths in their olympic-size pool.

Time and work pressures mounted to a point were now I go one a week if possible – this works out at £15 per session which is not great – I have looked around and can get the same equipment at my local “leisure centre” for a third of the price – so I am cancelling my gym membership but will reinstate it if my use of the local leisure centre increases again in the future.

Extended Warranties

I, like many others, are offered extended warranties when I buy goods in electrical stores. I never take the extended warranty as I don’t personally believe they offer great value for money – I instead ask what the cost is and place that amount in a savings account – I have managed to accumulate over £1,400 in the last 3 years.

Instead, I rely on the Sale of Goods Act 1979 – all products should be fit for their purpose and of merchantable quality. I have had to argue on a couple of occasions with shop managers but both times I have managed to get my item replaced.

Newspapers and Magazines

I generally find that newspapers and magazines are filled with articles I am not interested in or page after page of advertisements. Knowing that the majority of magazines with low circulation make their income from selling advertising space rather than selling copies, many magazines these days seem to simply be a collection of adverts, interspersed with the odd article.

Any news in print is out of date! I can get instant news online and therefore have no need to purchase a newspaper any longer.

Can you think of any other wastes of money? Please add your comment below.

New passport fees announced – act now to save 7.64%

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The cost of a UK passport is to rise – by acting now you can save money on this necessary purchase – every penny counts in the current economic climate.

The cost of a 10 year adult passport will rise from £72.00 to £77.50 – a rise of £5.50 or 7.64% of the current price. This increase in price is due to come into effect on 3rd September.

The cost of a child’s passport will also rise – from £46.00 to £49.00 – a rise of £3.00 or 6.52%.

There is therefore a saving to be made by renewing or applying for a passport ahead of this price increase date on 3rd September 2009.

Did you know?

You do not have to wait until your passport expires to renew it – within 9 months of it expiring, any unused time will be carried over onto the new passport – renewing your passport.

More information on the price rise here.

Conclusion

Although it’s not a large monetary saving, renewing or applying for your passport before the 3rd September will save you from incurring the large, above inflation increase in passport price.