Financial lessons that I have personally applied
In every single financial advise that I have ever read, one of the points is always about budgeting. Unfortunately as I discovered early on, budgeting doesn’t really work for me. I am almost incapable of keeping track of my expenses on a daily, weekly or monthly basis. I start to do so with all good intentions but after a couple of months of jotting down everything, I tend to forget to do just that. So instead early on I adopted the envelope procedure.
Sounds funny? trust me its not. The whole process involves taking out all of your salary and putting it away in envelopes designated for different purposes. So we had an envelope for rent, one for utility bills, one for credit card bills, one for grocery, one for car & fuel expenses… you get the idea. We created envelopes as we needed them and added and subtracted between different envelopes as we went. One very good thing that came out of this is that we paid down the credit card debts and learned the hard lesson of living within our means. Paying in cash is actually quite a sobering experience, it gave us new appreciation & awareness of the value of things that we were spending our money on.
Once we had paid off our credit card debt however we switched tactics. My ex-husband and I went on our different ways to be traveled as we saw fit financially. So we dissolved the joint account, cut up the joint credit cards and ended the journey of having joint financial responsibilities.
The next tactic which stood me in good stead over the next decade of my career is “paying myself first”. It didn’t matter that I was stowing away peanuts, I still persisted in stowing them. I started with 500 Taka (not even 5 GBP) per month, soon enough I got to the point where I was saving 5000 per month on a regular basis. I increased the amount I save every time I got a pay raise. I also opened 2 bank accounts and maintained them completely separately. In one account I got my salary and I used the ATM card to withdraw cash as needed for expenses through out the month. The other account was purely for saving purposes, money went in but would not come out (except of course for dire emergencies – which were plenty over the years).
The advantage of online banking is that now my saving and current account are both with the same bank and the balance is always at my finger tip. The money is automatically transferred at the beginning of every month so I don’t have to physically go anywhere to ensure that I keep up my saving habits. Online banking also meant that once again I am comfortable using my credit card, I can check the balance at any time I want instead of getting a rude shock when the statement comes in. Another good thing is that being able to pay credit card bill online means that I can actually make several small payments as I incur the cost so that by the time the pay off date arrives, my credit card bill is completely settled.
So .. I might not budget but I do follow ONE golden rule “PAY MYSELF FIRST”. I save before I pay the mortgage or the bill or anything else and I insist on doing that month after month so that at the end of the year I’m pleasantly surprised by the cushion that I have created for myself and in times like this … that is a lot of peace of mind right there 🙂