May

7

make choices without being constrained by finances

Filed Under philosophical | 8 Comments

So, the other day I was talking about how if you’re a stay at home parent, you need to do things to mitigate the financial impact of that choice. It’s not a choice that everyone faces (and I’m one of the people planning to avoid permanently). But, it’s an example of a wider principle.

There are lots of choices that we make that are chosen for reasons other than finance. We might decide to live in a certain location because it offers the social environment that we want. We might decide to get have a big party when we get married, because we want to celebrate with all our friends and family. We might decide to have children. We might decide to switch careers, because we don’t like the job that we do. The list is endless.

I hope that most of your big choices are not made primarily for financial reasons. I hope that you choose to live somewhere that you like living, I hope that you get married the way that you want to, I hope that you have a job that you enjoy, I hope you have children or remain child-free without being burdened by the financial costs. I hope that you aren’t forced into major life choices simply because you cannot afford your preferred alternative.

On the other hand, just as there are financial downsides to being a stay at home parent, so can there be to our other big choices. Living in a nice area is expensive in a continuous and ongoing fashion. Throwing a big wedding will probably cost thousands and thousands of pounds. Not every fun job is the highest paid. Children eat money - well they eat food, and food costs money.

For every choice you make that has major financial downsides, you need to mitigate against them. My mantra is that I can’t have my cake and eat it all at the same time. I choose to live on my own, but that means that I can’t afford a car, so I mitigate by living close enough to walk to work. I choose to travel extensively, but mitigate that by concentrating on budget travel.

If you want to live take a lower paid job, you’ll need to cut back on your expenses, and be willing to devote a greater proportion of your income to savings and investings. If you want to resume your studies, you need to investigate grants, scholarships and bursaries, as well as getting the best possible financial terms on your course. If you want to have a big fat wedding, then you need to save up for it, cut costs where they are not important to you, and focus on the most important elements.

Most choices that we come across don’t have a right and a wrong answer. It’s usually ok to decide either way. Be in a position to do what you really want, by mitigating against all the financial downsides of your choices.

Apr

25

boomerangs - try to get rid of them and they keep coming back

Filed Under philosophical | 13 Comments

Have you heard the term, boomerang kid? It’s what you call people that move out of their parents home (typically to attend college) and then later move back in. Presumably the will move out permanently at some point.

To be honest, I don’t really get it - but I know people that do.

There are two ways of looking at it. There’s the people that move back in after having been to university. I have to admit that this makes a lot of sense. If you didn’t acquire a job before leaving university, and your parents live in a place where there is a reasonably likelihood of getting a job, then it would be financially beneficial to move back in with your parents temporarily. If I hadn’t had a job when I left uni, I might well have been in this position. One of my siblings did this and spent five and a half years living temporarily with one parent, then the other.

On the other hand, there are the people that make a successful move (planned to be permanent) out of the parental home, and then come back again. I have another sibling that has done this. They moved away to uni, stayed in their university city after graduation for a year or so, decided they wanted to move back to London so moved home. About a year (or so) ago, they left home to move into a shared house (as is common with young professionals in London) and then just recently moved back in again.

I seem to be inherently suspicious of either situation if it extends beyond a couple of months. I guess that I place store on being independent and I’m possibly over aware of the affect that boomerang kids can have on the parents. My dad (the only one who would put up with this sort of thing) seems to enjoy having us kids around but I’m not sure what he thinks about having one of us back indefinitely. If it was a problem he wouldn’t say anything to me.

The drawbacks for the kid are that they remain cosseted. One of the things that Looby mentioned as being something good to come out of her college experience was that she learnt to live in a student hovel (not quite in those words). The later you experience life on the proceeds of a smaller income, the harder it is to adapt, and to realise that yes, this really is all that you can afford. It’s easier to avoid taking responsibility for your own life.

Then again, I can see it being ok if everyone acts and is treated like an adult. It can save money for the kid. Some parents enjoy having their adult children around all the time - and if they’re out quite a bit and the house is big enough, people need not get in each other’s way. If the parents are older, they may benefit from having some help around the house - especially with maintenance tasks and so on.

On balance, I’m negative about boomerang kids. That’s probably because it’s not the path that I chose, and I’m jealous of the money that people can save by moving back home. It would be reasonable to suggest that I could be more objective on this, so whether you agree with me or not, let me know what you think in the comments.

Apr

16

where you live affects how much money you have

Filed Under philosophical | 15 Comments

top of the gherkin jar

It should come as no surprise to anyone familiar with the property market in the United Kingdom, that it’s not a cheap place to live. In fact, it’s a pretty expensive place overall - the cheapest area of the country (the North) still has an average home price of about £150k (in US$ that would be $300k).

It’s not just accommodation that’s expensive. Having travelled a little and noticed that everywhere else, food and drink is a lot cheaper than at home, I think it’s pretty clear that it’s expensive in the UK. Cars are notoriously expensive - petrol is over £1 a litre (more than $7 a gallon), and that’s not even touching on the relative cost of more luxury items.

Still, there are more than enough upsides to living in the UK that I’m prepared to overlook the general cost of things.

One thing that might come as a surprise to some people is that I don’t live in London. I grew up in one of the London suburbs, but moved away to go to Uni. Never in a million years did I imagine that all these years later I’d still be here. I’d always dreamed of living in London, and I still do.

If I lived in London, I could live closer to my immediate family who all live within 5 miles of where I grew up. I’m a true city girl at heart, and although I do live in a city, it’s not quite the same as living in a major world city. London has better shops and bars, more free museums, a better transport system, it’s bigger and more vibrant.

It’s funny that now that I’ve bought a house, started to make it nice, and am completely not in a position to move, nearly every time I visit my family, or take a business trip to London (and these happen at least once a month) I wish, wish, wish that I lived in London.

The thing is, that even if it wasn’t ridiculously impractical to sell my house, I can’t afford to move down there. I’ve looked in the trade press, and I already know that I wouldn’t really make any more money living in London, and in the city itself there aren’t actually that many opportunities in my industry. Moving to London now would mean that I’d have to give up my dreams of working 4 days a week, my wish to travel, and owning my own beautiful little house.

Choosing to live where I do, is the more practical idea. It allows me to work towards more of my goals. It will help me to eventually become rich enough to retire. And it’s not like I don’t have a life here, I do. And I do like my city, I’ve put down roots that don’t want to be tugged up for no reason.

I’ve made a choice, and all I need to do is to remember that it is a choice that I own, and that it’s not a forever choice. I’ve always imagined that I would live abroad, and I’m only in my twenties, since I don’t plan on having kids there’s no time limit on that. If in 5 or 10 years time, I still want to live in London, I bet it will still be there. And I’ll have more money, and it might just be practical.

Where you live affects how much money you have to play with, and whilst extra money can’t buy happiness it can help you achieve your other goals in a less than perfect location.

Image by ThisParticularGreg

Next Page →