And yet, I feel like I’m matching the overall mood. I’m not so inclined to go out drinking, I haven’t eaten out nearly as frequently as I used to, I haven’t been to the cinema in months, and I am much less interested in international travel than I would normally be.

Some of this is because I feel the need to improve my house (to both increase it’s value and to improve it’s functionality as a home). I’m saving up for things like new bathrooms and boring fixes to the fabric of the place. I’m also trying to bump up my emergency fund - I never seem to get past the mythical £6k figure. (Around 4-6 months expenses depending on how frugal I could be.) And some of this might just be me settling down a bit as I approach my 30th birthday.

I’m thinking that on a personal note, it’s not so much of a bad thing if I’m spending less and saving (and investing) more. For the economy, as a whole, it’s not so brilliant - although the investing is good - but we’re in a bit of a prisoners’ dilemma. In any case, I’m not really cutting back deliberately, I’m cutting back because intuitively it feels the comfortable thing to do, and I can’t think of a logical or objective reason to spend more.

Is anyone else spending less in the recession for no particular reason? Or have you felt the effects more directly and are adapting? I guess it’s sort of consumer sentiment thing, but there must be a name for this sort of phenomenon. Let me know what you think in the comments.

food

The other day I was talking about the food that I eat. I really don’t enjoy cooking unless it’s for other people, and I live alone. This is a fairly recent thing for me, so to start with, even though I couldn’t be bothered to cook I would buy sensible, ‘make from scratch’ food - like fresh vegetables, minced meat, chicken breasts etc. Good idea, right?

Wrong. I basically wasted all that money, because I couldn’t be bothered to cook the food and had to threw it out. Instead, I’ve moved towards putting more emphasis on preparation time when choosing food. I’m doing what works for me, even if it isn’t ideologically the best thing.

cash and cards

For a long time my spending money has been placed into a separate account and then I’ve been spending it on a card, and rarely used cash. That worked for a long time, but I started to get slack and then the card rules changed, which meant that it was too difficult to track.

Although received wisdom says that you spend more money when it’s on a card, I used to live primarily on cash, and I’ve long known that it burns a hole in my pocket and slips through my fingers. Cards are normally a better solution for me, but I need to know how much money is left to fritter in the month, without having to look it up somewhere.

I decided to take the plunge and experiment with cash only. I started a couple of months ago, and it’s going fairly well. The way that I’ve made it work is to take out all the money I’ve allowed myself for the whole month (so that I don’t need to track withdrawals), and then ration it carefully at home. I basically limit the amount of money that I have on me to the minimum possible. I’m rubbish at delayed gratification, so I avoid daily challenges on the issue by removing temptation as much as possible.

what does it all mean?

For me, doing what works means being honest about my own limitations. It means accepting that I have both strengths and weaknesses, and doing what is needed to ensure that I don’t sabotage myself and my plans. It means being auto-magical because I’m lazy, and writing everything down because I’m forgetful.

One of my favourite quotes/cliches is that ‘done is better than perfect’. Life is more pass-fail than about scoring the highest grade for the neatest work. It’s about what you learn, playing to your strengths. I try as much as I can to drop pre-conceived ideas about what ’someone like me’ should be doing with their time and money, and try to do what I think will make me happy, and/or what will mean that I’m least likely to screw it all up.

What non-perfect tactics do you employ that work for you?

Now I know with my intellectual maths graduate brain that money is fungible - which is just a fancy way of saying that it’s all the same. £1 is worth £1, and $1 is worth $1.

But you wouldn’t think it to look at how I actually work. I own a house which currently requires:

• a small repair to the roof
• containment of the little shop of horrors backyard ivy
• gas fires removing
• maybe damp sorting out in the bathroom
• a new bathroom suite
• insulation in the loft
• a new front door

But, I went out and spent 2 years worth of earnings from this blog on a new (to me) oboe. Which is fine, because the oboe purchase makes me happy, but not so much, because it never occurred to me to spend the money on the house. In my head, I’d allocated blog money to the oboe fund and it couldn’t be spent on another purchase.

a useful mindset

In some ways, the idea that some money is different can be very useful. It can stop you from impulse spending money that’s set aside for another purpose. It can help you keep track of your goals.

In my case, whilst I didn’t need the oboe as much as I need to make repairs to the house, it was the first thing that I’ve really saved up for. As far as my learning and playing was concerned, I’d progressed well beyond the capabilities of the oboe that I was borrowing. Spending the money on a more sensible purchase would probably have been more grown up, but I’m not really all that grown up at heart. It didn’t work out too badly - at least I have something to show for my efforts.

or less than helpful?

On the other hand, if I’d thought about it, maybe I could have managed to squeeze out a new bathroom instead of the oboe (plus little shop of horrors and damp work which would be prerequisites). By not considering the money fungible, I didn’t give myself a chance to make that decision. I stuck to the idea that I had last summer, without re-evaluating.

This time, it hasn’t been the end of the world. Even if I’d thought about it, I might well have bought the oboe rather than been more sensible. Next time I might not be so lucky.

Do you tend to think of money as all the same, or as each pot having a specific purpose? Let me know in the comments.

and when the luck begins, it’s like a wedding,
which is like love, which is like everything.

Alice Oswald

Sometimes I think that for a single person, I find the process of planning a wedding a bit too fascinating. It’s just that they always seem to be like real life, but on a more confined scale with lots and lots of emotional baggage.

If you ever write a post on weddngs that attracts a significant number of comments you will probably hear the following:

• get an amateur or student to do the photography
• don’t skimp on photography - the photographs are the only thing that will remain
• use an iPod for the music
• don’t skimp on a DJ - the music is what will get people dancing
• cut back on the guest list
• save money anywhere but the guest list - it’s more important to celebrate with the people you love
• ask your friends and family to help with tasks
• don’t ask your friends and family to help - they want to be guests not working
• don’t serve alcohol
• no one admits this, but at least one person is silently thinking an alcohol free wedding is the last thing they’d want (it’s probably me)

It should be clear, that if you listen to everyone you can’t win. Different people have different priorities. Should anyone ask me what I think is important in celebrating a wedding, I’d go for food, drink, clothes (in that order), those are the things that I remember most. Photographs and music are reasonably important to me but I could be as happy with cheap or free as with expensive, and if there were no flowers I wouldn’t care one little bit. And maybe you do only do it once, that doesn’t mean that you want to be paying ofor it for years to come.

Weddings are like everything else. There are a few things that are fundamentally essential- a happy couple, a marriage licence, witnesses / officiant as per legal requirements. Everything else is just for frills. In real life, what couples should do is:

• work out a budget
• sort out the essentials
• work out what wedding features are most important to them
• put more money/time/effort into the important things
• cut back on the things they don’t care about

And they should do these things based on their own values, opinions and circumstances, not the word of an internet commentator.

But, as I said, weddings are like everything else. What we should be doing in our normal day to day lives is:

• set a budget - or at least know our incomes
• work out what things in life are essential and allocate money for those
• work out what things are important, and allocate money for those,
• put any money left over to the less important things.

The things that I think are most important for celebrating a wedding are probably not the things that you think are important (people rarely think that the clothes are more important than the photographer). But that’s ok because when it’s your wedding, you don’t have to do what I want.

Similarly, and fortunately with less stress and emotion, the things that you think are important in your life are probably different to the things that I think are important in mine. Not everyone is going to spend £2250 on a second-hand oboe, when they also need a new bathroom. (Since the shower in my bathroom is amazing, the oboe will actually make me happier.) For some of us, clothes are important and for others it’s eating out at fancy restaurants.

There are some things that we all need - things like food, and shelter, and a healthy savings account - but for most people they actually need only take up a very small proportion of our budgets. I could probably spend less than half the amount I actually do on housing if I hadn’t prioritised having my own house above other things.

Life is a balancing (or juggling) act. There’s never enough money to do absolutely everything. So you may as well prioritise the things that are most important to you, and spend your money, time and effort on those, rather than things that other people tell you that you’ll value.

my friends make more money than I do…

I just got off the phone with one of my closest friends. I guessed that she earned more than me these days because of the industry that she’s in and because she lives in London, but I didn’t realise it was as much as £10k more. She and her boyfriend are looking at buying a house and with some help from her mum, their budget is about three times as much as my house cost me.

I have to admit that I’m jealous.

I’m pretty certain that I’m not doing as well in the income stakes as many people I know. One of my other friends who is about 3 years older than me makes about £15k more than me. A guy I went to university with earns about twice as much as I do.

…but this is not really important

I’ve just accepted a new job, and it comes with a pay cut on paper. The overall package is actually very slightly better than my current overall package, and I even managed to negotiate the starting salary up by £1k (I knew in advance that there wasn’t going to be much wiggle room). But, when I was deciding whether or not to take this job the money was to a certain extent irrelevant because it was much more important that I choose the job that I thought would make me happy.

The only way I can do that is by keeping my spending as under control as possible. I’ve experienced a reasonable amount of lifestyle inflation since graduating. My spending has grown about 3% above inflation since I started my first graduate job, mostly because I’ve moved from a rented 2 bed flatshare to a 2 bedroom house owned and occupied by me alone.

Money isn’t everything, but keeping income and expenditure in balance is pretty important. Do that and you can build wealth, and happiness if you like, eventually.

For those of us who are not American, so don’t know (or care that much) about CNBC. Jim Cramer is a stock pundit with a show called Mad Money on America’s biggest financial news network. Recently, Jon Stewart of The Daily Show (satirical news chat show, catch it on More 4 at 8:30pm on weekdays), called out CNBC and Jim Cramer for giving poor financial advice particularly with regard to the failure of Bear Stearns, and Lehman Brothers.

It got me thinking about how you should treat financial news and personal finance blogs.

In general, I think that it’s quite a lot like sports news, and reporting.

the facts

Sometimes we write pieces that are explanations of how semi-complicated financial products work - a bit like explaining the rules of cricket, or baseball. If it’s factual like this, multiple sources should give the same answer (there is only one correct answer to the question what is the ISA limit for 2008-09). I personally trust this kind of information if I am of the opinion that the source is legitimate.

the received wisdom

Sometimes we write pieces that described received wisdom, like suggestions for getting out of debt, or investing responsibly for retirement. This is kind of like describing how you can train for the marathon. Whatever you do, the outcome isn’t guaranteed, and there is the real risk that you could injure yourself even if you follow the suggested path if it’s not right for you. Fitness advice and suggestions are often caveated with the statement that you should consult a professional before making any major changes. Similarly, good personal finance suggestions is caveated with the statement that you should consult an Independent Financial Advisor if you want advice specific to your situation.

Personally, I use the collective wisdom on stuff like this. If it seems to make sense to me, and everyone is saying the same thing, I take it on board. I can if I think it is useful for my own situation, and most of the time it is not.

the pure speculation

Sometimes we write pieces that suggest that a certain stock is good buy, or sell. This in my mind is like a racing tip, and no more or less likely to be accurate. It’s not that people giving stock tips don’t know what they’re talking about, but more that none of us can see the future, and they can’t be sure what’s going to happen, much like the pundits before a horse race. Personally, I don’t bet on the horses except for entertainment purposes (i.e. I expect to lose every penny I put down) and I feel the same way about stock tips. You should make up your own mind.

what about plonkee money?

I try to be as careful as possible to ensure that I don’t cause any harm with my articles. I want to encourage people to be more confident with risk, to work out what their actual risk profile is and use it to inform their investing decisions. I want people to understand how investing works, why debt is unhelpful, and how money is not something to be frightened of.

I don’t want people to read my posts, and think that I know what I’m talking about, because I don’t. I don’t want you to take my word for it - everything here really is for entertainment. It’s a blog, written by a regular English person, with a regular life. I want you to read as widely as you can, take into account your own situation and act sensibly. If I’m getting in the way of that, I need to know, before I’m on The Daily Show getting lambasted by Jon Stewart.

Now, I guess all the Mercedes owning readers get overexcited that they’re never going to reach middle age. The point that the author was trying to make is that when we are young, we have dreams about the things that we’re going to accomplish, and the stuff that we’ll have - we’re all going to be rich and successful etc, etc. But at some point we’ll probably realise that no, we’re going to have more modest and ordinary lives.

It sort of makes me think about lifestyle inflation. It’s reasonably easy for me to go without various luxuries - new clothes, expensive trips abroad, eating in posh restaurants - but I think that I expect to be able to do these some day. When I reach middle age, and realise that some stuff probably isn’t ever going to happen and that I’m probably never really going to be any richer, financially, will I succumb to lifestyle inflation then?

I know there’s that saying that Dave Ramsey fans are always quoting that goes something like:

Live like no one else will, so that you can live like no one else can.

Which is fine, but what happens when you suspect that no matter how much you live like no one else will, you’ll never really be able to live like no one else can? Perhaps, when you reach true middle age, that can be true and you make your peace with it. I certainly think it would help to have a fulfilling life in non-financial terms because nobody thinks money is everything, and being content with what you’ve got is easier when you have a rich life in intangible ways.

I don’t know. I get the impression that many of my readers are more mature than me, whether they are older in years or not, so why don’t you let me know what you think about contentedness in the comments.

Posts on other blogs that are related (in my mind at least) and certainly interesting:

• are we financially worse off than our parents? [Moolanomy]
• balanced living for today and saving for tomorrow [Paidtwice]
• is your life fiction or non-fiction? [My Two Dollars]
• developing a millionaire mindset [BripBlap]

Since I’m planning and hoping to remain child-free by choice, although I think it’s wrong, this attitude doesn’t bother me because I’ve already realised that I personally, can get more value from doing other things with my life. A couple of my friends however would desperately have liked to have children, but as single women in their early 40s have come to the realisation that it is unlikely to happen for them. Sure I think that you can have a great life without kids, but I don’t really like children. It’s much, much harder to enjoy being child-free when you hadn’t quite planned to end up that way.

I deliberately use child-free by the way because that’s how I see it - as a positive state rather than a negative one. And I do think it’s funny that natural selection is unselecting my genes.

Life without children is good for your finances. I don’t care how frugal you are, or how much harder you think you work, the fact remains that people, even fairly small people, consume resources and resources require money. Kids require educating as well as feeding and clothing, which to most people means being tied to an area with good schools (although home education has much to recommend it). Good schools cost money.

It’s often argued that being child-free is selfish. If you think about it, that’s trivially not true, but it is true that parents sacrifice time, money and energy for their children. I can see how one might begrudge the child-free their morning lie-ins and extra cash. But these are the consequences of the choices that we make, plain and simple.

The real problem with not having kids (aside from other people’s comments), is deciding what to do with all that extra time and money, of all the many things on offer. Just having kids can be treated as a bit of a pass on this front because the children effectively give you things to occupy your time, and then some.

But, even if you do have kids you are only putting off this decision until the time at which they leave home. And, as I remind my parents occasionally, just because you have kids, doesn’t mean your children will provide you with grandkids. With a bit of luck, eventually we’ll all have to find some kind of intrinsic value in our lives - not derived from any kids.

Thinking about what you want to do with your time and money is important, because otherwise you tend to waste it. And life is too short not to be as happy and content as you can be.

Currently, in the UK there’s a big furore over the recommendation of the independent advisory panel that ecstasy should be reclassified as a drug - it currently stands in the same group as heroin and crystal meth, and the advisory group have, upon looking at the evidence, suggested that it is not quite as dangerous as that. Now, in this circumstance the decision is entirely political. Ecstasy is nowhere near as addictive or as dangerous as most other class A drugs, but the chances of the moral majority believing that are remote to non-existent.

In a very different, but similar vein, there’s a lot of stress on banks in the UK not to pay out bonuses to their staff. Now, my company has a pay freeze and I do in many ways blame bankers for being the catalyst for our current problems, but some people who work for banks have contractual guaranteed bonuses. This means that if they are not paid, they are more than entitled take the banks (their employers) to court with, as far as I can tell, a reasonable chance that the bank workers will win. Wishing that the contracts were not written in this way, will not make it true.

It’s very hard to challenge our assumptions and beliefs, but it’s essential to do if we want to remain grounded in reality, if we aren’t grounded in reality it will almost certainly come back to bite us. i would very much like it to be true that I have a higher income, but that’s not the case. I can work to get a higher income, but really I should challenge the idea that having more money coming in would make me either happier, or richer, because in reality by itself more money isn’t enough.

There’s been a discussion on Christian personal finance books on The Simple Dollar.

As a matter of interest, Trent, who writes the Simple Dollar ,happens to be a Christian, if pushed I’d guess he was a liberal to conservative Christian. Of course, since that’s fairly mainstream American (especially in Iowa) as far as I’m concerned it’s the fringes that are having the polite and well-mannered interesting discussion on that particular post And the fringes are me (the atheist), glblguy and mbhunter (born again Christians - I think, and great bloggers).

is there something wrong with Christian personal finance books?

The issue at hand was why I don’t like Christian personal finance books, and my original statement is that I would like them a lot better if they didn’t:

1 assume that I was a Christian

2 assume that Christianity was self-evident

Actually, I think this about all religions (because I am a non-believer) and all media. I think it’s interesting that none of the Christian personal finance bloggers write stuff that I despise. None of them assume that the casual passer by on their blog *is* Christian - although they may state that only Christians are likely to be interested in a specific post - and as a result, they don’t generally assume that Christianity is self-evident. Once you’ve admitted that there are non-Christians, you have to admit that the whole thing doesn’t make sense to some people (even if you then think that they are misguided).

what makes a personal finance book good?

Now, broadening it out away from matters of religion, it got me thinking about what I look for in a personal finance book. I’ve found that where the worldview is completely at odds with mine, and it’s one that I can have problems respecting, I don’t find the book helpful. If it’s not helpful, then for me that defeats the object of a personal finance book. This rules out The Secret, amongst other contenders.

Another thing that I look for when I’m browsing in a bookshop are a good writing style. If it’s not easy to follow, then frankly I haven’t got the time. There are plenty of sources of information on personal finance that are a pleasure to read; I see no reason to waste my time on something filled with poor English.

At this point in my personal finance thinking, I don’t really need a book on the basics. I’m (strictly in a personal finance sense) well read enough that I know how to find any information that I’m looking for on the internet. What engages me more, is the sort of extended riff on a theme or idea. Books like Your Money or Your Life appeal because they are coherent, and different presentations on what money means in the personal context.

I also don’t need books primarily aimed at someone who is at a different life stage to me. Books of frugal money saving tips may be very useful, but if the majority of advice is aimed at people with spare time on their hands, or with children, then it’s not going to appeal to this family of one.

Overall I want a personal finance book that changes me - by altering my views, or perceptions or calling me to action. I don’t need my existing ideas confirmed unaltered - not that the book would be wrong, you understand, just that it would be waste of time reading it.

On the other hand I have to start from where I am, and so, to an extent, does the book. If it disagrees with my strongly held core personal finance assumptions then it had better have a stellar argument for that. If it disagrees with my strongly held core personal values of tolerance, fairness and equality, then it’s going to be kicked to the curb.

tell me about your favourite personal finance books

My requirements are vague and woolly - I know exactly what I’m looking for but struggle to describe it. What do you think about personal finance books? Where do they fit when there’s so much information readily available on the web, tv or radio? Do you have any suggested personal finance books that fit my requirements? Do you have any other books that maybe aren’t what I’m looking for, but could be just the thing for someone else? Let us all know in the comments.