Could the 5:2 money diet make you rich?
Debt can cause anxiety and stress but Alix O’neill discovers there are simple tricks which can lighten your financial mood
Last weekend, I set out on a mission to buy nursery essentials for my firstborn, who arrives in December. I came home not with baby grows and a breast pump, but with six champagne flutes and a Broste Copenhagen salad bowl. Given the drinking limitations surrounding pregnancy, the former was perhaps an ill-advised purchase. As for the salad bowl, I’d argue an injection of Scandi-chic is essential in any home.
But then my spending habits have never been particularly shrewd. I’ll opt for artisan bread over sliced, hop into an Uber instead of taking the bus, and every time I embrace a new interest, I’ll convince myself I must have the accompanying paraphernalia before I can possibly commit. I start each month vowing to live within my means, but before payday comes around I’ll have dipped into my savings to fund my bon viveur lifestyle. The shameful truth is, I’m 33 and have never managed to stick to a budget.
I’m not sure if this is reassuring or not, but I’m far from alone. In May, the Money Advice Service revealed that one in six adults is on the brink of being tipped into a debt crisis, and it’s not just poorer households who are at risk – debt charity Stepchange says most of those who approach them for help are employed, some in senior roles, while one in five owns their own home. Meanwhile, a survey last year found that a third of middle-class families would need to borrow to pay an unexpected bill of £500, and one in 10 couldn’t even rustle up a spare £100.
Thanks to parental help with a deposit, back when living in London didn’t require an oligarch’s income, my husband and I are lucky enough to own a small flat in the capital. We earn reasonable salaries and, between us, have modest savings. That said, as a freelance writer I have no pension (entirely my own fault – why invest in the future when you can have a Diptyque candle now?), am not entitled to maternity pay, and the precarious nature of my job means that work could dry up at any minute. Like many of my friends, I have a modicum of debt – around £1,000 on my credit card and a £500 overdraft. And while my pecuniary slovenliness isn’t causing me sleepless nights just yet, I have that unsettling feeling you get when your kitchen is ostensibly tidy, but the innards of your cupboards tell a different story. My financial house is in desperate need of the Marie Kondo treatment.
Psychotherapist Rebecca Mccann tells me: “Society has normalised a culture of immediate gratification, but our brains are simply not wired for the continual stress and anxiety debt can bring. It’s not about how much you earn – it’s about living beyond your means. Each splurge continues a cycle of unhappiness that can have a serious impact on physical and mental well-being.”
Wellness is big business. We’ve become obsessed with the pursuit of health and happiness, so perhaps it was only a matter of time before we turned our attention to cleaning up our spending, too.
Last week, the
Channel 4 documentary How to
Retire at 40 revealed the growing army of “super savers”, aiming to become mortgage-free in middle age by making prudent purchasing decisions. One particularly thrifty thirtysomething couple caught my attention, for squirrelling away an impressive
£14,000 a year by taking inspiration from the 5:2 diet.
Rather than indulging for five days of the week and being sparing for the remaining two, however, teacher Nicola Richardson, 30, and her partner, Dave, 34, flipped the plan on its head, and for five consecutive days a week they don’t spend a penny. Not on a single coffee, sandwich, travelcard or any other daily essential – which involves a level of weekend organisation that I’m not sure I could ever reach. Luckily, a plethora of mobile apps make tracking your spending as simple as your step count. Money Dashboard, for example, lets you view all of your incomings and out-goings in one place. It then cleverly groups similar transactions together to highlight exactly how much you spend – handy for shocking you into cutting back on eating out or taking your own coffee to work. Although attitudes towards money are typically fixed by the age of seven, according to the Money Advice Service, Lisa Conway-hughes, also known as Miss Lolly (misslolly. com), says there’s still time for me to temper my profligate ways. She advises me to set a “splurge” budget every month – “have a separate account for ‘fun’ and when this is gone, it’s gone” – and three pots of savings: a short-term cash savings account, an investment account for medium-term (5-10 years) and long-term savings, i.e. that pension. “You should be saving 10 per cent of your income and putting half your age (so 16.5 per cent, in my case) into a pension, plus set up all outgoings to leave your account on the day you get paid.”
After speaking to Ms Conwayhughes, my mood is lighter and my wallet heavier – I resist the urge to Uber home from book club that evening, saving myself a tenner. My financial house may not yet be clean, but those cupboards are starting to feel a littletidier.
All change: Apps can help divert ‘must-have’ indulgences into savings accounts and pension plans