ARE YOU AN OSTRICH WHEN IT COMES TO MONEY PROBLEMS?

HOW TO MANAGE YOUR MONEY BETTER

BEHAVIOURAL ECONOMIST PROFESSOR IVO VLAEV OF WARWICK BUSINESS SCHOOL TALKS TO NIKI CHESWORTH ABOUT HOW TO IDENTIFY YOUR MONEY TYPE. MOST OF US FALL INTO MORE THAN ONE CATEGORY, BUT TRY TO FIND THE TYPE THAT CLOSELY MATCHES YOUR ATTITUDE TO MONEY…

1. THE OSTRICH

WHEN FACED WITH A FINANCIAL DECISION, DOES YOUR MIND GO BLANK? YOU KNOW YOU NEED AN ISA BUT YOU DON’T KNOW WHERE TO START? WHEN YOUR EMPLOYER GIVES YOU A CHOICE OF PENSION INVESTMENTS, DO YOU SCARCELY READ IT OR JUST OPT FOR SOMETHING SAFE?

POSITIVES YOU ARE NOT GOING TO LOSE ANY OF YOUR HARD-EARNED CASH ON A GET-RICH-QUICK SCHEME – IT’S ALL SAFE IN THE BANK.

DANGERS FEAR AND APATHY STOP YOU FROM DOING ANYTHING TO MAKE YOURSELF BETTER OFF. YOU MIGHT BE MANAGING YOUR MONEY TODAY, BUT YOU ARE NOT MAKING THE MOST OF IT FOR TOMORROW.

NEW HABITS YOU NEED TO GET INTO THE HABIT OF REGULARLY CHECKING YOUR BANK ACCOUNT, CREDIT CARD BALANCES AND YOUR SPENDING. ALSO MAKE IT A HABIT TO CHECK YOUR CREDIT REPORT EACH MONTH WHEN YOU GET PAID (TRY NODDLE.CO.UK, A FREE-FOR-LIFE CREDIT REPORT, AND YOU CAN SEE A SNAPSHOT OF YOUR FINANCES). BY SEEING EXACTLY WHAT YOU ARE SPENDING, YOU WILL HAVE A DAILY REMINDER WHEN YOU OVERSPEND. TO LEARN HOW TO PLAN YOUR FINANCIAL FUTURE YOU DON’T HAVE TO BECOME A FINANCIAL GURU. TAP INTO THE EXPERTS INSTEAD. GO TO SITES LIKE NUTMEG.COM, BESTINVEST.CO.UK OR HL.CO.UK AND CHOOSE A SAMPLE PORTFOLIO (PROBABLY CAUTIOUS), AND START INVESTING A SMALL AMOUNT EACH MONTH. AS YOU BUILD YOUR CONFIDENCE, YOU CAN INVEST MORE. IF YOU PREFER TO TALK TO SOMEONE FACE-TO-FACE, VISIT UNBIASED. CO.UK TO FIND AN INDEPENDENT FINANCIAL ADVISER NEAR YOU. >>

“Make it a habit to check your credit report each month”

“Pleasers find it hard to put themselves first, meaning you don’t prioritise your own future with a good pension, so start small and gradually build up the amount you set aside each month.”

2. THE PLEASER

DO YOU BAIL OUT YOUR OLDER CHILDREN EVEN WHEN PROBLEMS ARE DUE TO

THEIR BAD MONEY HABITS? OR INDULGE YOUNGER CHILDREN WITH TREATS BECAUSE IT’S EASIER THAN SAYING NO? WHEN IT COMES TO SHARED INCOME, DO YOU LET YOUR OTHER HALF SPEND WHAT HE WANTS ON SPORTS TV CHANNELS, SPORTS KITS OR TRIPS AND DRINKS IN THE PUB, WHILE NEVER ASSERTING WHAT YOU WANT TO SPEND ON, WHETHER IT’S SOMETHING TO DO WITH THE HOUSE OR GIRLS’ WEEKENDS AWAY? DO YOU CONVINCE YOURSELF THAT KEEPING EVERYONE ELSE HAPPY, MAKES

YOU HAPPY TOO?

POSITIVES THOSE AROUND YOU REALLY BENEFIT FROM YOUR GENEROSITY, WHICH MAKES YOU FEEL GREAT.

DANGERS PUTTING EVERYONE ELSE FIRST PROBABLY MEANS YOU DON’T PRIORITISE YOUR OWN FUTURE WITH A GOOD PENSION AS YOU DON’T FEEL ABLE TO INVEST PURELY FOR YOURSELF. IT IS KEY TO ACCEPT THAT LONG-TERM YOU WILL NOT BE

3. THE COMFORTER

DO YOU MAKE PURCHASES THEN TEND TO STUFF THEM AT THE BACK OF THE WARDROBE BECAUSE IT’S BUYING THEM THAT GIVES YOU THE THRILL RATHER THAN WEARING THEM? DO YOU FEEL YOU’RE CHEERING YOURSELF UP OR COMFORTING YOURSELF BY BUYING A TREAT?

POSITIVES YOU HAVE AN APPROACH TO MONEY THAT IS VERY MUCH ABOUT KEEPING YOU HAPPY TODAY.

DANGERS INSTEAD OF BOOSTING YOUR EMOTIONAL WELLBEING, YOU ARE IN DANGER OF SABOTAGING IT. YOU PROBABLY SPEND TO THE LIMIT OF YOUR MONTHLY INCOME

AND THEN PUT PURCHASES ON A CREDIT CARD, BUT DOING SO RISKS MOUNTING

DEBT. CONTINUOUS SPENDING ON SMALLER ITEMS ALSO MEANS YOU MISS OUT ON LONG-TERM PLEASURES SUCH AS FANTASTIC HOLIDAYS, WHICH REQUIRE PLANNING. ABLE TO HELP ANYONE IF YOU ARE IN A POOR FINANCIAL POSITION YOURSELF.

NEW HABITS SET UP DIRECT DEBTS TO PAY INTO AN ISA, BOOST YOUR PENSION SAVINGS, CLEAR YOUR CREDIT CARD DEBTS. IT’S HARD FOR YOU TO PUT YOURSELF FIRST, SO START SMALL AND GRADUALLY BUILD UP THE AMOUNT YOU SET ASIDE EACH MONTH. WHEN IT COMES TO REFUSING OTHER PEOPLE’S DEMANDS, AVOID SITUATIONS

THAT ARE FLASH POINTS BUT SET CLEAR BOUNDARIES. THAT COULD BE SETTING UP A DIRECT DEBIT TO PAY A SET AMOUNT TO YOUR STUDENT SON, MAKING IT CLEAR THERE ARE NOT TOP-UPS, RATHER THAN CONSTANTLY GIVING INTO DEMANDS FOR MORE CASH. NEW HABITS AVOID TRIGGERS SUCH AS GOING SHOPPING JUST AFTER PAY DAY. PAY DOWN YOUR CREDIT CARD AND LEAVE IT IN THE DRAWER TO BE USED FOR EMERGENCIES, NOT AS AN EXTENSION TO YOUR CURRENT ACCOUNT. YOU NEED TO BUILD UP A CAPACITY FOR DELAYED GRATIFICATION AND GET INTO THE HABIT OF SETTING YOURSELF A LONGER-TERM REWARD THAT IS BETTER THAN THE SHORT-TERM ONE. IN SIMPLE TERMS, BECOME THE TYPE OF PERSON WHO CAN EAT HALF A CHOCOLATE BAR, WRAP IT UP AND PUT IT AWAY RATHER THAN EAT IT ALL IN ONE GO! SO FOCUS, FOR EXAMPLE, ON A LUXURY WEEKEND AWAY OR EVEN AN UPGRADE ON YOUR CAR RATHER THAN DOZENS OF PAIRS OF SHOES YOU RARELY WEAR. A THREE-MONTH SAVINGS GOAL IS A GOOD PLACE TO START. BREAK IT DOWN INTO ACHIEVABLE FORTNIGHTLY TARGETS. IT’S ALWAYS GOOD TO SEE WHAT YOU ARE SAVING FOR, SO GET A PICTURE OF YOUR GOAL – WHETHER THAT’S A HANDBAG OR A NEW KITCHEN – AND STICK IT ON YOUR FRIDGE. WRITE A STATEMENT TO KEEP YOU MOTIVATED AND RECORD YOUR PROGRESS TO KEEP ON TARGET.

4. THE CONTROLLER

DO YOU CONSTANTLY CHECK YOUR BANK BALANCE? MONITOR YOUR SMART METER TO KEEP YOUR ENERGY BILLS DOWN? SHOP AROUND OBSESSIVELY FOR BEST BUYS?

POSITIVES YOU ARE A TYPICAL “KEEPING TRACK” PERSON WHO KNOWS JUST WHERE YOUR FINANCES ARE TODAY… BUT WHAT ABOUT TOMORROW?

DANGERS YOU ARE SO BUSY MICRO-MANAGING YOUR MONEY, YOU FORGET TO SEE THE BIG PICTURE AND PLAN LONG-TERM. SOMETIMES YOU ARE SO FOCUSED ON GETTING AN ABSOLUTE BARGAIN THAT YOU BUY THINGS YOU DO NOT REALLY NEED – IF THEY WERE NOT CHEAP, WOULD YOU STILL WANT THEM?

NEW HABITS SET LONG-TERM GOALS AND AIM TO CONTROL THEM INSTEAD. INVOLVE YOUR FAMILY IN THESE PLANS – THEY MIGHT NOT ENJOY CONSTANTLY GOING WITHOUT BECAUSE OF YOUR TIGHT PURSE STRINGS, SO GET THEM TO SHARE IN THE BENEFITS OF YOUR PRUDENT APPROACH TO MONEY. W&H