Shona Prophett in 2016

Frugal Entrepreneurs 01

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Shared with the Frugaleur (Frugal Entrepreneur) blog

 

Time to find out what everyone's doing to make extra savings and investments, other than by being frugal with the household shopping, being economical with energy use and quitting spending on non-essentials. Are you debt free? Is your financial future secure? Have you protected your 'cyberdosh'?

 

 

Here at NYK Media HQ, we run annual money saving challenges (see Frugal Forums) and also regular money making ones, like the frugaleur or cyberdosh micro-business challenges, but what is everyone actually doing by way of investing in their own futures? Can frugaleurs AFFORD to invest, as by its very nature, investment can reduce savings as well as increase them.

 

In 2008, my challenge was to earn an extra £15 per month (not quite 50p per day) and save it into a 10-year, tax-free savings bond with life assurance attached. That's £15 per month, every month for 10 years - a total of £1,800 paid out for a guarantee of only £1,500 life assurance or around £1,500 cash back at the end of it. If I remember correctly, there was cash back award of around £45 plus, I think, some Marks & Spencer shopping vouchers, but is it really worth it?

 

At the moment, the £25 'Scottish Bond' from Scottish Widows is offering £50 cash back plus a £25 'My Rewards Card' when you have paid a minimum of 2 monthly instalments into your plan. But then you are paying £25 a month for 10 years in the hope of getting your £3,000 back - no guarantees.

 

At the time, being guaranteed £1,500 of death benefits appealed to me. I had nothing set aside for that eventuality and it's one that I know can break family finances and create horrible psychological scarring for those guilt-ridden at not being able to afford to bury family members, lost suddenly and unexpectedly. So I went with the £15/month and stuck with it. I'm now paying it from my basic £4,000 per year budget, as prices on other things have reduced and I no longer have rent to pay. However... I may not get back what I put in after the 10 years - that's the risk we take with investments. For me, the little bit extra peace of mind was worth it and I still have the £1500 guaranteed lump sum due back in May 2018.

 

Back in 2002, I began learning a bit more about trading from home on the stock market and had some fun for a few years doing that, while being in what I considered to be a fairly well-paid job. (It was about £7 per hour and that was a huge amount of money to me back then, even allowing for £500+ a month rent, and still is to this day.) In all these years, I have continued to live on £4,000 per year and save everything else that was left after household bills and clearing debts. When rent became obsolete (on accounts of buying a small house for cash) I still continued to live on £4,000 per year, regardless of my income. Can you see the potential for savings when it costs £4,000 to run a household of 3 when all 3 are earning at least minimum wage each year?

 

The moral of this tale is that once you have learned to live on little and achieved your debt free status, there is no need to change your frugal routine just because your income doubles, trebles or quadruples, your household running costs drop, or a combination of both. While I had children home paying 'dig money' it all got saved, so when they finally moved into their own places, the drop in my household income didn't affect the budget at all, it simply meant the household running costs dropped slightly and the regular savings amounts were reduced.

 

Now what? I have a £4,000 + council tax annual budget but real costs are much less than that because I share the house and bills. I'm not money-orientated in a way that I wish for vast financial wealth - but the thrill of investments, even the most microscopic of them, is worth pursuing. It's what being a frugal entrepreneur is all about - playing a game of chance that can improve your future financial prospects while still being aware of the potential for it all to go wrong at any minute.

 

If we can weather our money storms, then we can learn from our own experiences that enable us to make better-informed guesses at what's right for us in the future. If we need to do it penny by penny, then so be it... the pounds will take care of themselves as long as we aren't foolish in spending our savings.

 

I want to be Shona Prophett by the end of 2016, so it's time to up the ante and make a few more decisions about what's going to be hot and what's not!

Teaching Money Matters in Schools - WHY?

Home Economics + Basic Arithmetic = Good Kousekeeping!

I've been watching the recent news and developments with regards to the petitions that are floating around the place. They are plying us with reasons to pledge our support to their cause, asking us to help bring money matters into schools as part of our basic education system. To be frank, I just don't get it!

School is a place for children learning the basics needed for their future adult lives, isn't it? These lessons are simple, they establish an elementary understanding of subjects that are important to everyone during future careers, regardless of what that career may or may not be. We can choose to listen and learn or we can tolerate these 'lessons' up until the point we have the freedom of choice to leave school and learn in another capacity - through life itself.

Some may see school simply as a place where children get sent during the day so they aren't wandering the streets with nothing better to do, biding their time until they are old enough to earn. School, like nursery, could even be seen as a place where children go so their parents can carry out activities other than childcare, like earning an income or anything else they see fit to do in the absence of their offspring.

Whatever any of us thinks of school, it is our right to have a basic education and our duty to provide similar for future generations. But it is not our duty to accept responsibility for the bad spending habits of others. We each receive a basic understanding of reading, writing and arithmetic, along with the simple concept of economics, be they home or otherwise, so common sense should prevail. But it doesn't!

Those who should know more than us have burdened this society with false beliefs that we should all be classed as equals, that we should all be able to partake of a decent meal, own designer labels, buy the most up to date gadgetry and possess all manner of luxury items. We should all be able to afford hobbies, pastimes and holidays, convenience and luxury should be readily available, en masse.

They led us to believe that we could all own our own homes and have the basic skills necessary to turn us into entrepreneurs or even just start our own businesses. But they overlooked one fundamental flaw in the plan - the fact that money is not a living entity. It cannot grow naturally, it cannot adapt to its surroundings and it cannot learn right from wrong. It is nothing more than paper, plastic and metal developed, manufactured and controlled by the chosen few who, to their disgrace, have been unable to balance the nations' books.

The concept is simple - take one pile of money, divide it be any number to whom you see fit to lend, then sit back and watch them pay dividends, by way of interest. If those payments fail, charge even more, add on penalties and drive the borrowers further into debt. Offer an array of incentives and promises of a better future, more security, better choices and the potential to feel good and then sit back, watch the borrowers borrow more and spend more, lining the pockets of the chosen few or those who chose to become one of them by sheer grit and determination. They all seem to have one thing in common - a total disregard for others when things, not surprisigly, go wrong. But there are always the get out clauses of insolvency and bankruptcy!

This continual building of debt has now escalated to such a height that even they cannot fathom out an agreeable method to stopping it, let alone putting it right. Their solutions are to print more money, cut back on what they think is 'unneccessary' spending and make it ven more difficult for 'normal' people to build real, reputable businesses that can grow to prosper and employ others.

They price ordinary people out of the market with legislation governing maternity pay, paternity pay, pension schemes, insurances, restricted working hours and minimum wage thresholds, then sit back and await the next emergency move.

But where do they go when all the previous options fail? They need to cast blame further and wider, so now we see the blame being laid on the children... If the youth of today and the common people had learned more, this may never have happened.

Well that is bullshit!

Those who dragged this nation to its proverbial knees were the very people who allegedly benefited from extra education. All their accumulated wealth of wisdom and expertise led us to where we are now, watching and waiting for the next global catastrophe that can quickly be assigned a few billion that adds to the amassed debt. They need huge tragedies, wars and disasters, so future generations can look back on history and point the finger of blame in any direction except that which is true. Nobody appears to have shoulders broad enough to support the burden of controlling what really cannot be controlled, so let's start again - educate the young.

To whom should we look for this teaching?

How and why are the current teaching methods allegedly failing us so badly?

Controlling a company, household or personal budget is nothing more than a combination of basic arithmetic and home economics, so why are so many people so bad at it?

Why isn't a closer look being taken at the education system itself?

Why are teachers failing to teach the basic principles of addition, subtraction, multiplication and division?

Why are parents failing to teach their children the basic skills necessary for survival in a capitalist society?

Is it not possible that some form of brainwashing has swept through our entire Western civilisatio, engulfing an entire generation, and that generation is not the youth of today! Nor even is it their parents' nor their grand parents' generations.

There has always been poverty, unrest, unfair division and class differences. YES! I dare to suggest that we still live within a 'Class' system and I dare to deny the existence of this so-called 'classless society' or equality that was dreamt up by some 'numpty' who thought the only way to cast off blame from those who should have known better, would be to invite society's minions into their lifestyle of wanton greed and waste - offer them more credit, hold them down by debt, if they come out fighting, let them take the blame when it all goes wrong.

So, I guess what I am trying to say here is that, in my humble opinion, people won't learn lessons that they don't want to learn, even if it is taught in schools. Brainwashing is everywhere - it's called advertising! Unless we ignore all of that and accept that debt is caused by spending more than we have, then what gets taught in our schools matters not one jot.

It is up to us, as idividuals, to challenge ourselves to live within our means and if speculative investments need to be made, have a back up plan in the event you don't quite pull it off in time.

Shona Prophett
www.shonaprophett.co.uk