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Cutting back on unnecessary expenses.

Last time, I talked about the miracle power of compounding, and the principle of putting one tenth of your income straight into your savings and investing account. To make this easier, simply start to cut back on unnecessary expenditure.

Lets get practical now. It is time to assess just how much you can save each day or week. (If you are running a business, apply the same thinking to your business).

What are you spending your money on, and what is necessary and what isnt? Your bank and credit card statements will tell you a great deal about where your money goes. So, check them first.

Also, you will find you are spending cash, and other incidental amounts on your credit or debit card daily.

For the next month, get yourself a handy notebook, and start recording what you spend each day as you spend it, and as you do, categorise your spending into three simple and easy categories.

1. I have to pay this.

These are the things like your rental or mortgage, council tax, your food, electric, gas, credit card bills, loans and so on. For each of these, look at how much you can save. There may be better deals around. If you have any loans, deal with the high interest and critical ones first. The web site moneysavingexpert.com has details of how to get the best mortgage deal, the best utility prices, the best credit cards, loans and so on. Check it out and take action.

With any savings you make, you have a choice – Spend it or Save it… so, a good choice is to put the savings into your savings account straight away, before you get used to spending it – immediately at the beginning of each month or on the date of the saving. (I will suggest how you can manage your savings account in more detail later.)

2. These are my personal necessities and I want it.

You will know what these are for you, but be clear with yourself how much you value it and how necessary it is.

You know, life is a bit lopsided, and in the early 1900’s, Vilfredo Pareto, an Italian economist, established how lopsided it can be when he discovered that 80% of the land in Italy was owned by 20% of the population. This was the start of the insight to what became known as Pareto’s Law, or more simply the 80/20 rule.

This concept can be applied to many things, from how you spend your time, to the quality of relationships and so on; through to your own personal spending and assets. It says that roughly speaking there is an 80/20 ratio with many things.

For example, and do think about this, you probably get 80% of your enjoyment from 20% of the activities you do, you may get 80% of your appreciation of who you are from 20% of the people you know, and you get 80% of your pleasure from 20% of the things you spend money on (80/20).

And, it follows, conversely, you get 20% of your enjoyment from 80% of the activities you do, you get 20% of your appreciation of who you are from 80% of the people you know, and that you get 20% of your pleasure from 80% of the things you spend your money on (20/80).

So, for everything you spend, ask yourself the simple question…

Is this an 80/20 purchase or a 20/80 purchase? Be honest.

If it is a 20/80 purchase, place it in the third category…

3. I thought this was a necessity, and it could be an investment.

Anything in this category is a 20/80 purchase and is up for grabs, you could take all the money spent here and add it into you savings and investment account… (or pay off debts). This one step could make a huge difference in you life.

If you catch yourself before you spend things in this category, give yourself a huge pat on the back, and put it straight away into a separate purse or wallet or bag and then into your savings account… DO IT NOW! dont delay.

Try it for a while, and enjoy seeing how wealthy you can become.

warm regards and good wealth to you,

John Cato, ACMC, MPNLP, MBCS, FRSA
The Wealth Coach

Executive and Personal Coaching
+44 (0) 845 338 4370

“You are wealthy when all aspects of Wealth are in harmony and aligned…
my skill is to help you truly be this in your own unique way and to champion you to achieve your potential; to become more successful in business, work and personally, and be more wholly wealthy.

If you know someone in business who may be interested in becoming more successful, and making their team more succesful, please tell them about me and put us in touch.

I believe a referral should result in a win, win, win, and to show my appreciation I have a referral reward scheme to benefit you both that I hope you will take up.

“There is one fundamental question… Are you moving towards what you want or away from it?
Notice and choose.”

** Any information on this site is provided solely to enable you to have greater awareness of your possible choices, and to make your own decisions; it does not constitute a personal or personalised recommendation.

You know, it has been some time since I read the Richest Man in Babylon, and on re-reading it, I am reminded to say a few words which may be the most important you have heard so far this year….

The first step to financial wealth!

The miracle of compounding

Whatever income you have, take an absolute minumim of 10% (or more if you can) out of the income before it gets to you (pay your savings and investments account first!!!)

Its that simple.

If you did this from the first work day you had at say 18 years old on say £6 per hour (saving only 60p for each hour worked), and it took you til the age of 25 to start getting paid the average wage (presently £13.10), and then you never earnt more than the average wage for the rest of your life, what do you think you would have saved by the time you were 58?

£20,000????

£30,000???

£40,000!!!!???

£50,000!!!!!!!!!???

NO,

If you simply saved it and stuck it under the mattress, you would have £186,000 pounds.
.
.
.

But if you had put it in a savings account and compounded the interest, this could give you about £450,000 pounds in a 5% interest account by the time you were 58…
.
.
.
and if you had placed it into a higher yield asset such as property or the stock market which has averaged around 10% growth over the last 50 years, it would be worth approx £1,430,000 pounds, nearly a million more than the savings account

(** email me at john@wealthcoaching.org, if you want the copy of the spreadsheet I used or any other explanation – also, NOTE: take advice before investing in riskier asset classes such as the stock market or property).

So, if you wanted to be a millionaire, it is that easy, and you would hardly notice it happening if you didnt peek at the investment account every now and then.

NOW,

If you waited until you were 25 before you started saving, in a savings account at 5% you would have £70,000 pounds less than starting at 18 (£380,000 pounds) or in a 10% growth asset class “only” £995,000. So, how about that… those 7 years savings at even low wages, can make a £435,000 pound difference by the time you were 58.

Think about it and GET THIS!!!!

START NOW. It is never too late to start being wealthy!

If you are 40 years old and wish you had started at 18, and decide its too late, I can promise you when you get to 50 you will wish you had started at 40. This is true whatever age you are; in 10 years time you will wish you had started today.

NOW is a great time to start this very simple practice, and you will hardly notice the difference in your day to day living because you would just cut back occasionally on the odd capucino… reduce expenses, save money, and invest in assets…. and as Robert Kiyosaki of Rich Dad Poor Dad fame might be heard to say – dont doodad it!

It doesnt matter what age you are, or how much you earn, START NOW, do not put it off even one day, and you will thank yourself later, and so will your children and loved ones and tell your children about this miracle of compounding also.

DO this, and make a difference for yourself and the people you love.

And, if you applied the same concept to your business, just imagine how much your business would be worth now. It is the same deal, do not put your cash under the mattress, do not spend on doodads, invest a portion of your income wisely in assets!

Watch out for the second step to financial wealth, coming in a week or so time.

Warm regards and good wealth to you

John Cato, ACMC, MPNLP, the Wealth Coach
______________________
www.wealthcoaching.org
+44 (0) 7973 208940

If you want one 2 one coaching, please email me at john@wealthcoaching.org,
or call me on +44 (0) 7973 208940

** Any information on this site is provided solely to enable you to have greater awareness of your possible choices, and to make your own decisions; it does not constitute a personal or personalised recommendation.

“Britain’s personal debt mountain has grown larger than the annual output of the economy for the first time in recorded history.”

This is outrageous and frightening! It logically cannot continue. Huge numbers of normal people ‘next door’ are suffering and we could easily have an economic disaster for millions of people. This news makes me stand up to be counted!!!!

If you have somehow got caught up in this, and become one of the many who have been seduced outside of their comfort zone by over touted credit cards, cheap loans, interest free credit, or ‘cheap’ mortgages you might want help. Along with government agencies and independent financial advisors, Coaching may be one avenue of transformation you may have considered. I offer free coaching to those who havent got the money right now (and an income related charge to you if you can).

Curious? Read on.

From recent copies of the Daily Mail, spiralling debt is pushing an ever-growing number of families to breaking point, there are signs of ‘growing distress’ among consumers as they struggle to cope with debt totalling over £1.1trillion, said the Financial Services Authority (FSA).

The statistics show:
· Individuals declaring themselves insolvent have risen 95 per cent
· Bankruptcies are up by nearly a third
· Home possession orders have jumped 66 per cent and repossessions 47 per cent
· The average personal debt of visitors to advice charities has topped £30,000.

The FSA is making a stand following a series of suicides among those unable to cope with their huge debts.

In an unusually frank statement, it said: “We are seeing signs of growing distress among consumers, including more insolvencies, more late payments on credit cards and a rise in mortgage repossession orders.

“Our research shows that many consumers with significant borrowing commitments are currently struggling to keep up with repayments.” The dramatic statement follows a cultural change as more and more people sign up to a “spend-not-save” ethos. This is putting thousands of families and single people in a position where their debts are far bigger than their income or their savings.

Credit card companies have been attacked for encouraging customers to borrow when their debts are already out of control. ‘Mega-mortgages’, which allow families to borrow much more money to buy a home than in the past, are also causing widespread difficulty. Some have been able to borrow up to 125 per cent of the property price.

The total personal debt mountain, including mortgages, is more than £1.1trillion – equal to about £19,000 for every man, woman and child in the country. A typical visitor to the Consumer Credit Counselling Service charity has debts of more than £30,000, 42 per cent higher than the average figure two years’ ago. Since it reopened after Christmas, the number of calls to its helpline has soared 70 per cent to nearly 17,500, or more than 1,000 a day. A typical caller is 34, married with two children, has take-home pay of £16,300 and owes money to seven different companies, mostly credit cards and unsecured personal loans.

Mark Sands, director of personal insolvency at accountants KPMG, said the dire situation could look like ‘a walk in the park’ if the economy dips. He added: “These bad debt statistics are coming through in a benign economic environment of low interest rates and high employment. What could happen in an economic downturn?” He expects the number of people declaring themselves bankrupt to reach an all-time high of 60,000 this year. Higher mortgage repayments are also hitting thousands of homeowners who took out cheap two-year, fixed-rate mortgages with interest repayments as low as 3.5 per cent in 2003. With a typical £130,000 mortgage, monthly repayments have since shot up by more than £230 under higher interest rates of 6.5 per cent.

So, if you are having difficulty, or want to take action before you do, would you like to come to absolutely Free* WealthCoaching evenings in Glastonbury and Clevedon. I am doing this as my way of contributing back to the community. I have committed to giving 10% to charity or community, and this is one of my ways of doing it. The only thing I ask in return is that you also consider giving 10% to charity or community when you find yourself able to do so.

Thursday evenings/Limited places – email me now to reserve your place.

Email me: john@wealthcoaching.org – for more details.

Warm regards and good wealth to you

John Cato, ACMC, MPNLP, the Wealth Coach
______________________
www.wealthcoaching.org
+44 (0) 7973 208940

* (there may be a nominal charge for room hire, though so far the venues are being provided free)

This last two or three months has been fascinating and wonderful, and I havent been posting for a while.

After my last post about a friends friend dying, I experienced an event where I was rushed to hospital in an ambulance having had an accident in which I could have been killed.

I wasnt!!!! and it brought home even more strongly my sense of what wealth means to me – much more than money (which is of course important) – but friendship, time, being at ease, health, and actually some simple things like walking in the country, relaxing over a wonderful meal cooked with friends, giving freely some of my time to people who find it useful and so on…

And since then I have been taking care of being with my friends with much appreciation and love and coaching clients also with much appreciation and admiration – for example one of my clients has gone from being full time employed to the point of having a complete transformation of running his own business in four to five months and with the same income stream from his own business as he had from employment… and it is growing by the month.

So, I want to acknowledge you all and just admire the changes you have made during this last year… and to my clients, I want to say how much I have enjoyed working with you and coaching you to your greater success.

I wish you all good things, much fun, and everything you could imagine for the year to come – may the sun shine on you, may the wind blow in your hair, and may the blessings of wonderful friends surround you always

warm regards, good wealth to you and my well wishes at xmas

John

John Cato, The Wealth Coach