Statistics and polls can tell us a great deal, but not everything, especially when it comes to the nuances of personal financial planning. Sometimes, to see the real picture, a little digging is required.
Take the latest statistics from MABS, the “national, free, confidential and independent service for people in debt or in danger of getting into debt.”
Its caseload has doubled since 2007, and in the first quarter of 2010, calls to its helpline rose over 20% above the same period last year. Between January and March, 7,828 people picked up the phone hoping to have their fears allayed, get advice or just share the load. Twenty percent is a pretty startling jump, but what this little statistic doesn’t tell you is that these callers are probably the tip of the iceberg. In reality, for lack of time, motivation or skills, there are far more people who, for some or much of the time, feel they can’t/don’t manage their finances properly. And by properly I mean paying bills, ensuring loans are manageable and thinking that sharks are something found only in the sea. So why aren’t more of us ringing MABS?
The truth is that most of us would rather stick needles in our eyes than explore more effective financial-management strategies. Or at least any strategy more sophisticated than using the bank statement to fuel the bbq and then pass it off as “renewable energy”. It’s not like it’s a trivial matter; now more than ever, it can be difficult to stay on top of things. And to be fair to said bloke in charge of the bbq—and it is always a bloke—bank statements, while being clear on what we spend, don’t offer much warning of what’s coming down the track.
Yes, there are some “knowns”, like the fact that bills are regular and that today there are as many ways of paying them as there are bills. But given that regular bills (food, energy, telecoms) comprise a sizable chunk of the average industrial wage, it’s surprising more tools don’t exist to help us bridge the gap between what we know we spent in the past and what we think we’ll need to spend in the future.
Being self-employed can help; years’ worth of bills/receipts are a healthy reminder of how much you spend and on what. But even armed with knowledge, it can still go horribly wrong, like the time my mobile phone provider breezily ignored the date I requested for my direct debit and I had to pay a hefty overdraft fee. Ouch. Lesson learned (move providers).
For others, the National Consumer Agency has a tool called The Economiser that identifies how your spending compares with the most relevant average for you. It hopes to help you become a smarter consumer. But because it is inconvenient to use, hardly anyone does. It’s a bit toothless, see.
At GetItKeepIt we offer a service which tracks spending (We have started with utility bills but plan to capture other areas) and uses simple graphs to illustrate trends.
Alternatively you could indulge your controlling side (most of us have one) and use Excel spreadsheets, like one pal I know? With a sizable mortgage and a dwindling income, she’s had to get creative. Transactions are entered into one of 23 (!) categories – everything from canned food to petrol—I think there’s even one for “fallen down the side of the couch”. It might seem rather extreme, but in three months she’s reduced their monthly food bill by a staggering 25%, leaving them more money for treats and less room for fretting over the pennies. And who wouldn’t want a piece of that?
If you are using our service then this is the area we are moving towards….if not good luck with the spreadsheet
Some useful links: