Adopting good habits can greatly improve your financial wellbeing

One of life’s great challenges is how to form new habits; here are three top suggestions – Laurence Taylor, Founder, Easy As 123

1. Break down feelings such as ‘I’m not the sort of person who saves/invests’ into smaller pieces to see what’s holding us back – ‘I don’t feel confident in doing that’.
2. Start small, set easy targets and achieve them.
3. Develop tactics for when we inevitably don’t always succeed – set schedules rather than deadlines, and get back on track quickly.

We have to clearly see the point of adopting new behaviours and take baby steps towards them; this may be reinforced by seeing others doing the same thing, because then we aren’t ‘different’ – which is why cooperative/syndicate models have proved successful in the past.

However profligate Mr Sunak’s borrowing in the face of the pandemic may seem, we ‘little people’ should never be disavowed of the belief that sensible financial planning is not the right thing to do; however ‘uncool’ it might be, who knows what political, economic  or climate-based catastrophe, or indeed even more virulent pandemic, is coming down the line?

Easy As 123 supports self-employed people to get into the new habit of transferring money into a ‘Cushion’ – a basic account to which we transfer our tax set-aside, emergency reserve, & any surpluses we have to DIY invest, then move those funds between separate Saving Accounts/ISAs/SIPPs etc.

How we might view each of the 3 parts of our Cushion:

1. Part of what we earn isn’t ours – set tax aside immediately to avoid the panic each January/July.
2. For many a recent, or indeed current experience, is not having any cash or access to cheap credit in a crisis; set up that rainy day fund.
3. We love spending, and for many ‘I never have any spare cash, all I earn I spend’ is a way of life’; the need for prudence should encourage us to put a spare bit of cash into an account – maybe do some DIY Investing – to deliver long term improvement to our financial wellbeing.

How we might make using our Cushion a new habit in practice:

1. Every time an invoice is paid or we receive a remittance from Stripe or PayPal, go on to our banking app and transfer 20% of it into our Cushion account – if we miss it once, put in a reminder to do it at the end of the week or first thing Monday morning.
2. Use ‘round-ups’ to swipe extra pennies/pounds on everything we buy into our Cushion.
3. Block out 10 minutes a week to check out our investments and maybe share how we’re doing – start small, choose shares in companies you understand or are interested in, or find funds that have performed well, and reflect your belief in sectors and markets, and do some easy metrics on what’s gone up or down.

Abracadabra: we have a pot of money to work with – but the trick is to regularly transfer funds into a separate account so that we see the point of trying to make that sum go further. Enjoy it and good luck!