As you can probably tell from my blog, things have improved over the last few months. I started a new job, was able to pay off my 25k loan and finally, my credit rating jumped from zero to (almost) hero within months.
However, I didn’t manage my money very well for much of my life. I was living from payday to payday. I would spend all my salary each month, so yes, I didn’t once save anything for an emergency fund.
So it was only when I lost everything that is truly and utterly broke, as in getting down to your last £20 in the bank broke, taught me this:
1. Essential Living
Subscriptions to Now TV, Netflix, Amazon Primewere cancelled. When you are really broke, you can only afford essentials, not luxuries. I scrupulously went through my bank account to discover what was going out each month. Phone insurance, Now TV, Netflix…they all add up.
2. Friends and family
Family and friends are so important. You might have to spend some time not going out – it might feel like forever – for drinks, birthday parties, and festivals. However, your real friends will stick by you and keep checking in. Whether they are old or new, people will genuinely surprise you. More importantly. I have never been so close to my mother as I am now.
3. To buy or not to buy
A year of not buying clothes or make-up, unless essential, is quite a challenge. When you have nothing left, you will protect the money you have. I wouldn’t bat an eyelid spending £30 on foundation, £10 on eyeliner, or £25 on new shoes. When you are well and truly broke, you can’t afford to spend like this anymore. So don’t.
I don’t care much for the expression ” no regrets”. When the money is gone, you will regret every frivolous financial decision you have ever made. Mine include cashing in my pension, and blowing hundreds of pounds buying drinks at the bar for everyone. Then there will be the bad career decisions you made. Not going for a job twice your salary out of loyalty to your employers. Not asking for more of a pay rise. Personally, I think this is a rite of passage. It will make you stronger.
5. Budget / Savings
The first time I ever saved in earnest was when I had little money. I started an account depositing £25 a week. It’s amazing that my credit score went up for the first time in years. I not only saved but paid off my credit cards bit by bit and my loan. It’s incredible how much you can save over time just by investing a small amount. Read my article on How to save for an emergency fund on a budget.
Your confidence during times like these will be affected. Whether you are flat broke, having to live at home, or being made redundant, all these things mean your ego will take an absolute beating. Keep a good set of friends or family around you who will keep your spirits up. Ask for recommendations on Linkedin to remind yourself just how brilliant you are. You have got this!
Unfortunately, money stress can make or break a relationship. Especially when you have nothing. Some people may be there for you during these times. Others may not. Just make sure you look after yourself. Don’t be pushed to spend money. You don’t have to try to keep a relationship going.
With a depleted bank account comes fewer opportunities to do everything you used to. Manicures, expensive haircuts, cocktail nights at Shoreditch House. No more. However, drinking water and less alcohol will do wonders for your skin and general wellness. Use this time to go to bed on time, reward yourself with a bottle of wine every so often, and indulge in a lovely bubble bath. Use this time to start taking good care of yourself.
10. Time to reflect
Being flat broke gave me a chance to reflect on life. I spent the summer of last year in Bournemouth. I hated being away from my friends and city life. However, I got to spend time with my family and spent lots of time by the sea. My happy place.
Use the time you have to do everything you have always wanted to do…like blogging! Money can enhance your life. Just don’t stop doing the things you have always wanted to do. Sometimes these are things that money can’t buy!