Question. What have sea snails, the Italians, and porcelain got in common? The answer is money. Although the oldest known coinage dates back to roughly 1,000BCE (found in China), the porcelain-like shell of the Cowry sea snail (known as ‘porcellana’ in Italian, hence the name) was in use throughout coastal communities in the Pacific Islands, India, and Eastern Africa as much as 200 years earlier. Before that, cattle and other livestock appear to have formed the exchangeable frontline in the global barter system. Humanity and money go hand in hand. We give away goods or services in exchange for an otherwise meaningless ‘token’ that can be used to secure desired goods and services in the future. It’s really quite a tidy system.
Then along came a second system. One of credit. A system that promised to loan us the money we need for immediate big purchases that we otherwise couldn’t afford, as long as we agreed to pay back more than we borrowed (as sort of a thank you). This too is a tidy system, but when it goes wrong, you need to know what to do to fix your situation (see Creditfix for extra advice).
Get on top of your expenses
Lesson one in improving your finances sounds like the kind of thing you would say to a young adult who has just secured their first job and has no real experience of how to run their finances. List your outgoings. This really is the basic first step in crawling out of the red, dusting yourself off, and walking back into the black. From an audit of the world’s top-earning companies to simply keeping tabs on personal expenditure from even a part-time student role perspective, listing your outgoings is going to highlight where your money is being wasted.
Trim the fat
Stage two is to eliminate any expenditure that isn’t necessary. But everything is necessary, you say, otherwise it wouldn’t be there to begin with. Well, yes and no. Sometimes you might get lucky and realise you’ve been paying for a streaming service or gym membership that you had completely forgotten about, meaning instant savings. Other times you might realise that your phone bill is on a higher tariff than you really require, or that your car insurance or payments towards your savings are too steep. Look into what’s going on and see what you can change for the better.
Finally, once you have a grip on your incomings and outgoings, and once you have reduced your outgoings to the bare minimum that you really need to get by, it’s time to set a monthly budget. This should be made up of the upper limit you are willing to lose. Yes, lose. Because if you’re spending it, you’re losing it. You may see the food bill, for example, as a necessity and not as a loss. But in all seriousness, if we didn’t have to eat, none of us would be wasting our time and money in the supermarket. How much do you really want to spend on food? On clothes? On entertainment? On travel? Limit yourself to acceptable losses and your finances will prosper.