The Fizz! Blog

Look after yourself as you'd look after an employee

If you’re a business owner, imagine an employee comes to you asking for a change to their pay arrangements.

“I was wondering if you could pay me less than I’m due most months, but then occasionally pay me a much bigger lump, once I’m really struggling.  And could you also pay for some of my personal costs, then wait until I’ve forgotten about them before making me pay the money back?”

You’d probably refuse, telling your employee that’s a chaotic way to run their finances, and that you care too much about them to enable self-destructive behaviour like that.  Regular, predictable pay is definitely better for everyone in the long run.

“How about if I only make my expense claims every three years, so that you don’t really have a full idea of your overheads, and I never have a clear idea of how much money I have in the long run?”

You’d probably turn that request down too, and encourage them to do their expenses monthly, so that everyone knows where they stand (and so that it’s not a massive task down the line to figure out what they were doing years ago).

It’s exactly how lots of business owners treat themselves though.  Look after yourself in the same way you’d look after that employee.

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Think about this year's ISA allowance - but think about next year's too

March is sometimes referred to as "ISA season", as people rush to use their ISA allowance for the year (or some of it, anyway) at the last minute.  The same thing applies to pension contributions, which people often try and do in a lump at the end of the year.

However, it's a perverse way of saving and investing.  As we've said before, it would be absurd if we tried to scrape together the money for a whole year's mortgage payments at the last minute, so why do we do the same with something equally important, saving for our futures?  There's no "mortgage season", and an "ISA season" is no more logical.

If your income is moderately steady, and you're aspiring to save into an ISA, why not think about setting up a fixed monthly standing order to it (or your pension, or savings account, or all of them) for the new tax year?  Things used to be much simpler - there were only three types of ISA, and one was never really used by anybody.  Now there's loads of varieties to choose from, with Help to Buy and Lifetime ISAs being particularly interesting to hopeful first-time homebuyers.  But if you were aiming to max out the mainstream allowance for Cash or Stocks and Shares in an ISA next year, the annual allowance is £20,000, which equates to a monthly payment of £1,667.

If £1,667 (or whatever your monthly aspiration would be) seems like a daunting amount to find each month, it's going to be no easier to find the whole lump in one go next March!  Of course, most people aren't going to be able to save the maximum amount - but that doesn't mean you can't save something.  And saving something at the outset of each month makes it harder to spend the money by mistake.  "Save, then spend what's left", as opposed to "spend, then save what's left"!

www.fizzhq.com