Issue #001: Top 5 Financial Basics - As a Beginner, Start Here

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👋 Morning. I want to kick off this first edition with as much value as possible by answering the most common question I get in my DM’s.

When it comes to my personal finances, WHERE DO I START?

It seems that us personal finance educators often assume that those consuming our content have the same level of knowledge as us. And in doing so, we leave behind the people that we are actually trying to speak to, the beginners. Those people who hear terms like ‘compound interest,’ ‘APR,’ and ‘lifestyle inflation’ and just think to themselves:

huh?

I want to use the opportunity of this being the first edition to put together a quick ‘one-stop-shop’ when it comes to starting your personal finance journey. These are the 5 basic steps that will kickstart your journey toward a successful financial future.

📈1% Better Every Day

The 5 Money Steps:

#1: Time to get rid of bad debt. 
Bad debt? Surely all debt is bad. While the ideal position in life is obviously not to owe a single penny to anyone, you can actually split debt into two categories: that which you should be paying off aggressively and that which you can leverage and therefore should pay off slowly. To figure out which category your debt falls into, all you need to do is look at the interest rate and understand whether it falls above or below your magic number. Magic number, sounds mysterious? This is the % return which you believe you could achieve elsewhere. For example, my magic number is 8% because I am confident I could find those returns over a long time period in the stock market. If my debt's interest rate is >8%, my goal is to pay it off as quickly as possible. If it's <8%, well, then the opposite applies!

#2: Let’s start building an emergency fund. 
"Emergency fund" is the polite name for it; in reality, let’s call a spade a spade, this is the “Sh*t's hit the fan” fund. Once built, I can almost guarantee that your financial confidence will start to skyrocket quicker than one of Elon’s Ships. This fund, as predicted, is your safety net money, the cash that you can use on that single day (which hopefully never comes) when you lose your job, your car breaks down and your rent is due! What should this fund actually look like? Aim to put away 3-6 months of your living expenses in an easy-to-access, high-interest account (depending on your risk tolerance). If that sounds too difficult, start with 1 month's worth of expenses and build up from there. This is quite simply the MOST impactful personal finance step you will ever take.

#3: Build wealth by investing early and often. 
Don't roll your eyes; there's a reason that everyone who talks about personal finance can't shut up about investing. Why? Because it could be the key step you take if you've ever dreamed of financial freedom. Investing £250/month from the age of 20 to 65 (with historical returns) would result in £2.25 million (having invested just £135k). Wait until you're 35 to start, and that number drops to £515K. Nuff said!

Now, I can already hear the comments:

1. ‘How do I actually start this investing thing?’

2. ‘What account should I be putting my emergency fund into?’

3. ‘What is MY magic number?’

Fret not; we have MANY more issues of this newsletter to come, so sit tight because week after week I will be answering the questions that you ASK!

🤑YOUR MONEY

This Week’s Headlines

🏠House prices finally falling. UK house prices fell at the fastest rate in five years in August as high mortgage rates are causing sellers to re-evaluate their asking prices. Are we heading for a crash?

📈Rent is on the UP. The rising cost of renting has again hit its highest level since comparable records began in 2016, due to strong demand from tenants.

🔥13 Million Brits aren't turning on heating. A survey by the consumer group Which? discovered that 46% of respondents did not turn on their heating last winter in order to save money.

🎬 New Content

Inflation Explained - in Less than 6 minutes. I've noticed recently that despite inflation being the hottest finance topic in the news for well over a year at this point, a lot of people have no idea what's going on. So let me explain it to you in less than 6 minutes 😊

DISCLAIMER: None of the above is financial advice. This newsletter is strictly education and should not be taken as investment advice or a solicitation to buy or sell any assets or to make any financial decisions. Please be careful and always do your own research.