Personal Financial Planning for the 2020s

To put it mildly, I’m in debt. I paid for a full refurbishment on my house this year, which is still underway – and getting hit with depression and having to take three months off work at the end of 2019 threw my credit score into chaos. I’ve applied for PIP and get other benefits whilst I’m not making an income – but I’m slowly establishing myself as a freelancer and hoping to follow that path going forward in 2020.

The first thing I will do is apply for the New Enterprise Allowance scheme. I’m currently not allowed to do that as I’m still signed off sick, but it will provide me with a helpful boost to establish my business. Then I have to make sure I am meeting the financial goals I set for myself every month.

I believe the way I plan my goals may prove helpful to others who have irregular income, so I’m sharing it here.

My blueprint for Personal Financial Planning in 2020

1. Work out your essential outgoings

First, there’s the essential outgoings:
Gas and electric: £170
Water: £30
Internet & telephone: £65
Mobile: £30
Repayments to debtors (repayment plan): £5
Website hosting: £20

Essential outgoings are £320 a month, or £3,840 a year.

2. Work out your non-essential but highly desirable outgoings

Then there’s the non-essential, but still useful outgoings for work and pleasure:
Car repayments: £440
Spotify: £5
Diesel: £25

Semi-essential outgoing are £470 a month, or £5,640 a year.

3. Work out your habitual spending and base lifestyle outgoings

I drink a lot of Red Bull and I smoke cigarettes. Neither of these are cheap habits, but they are very much a part of being me, for now. Let’s say I smoke 15,000 cigarettes and drink 2,200 cans of Red Bull a year. That’s 1,250 cigarettes a month and 183 cans of Red Bull a month.

I buy my cans of Red Bull in packs of 24 and I buy my cigarettes in packs of 200. So that’s roughly 8 packs of Red Bull and 6 cartons of cigarettes.

8 x Red Bull Sugar Free 24 pack on Amazon UK = between £18 and £23 = £144 to £184 a month

6 Cartons of Marlboro Lights = £660 a month

I can make huge savings on cigarettes by travelling to buy them, but let’s not work that into the equation for simplicity’s sake at this point.

Total habitual spending is around £840 a month, or £10,000 a year

4. Work out your minimal food spend a year.

I know for others it will be much less than this, but the minimum amount I need for food is £5 a day. That’s a meal deal at a supermarket, or an offer at a local bar. I don’t cook often at the moment as the kitchen isn’t finished, but I will be able to reduce that later in the year. For now, my minimal food spend is £5 day, which is approximately £150 a month.

Total minimal food spend £150 a month, or £1,800 a year.

5. Work out your actual food spend a year.

In reality, I survive on take outs at the moment, and my actual food spend is more in the region of £15 a day. The idea of this plan is to compare the reality of your spending to the actuals and ideals. Don’t by shy with this figure, food is as essential to live as heating and water, so budget it in.

Actual food spend a month is around £450 a month, or £5,500 a year.

6. Using the figures above, work out what you need to make for each scenario.

The Essential Bucket

To pay your bills and to survive on a bare minimum is Figure 1 + Figure 4. In my case, that’s £320 + £150 = £470 a month, or £5,640 a year. This is the amount of credit you want to make available to yourself at ALL TIMES throughout the year. By credit, I mean, cleared debt off credit cards that aren’t going to reduce your limit, overdraft availability – you want to make sure you have the means available to cover your bare minimal essentials as a priority going forward. What if you don’t have that amount available? That’s the amount you’re going to work to make available to yourself at the start of the year – it’s a bucket you can dip in and out of when you have guaranteed pay arriving but not at any other time.

The first £470 made in any month should go into the essential bucket. Anything extra after filling the The Life Bucket should go into The Essential Bucket until the bucket is full (£5,640) for the year.

The Desirable Bucket

This figure is the Essential Bucket + Figure 2. This will cover all your essentials plus the highly desirable outgoings. Sure, I could survive without a car, and I could certainly survive without Spotify, but they do add to my quality of life – and having a car saves me a lot of time on public transport, that I can spend working instead.

The Essential Bucket is £470 a month, and the highly desirable outgoins are a further £470 a month. The second £470 made in any month should go into the The Desirable Bucket, to ensure that you have the desirable things that make your life easier and give it quality. Therefore the first £940 I make in a month is accounted for and bucketed. It is only earnings above this I get to spend on habitual and “lazy” compromises.

The Life Bucket

My Life Bucket is Figure 1 + Figure 2 + Figure 3 + Figure 5. It’s the amount you need to earn to maintain the lifestyle you currently have. In my case that is £320 + £470 + £660 + £450 = £1,900 a month.

If I were to get a full time job not working from home, the salary I would need to meet My Life Bucket would be £30K. Add on £5K for the inconvenience and extra cost of travel. A job in that salary range would be easily in my reach, indeed, I tend to go for jobs that pay three times that amount – but the quest here is to work for myself, during hours I choose, and not to go back to the every day grind.

Therefore my initial aim is £1,900 a month, or in dollars $2,500 a month.

7. Work out how you’re going to fill the life bucket.

With a rough aim of $625 a week, I need to split this evenly through my businesses. I believe I can make $400 a week from freelance work, and will aim to make up the rest in sales through Amazon FBA and the other income streams I’ll be establishing throughout the year. It’s not going to be easy, but by focusing on a figure to get started, I can keep track of where I’m at. The ultimate aim, of course, is to make $100K this year, and if not this year, then the following year, etc. Ths guide to managing my finances in the meantime is a blueprint that I hope is easy enough for anyone to follow to manage their personal finances in the year to come.

Dropship week | Excel-mania

trophy stock

This week I will mainly focus on getting my dropshipping goods uploaded to Amazon and Ebay. I’ve always had the option of dropshipping, but never felt disciplined enough to check the orders every day and forward them to my suppliers. Now, however, I am ready to take on this challenge: it will cut the amount of stock I have to keep at home, and allow me to provide a better range of goods.

The first step involves downloading the supplier’s spreadsheet. Then, I work out which goods will make me at least $7.50 per sale – after tax, after shipping, after Amazon or Ebay commission and after processing fees. I’ll do this by creating a series of calculations in Excel. Once I’ve decided which items are viable for dropshipping I need to transfer these to the Product Upload template from Amazon, with descriptions and bullet points. Finally I will transfer the spreadsheet to an Ebay uploader.

I had toyed with the idea of setting up a Magento website with M2E pro, but the amount of time it would take me to do that would be more than if I just created the spreadsheet directly. I will set up an online store away from Amazon and Ebay soon, but it isn’t my priority.

Following that, I need to start getting the stock I still have in my house out to the FBA warehouse. It’s going to be a long job, which may take me most of January, but I know I’ll be relieved to have my house back again.

A Life of Win in 2020

My dream is to live a winning life in 2020. This is ground zero.

I’m one for making big resolutions at the start of the year and never carrying through with them. For example, I could resolve to update this blog daily – but I know I won’t. However, I am using it as a way to keep myself accountable, and I hope to provide others with the inspiration to follow through on their goals in the 2020s, too.

My main aim this year is to make $100K working for myself. Everything else will pale into insignificance, probably, as I’ll be so flat out working, I may not find the time to rest. This blog is also here for me to share my goals for a given week; report on whether I’ve kept on track, whether I’m stressed and doing too much, and as a means to organize my thoughts. It’s no lie when I tell you I have 6 businesses on the go, and I’m not devoting enough time or energy to any of them. My aim this year is to balance them all and stop neglecting the ones that have slipped through the net.

Even with that goal in mind, I have to be careful not to allow the simple joys of life pass me by. I have to make time for my friends and family, get out in nature, exercise and look after my mental health.

2020 is a reset year for everyone. A time to start again. A time to welcome a new decade and to let go of the drama and misery that may have haunted you before. Whatever your new year’s resolutions are for 2020, I wish you luck, and hope my blog provides some inspiration along the way.