Advice from people who are good at growing their money

[messybessie]

not on trees obviously.

My parents died when I was young and I inherited quite a bit of money. I wasn't completely reckless but I have pissed a lot up the wall.

The security of having a flat and money in the bank meant that I always spent everything I earned, even though I was on good money, and have been fairly wasteful.

Now I'm in my thirties I regret not being more frugal. I am working part time now with not much spare cash. I still have a good savings balance but it's just sitting in a savings account, so hasn't really grown any.

How can I be more careful with money?
Would you prioritise paying off mortgage, putting into pension or investing?

I feel I've wasted an opportunity.

Book yourself an appointment with a good independent financial advisor. They do charge upfront, which works out better value, as they're not on commission so will give you unbiased advice.

Changing your mindset is the only thing that will work, with regard to being more careful. The people I know who go "they want HOW MUCH???" when they see price lists for anything are all loaded. The ones who go "wey-hey, let's get another round in", or "but I want it" are all skint. It really is as simple as being habitually tight.

I have a rich friend who called her DH to say she had gone into labour and was in hospital, but that he'd better not dare get a taxi - he should get a bus. She is so cautious about money that the habit didn't leave her even when she was having contractions.

"Would you prioritise paying off mortgage, putting into pension or investing?"

The way I look at it is to separate 'short-term' from 'long-term'.... 'safe' from 'risky'.... and then 'high interest' from 'low interest'.

Starting with interest... simply place the money where it either earns most or costs least. If you have savings paying 2% and you're paying 6% on a mortgage, for example... pay off the mortgage. If savings were paying 6% and the mortgage cost 4%... pay off the mortgage when you've saved a lump sum.

Then 'risk'. In financial terms, 'risk' means the investment can go up or down. The higher the risk, the greater the potential profit but also the greater the potential loss. A bank deposit is very low risk.. it won't go down... but very low reward. Higher rewards can be achieved if you're prepared to accept greater risk. But you need to understand your personal attitude to risk, only take as much risk as you're happy with and then spread that risk across several investments. Not having all your eggs in one basket is very good advice.

Finally 'Short-term' vs 'long term'... everyone needs a rainy day fund for emergencies or a big one-off purchase. Aim to have about six months expenses put by in somewhere easy-access for the short term. Cash ISAs are good for that. For 'long term'... you definitely need to look at starting a pension. But other long-term options include proprty investment, stocks and shares, unit trusts, bonds etc. As you are in your mid-thirties you have a good 30 years of earnings potential in front of you so, even if these kinds of investments dip from time to time, you can afford to wait for them to pick up again. If you were 60+ you would be thinking more short-term than long term.

An independent financial advisor is a good suggestion but pick one carefully based on a personal recommendation. There are good advisors and some real stinkers out there!!!