Budgeting - The Poor Mans Way: Part1 - Prioritising Your Spending

Over the course of a few Blog posts I hope to discuss with fellow teenagers, students and other folk alike, about the topic of budgeting. It is something that the best of us have to do, whether it be monthly bills, taxes, the food shopping or holiday planning, it something that we will all come across. Many think of it as a chore, but to really get the best result you have to be patient and enjoy it, as well as being productive and methodical.

Now if you haven't got a very mathematical brain, like many others, yo should not be put off by this post, or anything to do with your finances. It is the core of anything in life, as unfortunate as it is to say, and you must understand it and embrace if you are going to succeed.

Please note as well I am aiming these articles on people who are at school or at university, and have other people who support them as much as they need to support themselves, but there is plenty in these to use and implement into your lives, whatever your situation.

The important thing to think about is the fact that you can only spend as much money as you have. For example, you receive a termly student loan payment of £1000. You only have that much money to spend. Just because your overall loan is £3000, it doesn't mean you can spend it all at once. This is something which will catch everybody out and has caught me out too on more than one occasion.

The best place to start with sorting out your budgeting is to take out all the monthly payments and termly payments, such as your accommodation  rent, phone bills etc. that you know you will spend. Once you have done this, you have a ball part figure of how much you have to spend. Now in this you need to find money for all of your other bits and pieces, including food, clothes, going out, presents, holidays, train and bus fares to list but a few. The worrying thing can often be how little money you have.

The next bit is about making sure you can afford everything, no matter how little money you have. You need to prioritise the expenditure that you have. So is that extra night out a week really affordable? Can you really use the posh shampoo in as much quantities as you do or should you settle for the own-brand and use in small amounts? Can you afford to buy a Subway every day for your lunch or would it be cheaper to buy in the ingredients and make yourself up some sandwiches? Is that weekend away to the lake district really worth it, baring in mind the cost of the hotel, travel prices and food when you are there, not to mention the drinking that might take place?

I will show you my 'tree' of spending and you can see an example of this prioritisation of expenditure in action.

Starting at the bottom is all my monthly payments:   

-Phone Bill

-Accommodation

++

-Food

-Petrol Money

++

-Bought lunches

-Drinks out

++

In amongst this I run and maintain a classic car, and this is what I spend my extra money on, like a hobby, as you may spend your extra money on online gaming. This is the last priority and often the thing that I do on the night before pay day is doing a bit of online shopping for a new set of hub caps or some new seat trims, so that I know I will definitely have the money to spend, and it also acts a reward almost for budgetting well that month. I know if I have no money left to spend then I have gone wrong somewhere and feel a tiny bit guilt for that week of have coke in the fridge to drink when I got in, because it was on offer in the Co-op. I didn't really need it and in the end spent about £20 more than I should have done that month which meant that I didn't have the money at the end of the month to buy what I wanted to buy for my car.

And it is that line of thinking which should be at the core of what you are budgetting for. How important are all of my expenditures, and if so, which of my monthly expenditures are neccessary or not. For example, if the shop is only a 5 minute walk away, do I really need to drive, spend about £10 a month more in petrol, or can I use that money to spend on a night out, so for 2 MacDonalds lunches a month?

You should be constantly evaluating how important that handing over of cash is, whether you really need a £4 meal deal on your break at work or whether some toast and a glass of water would be ok, from the out of date cupboard in the canteen, which is then free, not a nice granted, but just as good and probably a little more healthy.

We will go into more detail about food and things in the next part, I hope this has been useful to you and I hope that you have many successes with your financial planning.

Thanks for reading.

Follow me on twitter: @peachy146

                                                                                          

Spotting Business Opportunites

One of the many reasons why people are unsuccessful  and it is something that I have harped on about before, is that people become blinkered to their idea and sooner or later it will fall and they will have to find something else. We live in a world where everything changes and develops at such a speed. Sometimes new things have been developed before the old idea has even been realised.

This is something which we have to consider as businessmen too. I say businessmen in the fact that, no matter how big or small you are working on, you are showing and developing skills and mentalities of a business-lie manner and this is something which you have to be aware of. You may only be selling some kit-kats on the school playground but there are still a set of basic principals that you have to follow.

And this is one of them. You have to constantly self-assess yourself, your sales techniques, your products, and the wider market around you. For example, going back to the kit-kat example: It isn't going to be long before the kid over there gets the same idea and starts doing the same stuff as you. and then you have competition. And then you have to think about where you are going to head.

You have to decide whether you think you can move the idea you have onwards and upwards so you become a "market leader" of the playground, or whether you think there is money to be made elsewhere. Now persisting with 1 idea is hard work and not always 100% effective. Sometimes you just don't play your cards exactly right and everything goes down the pan.

My advice is when you get yourself into this position, you need to start thinking about something else. Always have 1 more idea in your mind, so you know there is always something to move to and somewhere to develop. This is a critical part of business. And this is where your 2 categories come in.

Let's take Peter Coates, my local butchers. They are currently in the 4th generation of the family business, about to hand down to the 5th. That is through the persistence and reputation in their area of expertise. The quality of their meat is very good, and the reliability of the sources that they get their meat from are also tremendous. Not only that, but everybody is aware they butchery their meat on their own on-site abattoir and this adds to their established reputation.

However, let's take Alan Sugar on the other hand. Started his life right when the world of audio technology was growing and booming, selling hi-fi equipment. He had that cavalier philosophy of ditching an idea and moving on as soon as he got any competition or opposition. and it was that that lead his busniess to grow, develop and become what it is today.

The difference between the two is the difference between persisting with one idea or moving between ideas and growing upwards all the time. The thing is that hi-fi equipment is not something which is highly skilled to make, it's not a craft like carpentry or stonemasonery, which is where butchery sits. So people are less worries about established reputation and more worried about price and value for money.

You can only make this decision, but my advice to anyone who is selling some bits and pieces small time, would be when it gets tougher, move on. I am not saying move from selling sweets to your mates to selling selling seed treatments to farmers, but just take the other fork at a crossing point.

Follow me on twitter: @peachy146

Wheelin' and Dealin' Part 2

So in part 1 we covered getting to grips with eBay. If you have come to this post first just go back and read part 1, just to gain some basic understanding of the point we are at. Here is a link: tomstopmoneytips.blogspot.co.uk/2013/03/wheelin-and-dealin-part-1.html

We had established our bit of reputation. I talked about the importance of this reputation on the internet as this is how customers know they can trust you. a big thing in selling is trust. It is this which drives a person to buy anything. For example when Tesco announed the house meat in the burgers you can bet the sales of their beef and all meat products have fallen and have not yet recovered as it broke people's trust in them.

Now there isn't this word of mouth idea that happens in real life as does on the internet. You really have to advertise. But this is not important until you get a little further on. You have to understand there is a point at which you can't go any further unless you advertise and present yourself better but you can't do any advertising until you work out what direction you are going to take. This is still yet to be decided.

Now think about an area which you found sold well in and are interested in. Some area where you have a little bit of knowledge of prices is always good too. This will help no end with your buying with the aim to sell. Small, garage businesses have to start with a few tactics to outwin those better, more well-known people to gain the internet shoppers custom. It is a difficult market to open a stall at and sometimes the progression between clearing out some rubbish and buying products with the view to selling can be scary and dangerous. At this point you have several options but all of them revolve around you getting you hands on more stuff.


Now you have done reasonably well at selling some stuff second hand and have a vague idea of what people will buy old chess sets for, for example. So go to car boots, bric-a-brac sales and the like to try and get your hands on some more stuff at the same price. If you are shopping looks for similar items in multi packs or bulk buy offers which you think you might be able to make a mark-up on. Work it all out roughly in your head and don't forget to include things like postage and fuel into your calculations.

Don't expect massive profit margins at this stage either. It is just about establishing yourself and searching around for a products and a sales pitch that works right for you. And the more experience you gain and the more varied range of places you visit to try and get stock, the better you will get. Nothing is ever easy to start off with, and I can tell you it doesn't get any easier as you progress, but I can tell you persistence is key.

Going back to that trust idea, it is the most important part of selling online. If somebody can see you are trustworthy you have to make sure you are. So take care in the products you are sending. Think to yourself: "Would I want it to arrive looking like that?" or "Would I buy that over everything else?" Constant self-evaluation with mean that you can assess how well you are doing and look for ways to improve. Don't rot yourself too firmly in your ways, allow them to develop and flow. I know that sounds a very 'hipper' mentality to have, but trust me, you need to absorb the bumps with your knees to save your back from breaking.

Follow me on twitter: @peachy146

Wheelin’ and Dealin’ Part 1

This article is going to cover some theories behind buying and selling on the internet and how best to portray yourself as a small ‘garage’ business using sites such as Amazon and eBay as shop fronts.

I think the most fascinating thing about buying and selling on the internet is watching the patterns which emerge from people’s buying habits, and seeing how different little tricks can change what people buy.

The first issue everyone has to overcome when selling stuff on the internet is competition. I would say this is probably the biggest hurdle. And it is such a big issue because there are so many people doing the same thing. I am currently reading Alan sugar’s book, where he talks about going into the Hardware shops as a Salesman and offers his products. There isn’t the same way of working on the internet as there is in the real world. There is no human contact or traditional persuasive selling patter which can be used.

The internet has its own selling system and it mainly involves the user coming to find you, not the other way around which is the more difficult bit. What you also have to consider is not only is there lots and lots of things which people are selling but also lots and lots of things which people are buying. The range of stuff which you can find is so much more expansive than any shop you may find, no matter how big or small.

So we are in a situation with so much to choose from to start selling, limited funds, and so much competition. I know what you will be thinking now. How do I even start. My top tip here would be to clear out your loft, or under your bed. Have a good old sort through your junk and find a few items to sell. Maybe 4 or 5. Advertise them on eBay. I am not going to tell you how to sell on eBay, that is for other blogs or maybe a later post, but I will tell you the first items you sell will be the best indicator of where your selling path may go. You can really get a feel for what people snap up, what sells and what doesn’t, how the system of eBay works and also how best to market items.

You will find many extra tools on eBay, most of them designed to squeeze every last penny out of the profits you make so you have to be careful with this. Do the maths and make sure you aren’t making a loss. Work out what is effective and what isn’t. Also by selling a few items you will build up some reputation on eBay and people will be more inclined to buy from you.

Let’s all take our parents for example. I know mine are certainly the ones who won’t buy anything of Amazon unless it is fulfilled by Amazon and take extreme care on eBay. They may really want that china teapot somebody bought you for your birthday 6 years ago because it has a tiger on it, but if you don’t have a very good ‘reputation’ they will stay well clear. I could make or break most of your sales.

Even the tech savvy look at this when purchasing. I can’t stress to you the importance of it. And it is built up with you being reliable and professional from the very start.

Don’t miss part 2 of this article where we look at moving you little endeavour on from just clearing out the junk under your bad or in the top of your wardrobe.

Please follow me on twitter: @peachy146

Selling Virtual Stuff

The world of technology is filled with a sea of nerds battling it out for the prime position. They trawl through the internet looking for new ways to conquer and gain ground. At least that's how some people see it. And partly that's true. There are so many nerds who do stuff on ths internet its unreal. And I am one. Admittedly not a very good one, but thats not saying there isn't plenty to do.

Think about the things you do on the internet. YouTube,  social networking, looking though websites, playing games and using addons and stuff. There has to be a way all that is made right? And there has to be a way to do it and people who can't do it, right?

There are many forms of 'computer construction' and the builders are sought after folk. I know someone who is able to make complicated computer programs at a high level in a difficult language and he can make up to £2500 per job. People want taylor made stuff on the internet and that requires people to make it.

If you can learn a skill that people want to use you are quids in. For example, the most basic form of webpage construction, html webpages, can be bought for £50 a page. Now a 4 page website and it already starts racking up. Your challenge is to learn that skill so you can make money off it. You can make web templates for example,  java applets for browsers or games for people. There is so much potential for you in programming even at a reasonably basic level. Remember the better you are, the more you earn.

Another way of creating digital products is that of the stock photo industry. People use stock photos off royalty photo websites for websites and magasines etc to save on taking them themselves. This is a great way of monetising those ameture photography skills.

You can also create eMagasines and newsletters, which can be used as a portal for advertising revenue.

Blogging is another option going down the advertising route. See my article on blogging for more info on this.

I have touched before on writing your own articles and doing freelance writing as a way of generating a little extra dollar. This is very handy and accessible with websites such as eLance.

There is obviously plenty more ways to make money from little virtual products and lots more things you can make with a little bit of skill and a load of creativity.

Follow me on twitter: @peachy146

Making Some Cash on The Internet

So for a lot of us, we feel the internet is the place to make money. Depending on your skills and interests, there are lots of places to make money. From YouTube, to Blogging, to buying and selling, there is so much you can do on the internet and so many outlets to sell your services and products.

There are 2 main categories which you can make money on the internet. The first is doing something for someone else and the other is selling something to somebody else.

The first, can involve many different things. Some examples inlude famous YouTubers such as The Yogscast, SeaNanners and the like who make videos and post them on YouTube and monetise them by allowing YouTube to place adverts on your videos and give you a cut ofthe profits. You can also do this on google blogs and any other form of posting articles or blog posts such as squidoo and others simular, where you add a google adwords section whih displays results from a google search in a box and then google pay you per click.

You can also offer you services as a freelance writer. Websites such as eLance and others allow you to offer yourself to write and people bid on a certain job. Your profile is stored up and people can view it, thus able to evaluate whether they want to work with you very easily This is a great platform and I have built myself up a little work pile which mainly involves copywriting and proof reading. The easiest and most boring jobs are the ones which you should start with and then progress from there.

The second category involves a little bit more thought and possibly a little bit of an outlay finance. Selling stuff to people on the internet is so easy in the growing global world of online shopping. However people's successes are built on their own good service. If you sell well and reasonably, then people will come back. If you mess people about you loose a lot of customers very quickly.

There are many ways you can sell stuff. eBay, Amazon and the likes are the best, with being able to set yourself up your own web store being even more easy than ever before, the word is your oyster, literally. You can sell virtual products: anything from web templates and websites; to music samples and loops, as well as digital imagery, fonts and graphics. BE very very careful with anything you do in this field that it is enirely your own work. However I may do a future post on this.

The final thing is your traditional wheeling an dealing. The way the likes of Peter Jones and Alan Sugar made their money. And with the internet now it is so much easier to set up an online sports shop for example from your own bedroom. Once again customer satisfaction is key and there is a lot of psychological theories which cover this. These are for another blog post though.

I hope this has filled you with inspiration to start making money on the web and I hope you prosper fully. Make sure you follow me on twitter @peachy146

The Classic Schoolboy Salesman

So I am going to talk you through my best money making scheme at school and tell you what I learned in doing so. Learn from my experience. I got quite into it. I even had an internet payong system set up at 1 point!

So I noticed all the deals going on in the local paper shop and convenience store right by my bus stop. I thought: 'If these companies can sell stuff off so low, there must be a reason why they sell them normally so high.' So I went away and did the maths. It didn't take long. If you can sell 4 mars bars for £1 but sell them singularly for 63p, then something has gone astray. I worked out I could sell a mars bar for 50p, undercutting the shops and making a 100% cut for myself!

So there it started. I bought some and asked guys at school if they wanted to buy. They got snapped up quicker than I could manage and by the end of the week I could buy 4 or 5 packs and sell them all. With a £1 profit per pack this was pretty alright. But of course, little shops sell out fairly quickly. So I had to use a bit of imagination. I realised I couldn't keep the same brands on all the time. I would have to be resourceful.

So I had to look around. Maybe the haribo were on a buy one get one free, or maybe the cans of pop. This is where you should look. Anything that you might be able yo split up and sell. Let me tell you if your mates csn walk into the same shop and buy something for a cheaper price you have lost your sales. You need to hndercut the shops. And the only way to do that is to buy on offer and sell off the offer. Simple.

So I continued buying stock every day. Maybe £4-5 every morning! This was a real slog to get it all into my school bag. I also had to face the disapproval of mum and dad. So everything was bought and sold on the same day. Simple. Nothing went over the threshold of my own house.

It was tricky to do. It taught me a few great lessons. Number one. Being resourceful and creative. Number 2. Judging exactly right. You get to know what your customers want after a while. One of my friends could do kit kats for 40p. There was no way I could do that. So I didn't bother with them. And I knew that if I bought in some pepsi, one of my friends may snatch 4 or 5 cans,  so I could afford to get 2 6 pscks and would be able to sell almost all of them in a day. It was a great lesson to me, about what people wanted and didn't want. And about how people think about money and savings. If someone can buy 1 can for say 63p and 4 for £2, every mug will go for the 4 can option. Even though they may drink 4 in the same day as they would just 1, and therefore they have spent more money, they feel like they have got better value.

And that is how a large majority of people think. They buy in bulk because it is better value and not cheaper overall. The 63p can would have meant people spend £1.37 a day than if they bought 4. Just be aware of how people think about what they are spending and propagate your money tree.