Save yourself rich

This week in the UK as part of George Osborne’s Budget, a new ISA called a “Lifetime ISA” was launched. The new ISA would enable you to get a 25% bonus on everything you saved up to £4000 a year. So you can get an extra £1000 per year in your account plus interest, from next April until you are 50. There are of course a few bits of small print, the big bits of which being that you only get these bonuses if you use the money towards a house purchase or your retirement.

My wife went through the numbers and projections last night and if we changed the way we saved and kept to the plan she made, we would have a very nice nest egg for retirement through this scheme. The thing about this new ISA is that I can’t think of any other savings method that is completely risk free that would give you a thousand pounds plus interest for a £4000 contribution.

What you save not what you earn

I am a big believer that life isn’t about how much you earn it is about what you spend and what you save. The amount of money you earn only makes you rich if you use it wisely. My wife and I make a great team for many reasons but one of them is because I am good at getting good deals and finding things for very cheap prices and she is great at saving, planning and budgeting. The combination between spending and saving is so important; if you do both well, you will have a great financial future.

I think when looking at savings, the important thing to do is to not look at the amount you are saving this month and how much money you make on your savings this month. You need to look at what the numbers look like if you keep saving that amount per month for 10 years, 20 years and so on. It is the numbers you will see then that will give you the incentive to keep on investing your small amounts every month. It’s like looking at your monthly direct debits, if you manage to get a new phone contract that is say £10 less a month than your current one it may not seem much, but if you look it over the two years of the contract that’s £240!

Working for you

Always make your money work the hardest it can for you – I hate this terminology but it is very true. Look at what savings options are open to you and pick the best ones for your needs. We are always being encouraged to shop around for best deals on insurances, energy and so on but it is also important that you shop around to find the best savings avenue for you.

Before this week I thought saving for retirement was impossible and that we would have very little but now with this new ISA and a plan I know in later life we will live a nice comfortable life.

Are businesses ruining the name of crowdfunding?

Embed from Getty Images

Over the last year I have grown quite tired of seeing companies and businesses asking their fans to bail them out of bad financial positions and using crowdfunding as their vehicle to do this.

Crowd funding websites and services, like Kickstarter and Crowdfunder, have led this growth market, that sees people pledging money to support projects and ideas that they are passionate about:

https://www.kickstarter.com/

http://www.crowdfunder.co.uk/

I think these services are great for people or organisations that don’t have the resources to accept their own donations and have no other way of raising money. I love going on these sites and seeing people trying to gain support for ideas they are passionate about, people that are trying to make something happen and aren’t letting their dreams or ideas go to waste.

Crowdfunding to save a business

The one thing I detest though, is when I see established businesses who have fallen on hard times who use crowdfunding just to stay afloat. These organisations ask their customers, supporters and fans who have paid in to their organisation for years by consuming their products or services, to then hand over even more money, just for the privilege to continue paying for their products or services.

These businesses, when they ask to be bailed out by supporters are normally ran and owned by people, who have a better quality of life and are in more privileged positions than the people they are asking to put their hands in their pockets. In these situations they are asking for more loyalty from their supporters, but yet these supporters haven’t been treated with any loyalty by the business.

It would be one thing if the business asking for money were offering you the chance to fund something tangible, like a new building or a new scheme but to simply say we have run our organization badly, have got ourselves in to debt and now want you to pay it off is staggeringly poor. If I were to get myself in to debt, I couldn’t set up a crowdfunding page asking members of the public to pay off my debt that I incurred through poorly managing my finances.

Abusing loyalty

I also take a dislike to when social media campaigns start up saying something along the lines of save our organisation, club or company. The way to have save it would have been to run it better in the first place, the horse has already bolted on the easiest way to save it.

If you are a for profit company, you should live or die on the strength of your business and your plans. As a business you shouldn’t let yourself get in to a position where the only thing that can save you is the public’s generosity.

Charities – the original crowdfunders

If you are looking for the public’s generosity to survive, you should be running a charity not a business. Charities are the original crowdfunding platform and have been doing crowdfunding even before anyone had the term crowdfunding. That’s why I love charities and happily donate to them, as by donating you are supporting a cause that you feel passionately about and are doing something to help that cause. You give, knowing that your money is going to fight a battle that can’t be supported in any other way and that the organisation aren’t just using your investment to generate profits for people.

I would implore crowdfunding services to stop businesses using this source of moneymaking to get them out of financial problems. I would also like to implore the businesses themselves to look at other ways of raising capital to get themselves out of trouble, rather than take money away from projects and ideas that could really do with the support.

Support

If you have the spare money and you feel the urge to crowdfund something, please go on to one of the many crowdfunding sites that are out there and find something that inspires you to support. By doing this you can make sure your money is going to help make someone’s dreams come true and that you are investing in something new that you want to see happen, done by someone that couldn’t make it happen in any other way.