asks if you are a spender, a borrower, a saver, or an investor!

A fool and his/her money are soon parted. Who’s NOT heard that idiom? In fact, though, there are many ways that you can be parted from your cash, some of which you may think are obvious, but one or two ways that you might want to think about!

There are four basic way stations on the road to wealth: The borrower, the spender, the saver and the investor.
A borrower: Someone who perhaps has the habit of spending more than they earn. Perhaps they have high interest credit cards and store cards. Indeed, they may even have taken out secured and unsecured loans at usury rates of interest. The first thing to do here is to recognize the problem, then find loans that have affordable interest rates. Paying down those credit card bills is also a necessity. Switching to balance transfers with 0% interest rate offers may be a good short term strategy (since most of these offers expire within 12 months or less); paying down the principal of the loans during the interest free periods by setting aside some of the money that would have gone to credit card payments, IF you had not changed lenders. In cases where the loan amount outstanding is quite large, or the rates are quite high, you may wish to seek Debt Advice. In this case, you will need to seek impartial advice and counselling to help you get things back on track.

A spender: A spender spends all the cash that comes into their lives. They will be familiar with savings products, but are unfamiliar with even the most basic of ways to control the flow of money through their hands. To counteract this effect, having even a basic current account would be quite useful. At least, the cheque book would need to be written up after each cheque is spent. In addition, at the end of each month, the spender would receive a written statement of transactions on their account. If they were smart, they might even score an account with no transaction fees, a pre-arranged overdraft facility, and some interest on cash, when the balance is positive.

A Saver: A saver may have already cut back credit card spending, reduced outstanding loans, perhaps even paid back several of the higher rated loans. A saver will have moved their savings accounts to the highest rates they can find! They will have put away a small emergency fund, too, perhaps about 3-6 months of expenses just in case. The money will be available at short notice to tide over unemployment or a downturn or an illness. A saver type will be more aggressive in getting better deals, too. For example, in these days of rising interest rates, remortgages are becoming more difficult as rates rise. However, it is possible to remortgage if you find one of the eight mortgage types more suitable to your current situation. You may still find that you can pay less through restructuring your mortgage! It may not be so easy as a few years ago, but still…

A step on from a Saver: An Investor. This is not the final stage, but the next stage on the road to financial independence. An investor will have minimized the unnecessary expenses, controlled their spending habits, built up a small security system of their own, and be willing to pay attention to the nitty gritty of financial agreements. Moreover, they may have bought their own mutual funds, a few ETFs in the stock market, some bonds, and/or a few choice picks after doing their due diligence. In spreading their assets through different classes, they may have property bought-to-let, commodities, a business or two, and so on.
Each step on the road from Borrower to Investor requires different kinds of personal, life, health and home insurance to cope with the different situations that you may find yourself. It is wise to give considerable thought to what you need, how much insurance you need (over-insurance is just as bad as under-insurance!), and who you need to insure.

Now, do you know where you are on the road to wealth? Which station have you stopped at? How are you planning to get back on the road? Most of us start out on the first or second stations, sometimes we slide back, too. Wherever you are, it will take some planning, some self-control, and some guts to get yourself moving in the right direction. But don’t despair, you can do it!

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