Frugal habits

Elizabeth Gaskell, in Cranford - about which excellent book more, another time - observes that most people have odd habits of frugality, for instance in their use of candles, or writing paper, and that there are certain areas where they will go to great lengths to save money, though they may not always be as frugal elsewhere.

Reading this reminded me of my first boss, who told me once that thirty or so years' earlier he had resolved never to buy a biro, and never again did so. He had a nice fountain pen, used for signing letters and for personal correspondence, but for everything else he made a habit of using free pens, picked up whenever they were on offer, and using those. I usually seem to be using a free pen acquired at some conference or other, and perhaps I have also absorbed the notion that pens are something which one should not have to buy.

For another, my mother-in-law, who is extremely careful and orderly in all things, was the first person I had ever met to make rubber bands out of old rubber gloves. I always seem to have a plentiful supply of rubber bands lying around, but do occasionally follow her example, although mine always have jagged edges and look a lot messier and more uneven than hers.

I suppose this is further evidence of how much we are all creatures of habit; I'm not aware that I have any particular frugal ways myself, except perhaps for an occasional fondness for second-class stamps, but perhaps I wouldn't know it; I'd be interested to hear of any other habits that others have observed in themselves or other people.

Possible re-discovery of a family heirloom

Yesterday, my grandmother and mother were visiting, and as we were having tea - coffee and walnut cake made by me; fruit tea loaf made by granny - my grandmother suddenly asked whether the standard lamp in my sitting room might have come from her childhood home. We traced back how it had come into my possession; my parents had given it to us when we bought our first house, and it was, inexplicably, then painted bright blue. ( It was the nineties....I later painted it off-white, which it now is.) My mother had inherited the lamp from her aunt, who had inherited it in turn from her mother, my great-grandmother. So, indeed, it was the same lamp my grandmother remembered from her mother's living room, from the early 1930s.

It was pleasing to think how much use that lamp has given to several generations of the family. Given its age, I thought it would be nice to see how it would look back to its original wood finish, and I have started to look into removing, or having removed, the various layers of paint, so we can see how it looks underneath.

Earning extra income: the rent a room scheme

I was speaking to a friend the other day who mentioned that he was thinking of letting a room in his home to a lodger. I mentioned that I vaguely remembered that there was a scheme allowing this to be done tax-free. I have checked on this since, and in fact the 'rent a room' scheme allows you to rent a room tax free for up to £4250 per year. This is possible whether the home is one you rent or own, although if you rent then it is likely that you will need permission from your landlord before sub-letting.

There are more details on this scheme at the direct.gov website, at the link below.

http://www.direct.gov.uk/en/MoneyTaxAndBenefits/Taxes/TaxOnPropertyAndRentalIncome/DG_4017804

Making things: ice-cream

A couple of years' ago my sister gave us a lovely present, of a low-tech ice-cream maker, and so every so often, we make our own ice-cream. (We bought some cream today so we can make some to have with apple crumble, when my parents come for supper later in the week.) The machine we have is about the size of a small mixing-bowl, and needs to be put in the freezer for a while before being used. Once it has been chilled, it only takes about half an hour for the ice-cream maker to turn your cream, sugar, and other ingredients into ice-cream; if you taste the mixture before putting it into the machine, it may taste horribly sweet, but it will taste quite different once frozen.

In terms of flavours, we have added chocolate chips or gratings – creating something along the lines of the straciatella ice-cream we liked so much in Italy, and, another time, peanut butter to remind us of amazing ice-cream eaten at an ice-cream farm in Scotland; another successful flavour was brown bread. (I hope I do not sound too greedy when mentioning the major food associations we have with all our holidays?) By the way, as well as the peanut butter the Scottish ice-cream farm made some other wonderful flavours which we have not yet tried to replicate, including turkish delight and rhubarb crumble..

It is fun using the machine, though it does make quite a bit of noise, and the ice-cream produced is definitely cheaper than the fancy brands we like eating as a treat. (It probably does not work out cheaper than margarine-style ice-cream, but is a rather different experience from that.)

'The Millionaire Mind' and the economically productive household

Following on from last week's post about 'The Millionaire Mind' and vocation, this week I am looking at what this book has to say about household spending. In one chapter, Thomas Stanley analyses the spending patterns of the wealthy, and notes that the members of wealthy households are more likely than others to be in the habit of doing the following things:

-Changing telephone providers to benefit from cheaper deals
-Having shoes repaired
-Having furniture re-upholstered instead of buying new
-Using discount coupons when shopping
-Buying household supplies in bulk

He points out that although doing each of these things may result in a fairly small weekly or monthly saving, over many years, the amounts saved will be significant.

I found one of Dr Stanley's examples interesting: that of a wealthy woman who, together with her husband, lived in a very nice house in an expensive neighbourhood. She bought high-quality clothes, but from second-hand shops rather than bought new; she ate good-quality, healthy food, but used coupons, planning her meals in advance, and cooking from scratch, and did not drive an expensive car. She was happy to spend a lot of money on antique furniture, partly because good quality furniture would last for a long time and be worth repairing or re-upholstering, but also because antiques would generally hold their value over time, if not increase, and could be passed on to future generations.

The lessons I took from this chapter were that it is worthwhile taking a long term view as small habits can lead to significant savings of time; it is worth prioritising what you want to spend money on, and allocating resources accordingly; and that it makes sense to spend money on things which will hold their value, or increase, like property or antique furniture, rather than consumer goods, expensive cars, or cheap furniture, which will not.

A letter about overdraft charges

My bank sent a letter to me this week, telling me that they would soon be introducing more 'straighforward' overdraft charges, under which they will be charging a pound a day, so three hundred and sixty five pounds a year, for having an authorised overdraft, whether for £1 up to £2500. I had to read the letter more than once to check that I had not misunderstood. The account involved is a personal account into which I pay my personal allowance, for clothes, books, and so on. The amounts going in and out are fairly small, but as it has an overdraft limit, up until now I have been pretty relaxed about going slightly overdrawn on it within the limit, when it suited me to do so, and this has cost me a few pence a month. I have learned my lesson now, however, and intend to close my account as soon as possible.

P.S After writing this post, I heard a discussion about this issue on the Moneybox programme, on BBC Radio 4, and there is a relaetd e-mail discussion on the BBC website.

De-cluttering the larder

I have been reading the recipe book "Economy Gastronomy", by Allegra McVedy and Paul Merrett, from which we've cooked some good recipes lately, and have been rather horrified by the figures on the vast amount of food wasted in the UK. Although we are fairly good about using up things in the 'fridge and freezer, sometimes packets or tins get forgotten about at the back of the cupboard.

I'm going through our larder at the moment, finding those things which should be used up before they need to be thrown away, and working out what to do with them.

Amongst various other bits and pieces, I've found the following:

Two packets of barley - there's a great barley salad recipe involving goats' cheese in Economy Gastronomy (p.199), but an even simpler meal is barley cooked in stock with some vegetables or salad and grated cheese. (The barley needs to cook for around half an hour, but needs minimal preparation.)

The end of a bag of couscous - also good with cheese or bacon and vegetables or pesto.

Red lentils, nearing their sell-by date - 4 oz can be made into lentil soup with a tin of tomatoes, an onion, and about a pint of stock. (Again, extremely easy, to make and takes about half an hour to cook.)

Green lentils - with onions, stock and garlic, could be made into a mush to accompany sausages.

Half a pack of walnuts - will be used to make a lovely coffee and walnut cake - a normal victoria sponge with a dash of strong coffee in both the cake mixture and the icing, and decorated with the walnuts.

Nuts, seeds and dried fruit - I found quite a few ends of packets - could all be added to homemade granola. (By the way, I've found that keeping all small baking supplies like nuts and cooking chocolate in a small box in the cupboard helps to reduce the chance of my buying duplicates.)

"Orchids on Your Budget, or Live Smartly on What You Have"

I mentioned that I had ordered this book a week or two ago; I have now read it, and been delighted by more than the title. The author wrote the 1930s bestseller "Live Alone and Like it" before writing "Orchids on Your Budget". This book is not aimed at those with serious financial problems, but at people interested in living well, responsibly and stylishly on moderate means.

It is filled with creative and inspiring ideas, some of which I will definitely revisit in future posts, but the main points I took from it were the following lessons:

-Don't feel you have to maintain a front of a fancy lifestyle to impress others, while scraping a miserable existence behind the scenes. Instead, forget others' expectations, take down the front and spend the money saved on things you care about.
-Work out what you want, and then work away of having that, whether by generating more money - and she offers many creative suggestions for doing so - or by making savings in other areas.
-Know the difference between real luxuries and habits. E.g don't buy a daily newspaper out of habit if you don't actually read it.
-Don't spend so much on housing, or food, that you don't have enough money for miscellaneous extras, whether those are orchids, holidays or theatre trips, or savings. The author is an advocate of getting a slightly smaller house or flat than you think you can afford; this will save not only on rent or mortgage, but also on the extra maintenance of a larger place.
-Plan ahead, whether in relation to your clothes - she suggests adopting a single colour for your wardrobe each year, and sticking to it fairly strictly - or entertaining.
-Play to your strengths, in terms of your assets and skills. My favourite example was that of a woman with a lovely silver tea service, whose preferred form of entertaining was therefore to have tea parties.
-Enjoy the challenge of doing a lot, and having fun, on a little money.
-Don't assume that you would be happier, better dressed and so on, if you were rich. The author considers that those who know about clothes will be well-dressed regardless of how much money they have; they spend time and effort instead of money.
-Do your social duty; return invitations, even if you can't afford a lavish party, and take responsibility for your problems if you do get into serious financial difficulty.
-Don't follow other people's rules on budgeting too slavishly; everyone is different, and you need to adopt a system that makes sense to you.

Is National Trust membership worthwhile?

I was taken to many National Trust houses and gardens during my childhood, and have had my own National Trust membership for most years of my adult life. Looking through my list of direct debits recently, I briefly considered the value of my National Trust membership, and concluded that this is thoroughly worthwhile. First, the National Trust is an organisation which does a great deal to preserve the English countryside, including many historic houses and much beautiful scenery. Therefore, even if I didn't not use my membership fully, this would feel like a useful charitable donation. Secondly, if I make even a few visits to National Trust houses or gardens each year I will soon save myself more than the cost of membership. Thirdly, because I can visit houses for nothing, if I want to make a flying visit somewhere, or go repeatedly to the same house or garden it is possible to do so without feeling that I am wasting money on entrance fees. (I was taken to a National Trust place near my grandparents dozens of times during my childhood, and never tired of it, and I quite often visit my nearest National Trust garden for a walk.) Fourthly, I find it educational to visit National Trust houses and gardens, always learning something in the process, whether about the history of the family involved, or the plants in the garden or the china or furniture or paintings.

National Trust membership also makes a sense for holidaying in the UK - English membership was, last I heard, recognised by the National Trust of Scotland - as wherever you are staying, you are likely to have some places to visit nearby. In the Lake District recently we found that some car parks were National Trust ones, helpfully saving members a few pounds here and there on parking fees. Alternatively, if you are staying at home for your holidays, you can use your membership for some inexpensive day trips.

Finally, many of the National Trust properties have cafes and restaurants, with good and reasonably-priced lunches and very nice cakes and ice-creams, with an apparent recent emphasis on local produce.

What to do with a lump sum?

I talked recently to someone who had come into a chunk of money, and asked me what I thought it was best to do with it. This is of course a good question to have to answer. I think it makes sense to do some planning and to try and strike a balance between enjoying your bit of good luck now, and benefiting from it in the future. My suggestion would be to do something along the following lines:

1) Pay off any high-interest debts, with the highest interest ones - almost certain to be any credit cards - first, then any other loans, apart from mortgage and student loans.
2) Once that is done, set up an emergency fund if you do not have one already, or top it up if you do. (As mentioned elsewhere, it is a good idea to have about six months' living expenses tucked away if possible.)
3) If you have done both of these and have some money left, I would designate some of the money for fun; a holiday, really nice meal out, home improvements, presents for your family, or whatever. The amount depends somewhat on how much money you have received, what your general financial situation is, and what you would like to do as a treat.
4) Next, you may want to look at your pension. For instance, if you are not paying the maximum into your pension to benefit from your employer's maximum contributions, it would be worth considering doing this for the future, and back-dating these contributions if you are allowed to do so. (If you work in the public sector you may be able to make additional contributions to your final salary scheme, which would be worth looking into, as this could make quite a difference to your final pension.) The advantage of doing this is that it should improve your pension situation in the long term. Because of the tax position of pensions, pension contributions are quite an efficient use of the money.
5) Another option, either as alternative or in addition to 4, is to consider paying off a chunk of your mortgage, although you should check first that you won't incur fees for doing so; this will probably depend on the amount of the planned overpayment, and the terms of your mortgage. Although interest rates are fairly low at the moment, paying off your mortgage will still reduce your outgoings and commitments generally, and will involve a greater monthly saving once interest rates go back up.
6) If that still hasn't used up your windfall then you are very lucky indeed! You may want to look at other investments such as stockmarket-based unit and investment trusts, and you may benefit from specialist investment advice at this point.

The Millionaire Mind by Thomas Stanley, and vocation

I have recently re-read "The Millionaire Mind" by Thomas J Stanley, partly to refresh my memory about this very interesting book, and also with a view to reviewing it here. I realised, however, that it addressed so many themes that I would prefer to write about a few of them in turn. If you have not encountered this book before then I do recommend it; following on from "The Millionaire Next Door", by the same author, it covers the characteristics of those who become wealthy in America.

Contrary to what you may expect from the title, and my description above, this is not a self-help book, and there is nothing gimmicky about it, but instead it is a very detailed academic analysis of how those who become wealthy do so, and the factors in terms of personality, profession, and financial approach which contribute to their success. (The author is an academic and university teacher.)

On re-reading, I was particularly struck by what Dr Stanley says about the importance of vocation for those who become wealthy. I have sometimes felt that one seems to have to choose between earning a good salary and doing enjoyable and interesting work. I have recently concluded, and this was reinforced by what I read here, that it might actually be unwise to stick with a career one does not love, quite apart from the unhappiness involved in doing so, because of the need to compete with others who are more genuinely motivated and enthusiastic, which over time would begin to tell.

I found it very interesting and encouraging to read the probably obvious-to-everyone- else fact that those who are financially successful in their work generally have great enthusiasm for what they do, not purely as a means of making a living, but as a vocation which uses their talents and suits their interests fully. It was also good to read the story of one highly successful sales man who left, or was dismissed from, 9 sales jobs before finding one to which he was ideally suited, and in which he was highly successful and contented.

Making things: granola

I recently tried making granola for the first time. Most breakfast cereal didn't seem to taste of much, but to involve a lot of packaging and to be rather expensive - and the more interesting-tasting cereal seemed very expensive. It is quite a satisfying exercise, and very easy, to make your own granola instead, and a good alternative to porridge - another wholesome breakfast - if you don't have time to cook, or don't feel like it. I used Nigella Lawson's recipe from Feast, although on second making adjusted the quantities, as the Feast recipe involved large quantities of rather expensive whole almonds. As well as eating for breakfast, it works well sprinkled over ice-cream as a pudding. Similar recipes to the one I have used can be found at : http://allrecipes.com/howto/great-granola/detail.aspx

Mending

Today, I have spent a satisfying hour or two mending clothes. I am not a talented seamstress, but have been sewing on buttons and mending tears in a few shirts. It is a good feeling to make these repairs, and to put some garments back into circulation which have been on a mending pile for some time. I have a small sewing kit which includes a twist of threads of all sorts of different colours, which I have had for years. When I come to mend an item, I can generally find a piece of thread of approximately the right colour for the garment involved; I don't need to buy or store reels of cotton of many different colours.

Using credit cards

I recently read an article on get rich slowly - www.getrichslowly.org - where the author suggested abandoning using credit cards and using cash instead. I thought this was an interesting suggestion, although one I might find it inconvenient to implement in practice, but I do agree that it is best to simplify one's credit card situation as much as possible. My thoughts on using credit cards are as follows:

1) Credit cards are a terrible way to borrow money; the interest rates are huge compared to any other type of loan.
2) Credit cards can be a useful way to pay for many purchases, but only if you already have the money for them.
3) It is worthwhile signing up for a credit card with reward points or airmiles. (Mine gives 2% cashback.) These benefits are only worthwhile if you pay off the full balance every month, however, as they would not come close to offsetting the interest payable.
4) Having used various cards in the past, I have now simplified my situation to the following; using one Mastercard for all household bills and most large items.
5) I have online billing, meaning a) you can check the state of your account at any point, and b) it is set up to pay the full balance every month, so you don't need to bother with a bill and worry about avoiding late fees. If you do not have this option, make sure that you have a way of keeping track of the due date of payments, so that you avoid running up charges for late payment.
6) If you need to have a back-up card, for instance for travelling or to pay for large one off items, keep it tucked away somewhere safe, and not in your wallet, when not needed.

Business travel, and money

I went to Germany for work this week, and while away gave some thought to my rules on business travel and money. (The day I set off was also the day that the next phase of the MP expenses scandal began!) I find it quite easy to fritter away money while travelling; here are my thoughts about how to avoid doing so.

1) Keep a container of miscellaneous currency, and make a habit of checking it, and taking relevant currency, when you go away.
2) Designate a wallet or envelope for expenses for your trip when you set out, so that you have all your receipts in one place.
3) Try to avoid spending money on anything that while potentially justifiable, you won't feel comfortable claiming back on expenses. (E.g extra snacks, slightly expensive lunches, or taxis, if the policy is to use public transport.)
4) Make sure you get receipts for anything that you do intend to claim back. (I felt slightly embarrassed reminding the air steward about the receipt for my airline bottle of water this week, but it was a very expensive bottle of water, and I had this article in mind!) If you are in danger of forgetting why you have kept the receipt, write on it.
5) Be prepared for time waiting around by taking plenty of reading matter, so you will be less tempted to succumb to airport newsagents and book shops.
6) Be careful about phone calls home from abroad; if you are entitled to claim the costs of a phone call home, keep the appropriate records; be aware of the hotel or mobile phone company's charges for overseas calls.
7) If you are expected to use your own credit cards for large items, e.g hotel bills, take the opportunity to pick up reward points, or airmiles.
8) If you have the opportunity to do any personal shopping, take advantage of this to buy things that may be cheaper, or better, than at home, if you have decided you can afford to do so. However, do make sure you are up-to-date on the exchange rate, and watch out for hidden sales tax, not marked on goods in shops, in some places.
9) When you get home, return any unused currency to your miscellaneous box, and fill in and submit your expenses claim as soon a possible.

Book Review: "A Guide to Elegance" by Genevieve Antoine Dariaux

This may sound like a frivolous book to be reviewing for a blog supposedly about personal finance, but actually I found the advice it contained extremely useful and practical, assuming that the topics of clothes and style are of interest to you in the first place. As I have mentioned before, I find clothes-buying an area where I am naturally inclined to spend money.

This book, whose full title is "A Guide to Elegance for every woman who wants to be well and properly dressed on all occasions" was originally published in 1964, though was updated and re-published in 2003. Though some of the advice, written as an A to Z of clothing-related themes, harks back to a more genteel era, with the suggestion of different outfits for morning and afternoon, cocktail parties and weekends away, sounding in many cases more like 1934 than 1964, much of it remains entirely applicable.

Mme Dariaux considers that Frenchwomen tend to have far fewer clothes than their American counterparts, partly because they are less exposed to advertising, but that the garments they do own tend to be of far better quality. She notes, and this was one of my favourite points in the book, that a woman's aim should be to own a single perfect outfit for every possible occasion, and that there is no stigma attached to wearing the same dress on many occasions.

Other advice is to invest fairly heavily in a good quality, and ideally colourful, winter coat, possibly bought with a skirt in a matching colour, as this should last for several years, and to take the opportunity of a prosperous phase in life to acquire some good jewellery, handbags, a gold compact, a nice umbrella - rather than to buy fashionable dresses which will not stand the test of time.

Under the heading of "budget", is the surprisingly short list of items that the author considers essential to a woman's wardrobe; this is expanded upon in the "Ideal Wardrobe" section.

Her advice on bargains is that whether an item is really a bargain has little to do with its initial cost, and everything to do with how much use and pleasure you derive from it over time. The author also wisely counsels against buying anything, particularly in a sale, because it is bound to be "useful"; you should love it.

In summary, I thought this was an excellent, and very encouraging book. It left me feeling that if I could manage to take a long-term view, plan, and save up for clothes that I really wanted, I would end up better dressed, without having spent too much, and with less clutter in my wardrobe.

The local shop

About a year ago, a small food shop opened in a village a couple of miles away. This was quite an exciting development, as until then we had been dependent on a not very interesting or convenient selection of food shops. The village shop sells fairly local fruit and vegetables, meat, and cheese, as well as a small selection of everyday grocery items.

We try to support this shop by visiting fairly regularly, buying fruit and vegetables, occasionally meat, bread and special cheeses where needed, essentially those things where it feels worthwhile to buy really good quality local food. As a special weekend treat, we also sometimes buy almond croissants; these are huge and the best I have ever had. For a recent family picnic, we bought a meat pie, good cheese, and a large crusty loaf.

Another advantage I find to the village shop is that it is quite refreshing to have fairly limited choices about to buy, as the shop is extremely small; this makes shopping trips very quick and straightforward.

Out of hours, we go to a local co-op to stock up on other things, and we occasionally - maybe every month or two - go to a discount supermarket to stock up on non-perishable items, like tinned tomatoes, kitchen towels and cleaning supplies, which it seems worthwhile buying cheaply and in bulk.

Making things: greetings cards

I am not very skilled at crafts, lacking artistic ability and not being handy, but I like the idea of making things, and generally enjoy doing so when I do attempt it. A while ago, I bought some cardboard, rubber stamps - one a futuristic swirly pattern, and one a rather pretty rose, and some red ink, with the intention of making some greetings cards. I have just tried doing so, and made a few rose-stamped cards. The ink pad had dried out rather, so I added a little water, in the end possibly too much, so the roses ran slightly, and one looks rather more like the man in the moon than a flower. But the exercise was quite satisfying, and I was mildly proud of some of the results, which I think are usable. And the craft materials I bought have at least now been put to some use.

"Orchids on Your Budget, or Live Smartly on What You Have"

I spotted this wonderfully-titled book in Vogue earlier this week, where it featured in a money-saving feature. It is about living elegantly on a small budget, and was written in 1937. I can't wait to receive my copy....(Sadly, this was not featured in my library catalogue, but I decided that it sounded worth buying.) I will report back in due course.

Lifestyle deflation

I used this term in an earlier post, but didn't explain what I had in mind. I have read various references recently to 'lifestyle inflation" meaning the tendency for one's spending requirements to expand with a growing income. I have been thinking back to when we first started working, ten years' ago, and had two small incomes, yet felt better off in many ways, and certainly much less cluttered up by life, than we do now.

Part of it is of course the benefit of hindsight, but I also think that our expectations and needs were much less, and simpler, than what we have become used to as the years have gone on.

Life was not entirely simple back then; we had a house, but it was brand new and low-maintenance, and contained IKEA furniture, some books, a few clothes, and not much "stuff". We had a car, but only one, and lived close enough to work for me to walk there. (Not an advantage in every respect.) We still lived a student-y lifestyle, and our tastes in meals out, clothes, food and furnishings were less sophisticated - possibly in a good way - than now.

Something I have been trying recently is to intentionally deflate our lifestyle. I've reduced my clothes allowance - only just, so cannot yet report on how painful, or manageable, this will be - and will be trying out a much cheaper hairdresser than usual. (I had been going to a lovely hairdresser, but the cost was high.) We are intentionally eating out less than had become our habit. So far, I do not feel deprived, but we will see how it goes. I definitely think that there is an element of habit in many of these expenses. While I do not want us to feel deprived I think, like the routine of buying lunch mentioned elsewhere, that it is possible for something which should be a treat to become an everyday "need", and then it is no longer appreciated, and just leads to further treats seeming normal.

Planning

I've been working quite hard recently, including some time away from home, and consequently haven't been as well-organised in various respects as I might have been. As well as being inefficient with time and energy, my lack of proper forward planning has also led to some financial inefficency.

For instance, I recently ignored the telephone calls from the car insurance company about my renewal until the last possible moment, meaning that I didn't have time to shop around properly for a quote, as I had intended to do.

I've also forgotten to take my packed lunch in to work a couple of times, and therefore had to buy lunch out. I used to feel that a bought lunch was a nice treat on those days - two or three a week - when I was away from home. Nowadays, except on these few recent occasions of forgetfulness, I am in the habit of taking a packed lunch, and save buying lunch for a special occasion, usually a social gathering.

If I am in a hurry I am also more likely to leave making travel arrangements to the last moment, so not being able to take advantage of cheaper rail fares, as well as more likely to eat out for convenience rather than pleasure.

When things are going well, I enjoy planning ahead, and find it quite easy to do so, but I have noticed that my natural instinct is to put my own affairs on hold if feeling under pressure, and find myself living from one day to the next. I'd like to think it is partly the result of a conscientious nature, but is probably not ideal for my own health and happiness, and this is something I am resolved to work on. (A classic example of this is my old habit of leaving my expenses claims to languish for months before submitting them - though that is one habit I have now more or less broken.)

Savings - different purposes - retirement

I've tackled emergency funds, paying annual bills, and saving up for large purchases, and this time am going to begin the subject of saving for retirement. (Remember - I am not an expert, so deal in these questions in fairly broad terms...)

In summary, while most of us working now may receive some kind of state pension on retirement, it seems likely that the vast majority of the money we need to live on in retirement will have to come from our own resources.

There are various possible sources for this income, the most obvious and generally applicable being a pension, to which we will have contributed while working.

There are essentially two kinds of pension; one, a 'final salary' pension which is based on receiving a proportion of the salary you are earning just before retirement, for the rest of your life, and often involves a lump sum being paid on retirement as well. The proportion of your salary which you will receive will depend on how many years you have been a member of the scheme. Final salary schemes are currently available to those working in the public sector, as well as in a very small, and declining, number of large corporations. The advantages are obvious, and the contribution you will have to pay as an employee relatively small compared to the benefit of a decent, guaranteed income in retirement. It may be worth making additional contributions in order to get the maximum benefit from these schemes, if you join late and can afford to do so.

The second type of pension is a 'money purchase' scheme. Under this scheme, employee and employer will usually each contribute a percentage of the employee's salary into a pension fund, which will build up into a sum that can be used to buy an income for the rest of the employee's life when he or she retires. Usually the pension will be held with a financial institution chosen by the employer, but the employee will often have a choice about which funds they invest in, and which are most appropriate will depend on your age, and how much risk you are prepared to take.

The pension contribution offered by different companies will vary, and companies generally match the employee's contribution up to a certain maximum, normally around 5%, maybe up to 10% if you are lucky. It is worthwhile thinking about making the maximum contributions in order to get the greatest benefit from the employer contributions, if you can afford to do so. On retirement, the money in your fund, which will hopefully have grown considerably over the years, will be used to buy an income for the rest of your life, called an annuity. There are various factors which will influence the value of your money purchase pension, including how much you have managed to contribute, which funds your money has been invested in, how much these have grown, and annuity rates - the rate at which it is possible to buy an income - at the time you retire.

Public libraries are wonderful things....

I am not the most patriotic of people, but I do greatly appreciate the UK public library system. I have always visited my local library regularly, to stock up on general reading material; I enjoy reading greatly, and can get through several books each week. However, until fairly recently, I felt somewhat limited by the selection of books in my local library, which as I live in a small town, is not huge, and I would be tempted to supplement the books I borrowed with online purchases.

However, when I lost my library card a few months' ago, and went to sign up for a replacement, I found that the library now offers online reservation services. If you are not already using these, then I strongly recommend investigating them. You can search your county's library catalogue, find out where any copies of the book you are interested in are held, and if the book is not held at your local branch, summon it to you.

This service costs 85p, at least in my county, but will have the book delivered to your local branch within a few days, if it is not out on loan. I find that using this means that there are many books which I do not now need to buy, and am changing my book-buying approach. Now, I buy those books I have read and decided it is worth owning, as well as those which I strongly wish to read, and cannot find through my library catalogue. (This is sometimes the case for US personal finance or business books, for instance, though most fiction I am interested in is available.) I find that many books I read I may enjoy, or get useful information from, but I really do not need to possess a copy.

Another advantage of the system is that if I feel the need to do some online shopping, as well as other spending-deferral techniques which I will discuss more later, I find that reserving books via the library catalogue is a good, and wholesome-feeling, alternative to buying them.

As well as books, libraries can be a good source of DVDs as well as audio-books on CD. I recently hired, for little over £1, an audio book which lasted for most of a trip to the Lake District and back.

While I am in the library, I may take the opportunity to flick through the magazines they subscribe to - yes, I enjoy Good Housekeeping, especially the recipes - and the various newspapers held there.

Lifestyle deflation - a simple meal involving tinned tomatoes and not much else

When I think back to the food I ate during my childhood - and I think I ate particularly well - it seems to me that the meals we ate then were a lot simpler than the meals eaten now. This was during the seventies and eighties, and although we had some instant meals, butterscotch angel delight, miniature frozen pizzas and mousses being among the greatest treats, pretty much everything we ate was made from scratch. My parents were, at times, at least semi-vegetarian, so we did not seem to eat much meat at home, and our meals seemed to be quite economical. We virtually never ate out, had few take-aways, or even bought cakes, and our ready meals were limited to the occasional pizza and chips. Like my mother, both my grandmothers are good cooks, and we ate many post-war type meals cooked by them.

Meals I remember with particular fondness were: bacon, egg, macaroni and peas with plenty of tomato ketchup; a bean and vegetable stew, baked potatoes topped with paprika and grated cheese, apple crumble, homemade chocolate sauce, millionaire's shortbread (though we did not know it by that name and called it "Granny's chocolate stuff), and macaroni cheese.

One of my all-time favourite meals, an incredibly easy, comforting and economical one, still one of my favourites, begins with tomato sauce and pasta. There are million recipes for tomato sauce so you hardly need mine, but here it is anyway.


Tomato sauce and pasta

For two people, cook one small or half a large onion on a low heat in sunflower oil, possibly combined with a small knob of butter, for around ten minutes, after sprinkling lightly with salt. You do not want the onion to brown, but become translucent, and when you taste it, it should have sweetened and lost its raw onion flavour.

Then add one tin of tomatoes, chopped if you have them, but if you are using whole tomatoes, it is best to mash them up with a spoon to break them up. Add a chopped or minced clove of garlic at the same time. If you feel like adding any other vegetables, and have some lying around, you could add some sliced peppers or mushrooms at this point, as well as a dash of oregano or basil if you have it. Bring the sauce to a simmer, and cook for 10 minutes before putting pasta on to accompany it. Spaghetti is good, but you can use whatever pasta you like, or have to hand. (Or a mixture of the ends of bags, as long as you start with the longest-cooking pasta, and watch the timings carefully.) As the sauce is not a very filling one, I suggest you err on the generous side in your per person pasta allowance. (I normally allow 75g per person, but you might want closer to 100g.)

Serve with grated cheese: cheddar or parmesan are both good, or I like a combination of the two, but again, whatever you have is fine. Alternatively, you could chop up a piece of mozzarella and stir that into the sauce just before you serve it. If you have any pesto you could serve a dollop on the side. Equally, if you have any salad leaves those would be a good accompaniment. You will definitely want some freshly ground black pepper.

Ice-cream and chocolate sauce

The pudding I associate with this main course is ice-cream and chocolate sauce. To begin, take your ice cream out of the freezer. I suggest using vanilla, whatever kind you like. Whilst I now prefer to avoid the margarine-style of vanilla I associate with my early childhood, you definitely do not need to use anything fancy. If you would like any accompaniments with your sauce - crunchy cereal, sliced almonds, sliced bananas, tinned pears - get those lined up now.

To make the sauce, for two people, put a desert spoon of margarine into a small saucepan on a low heat, then add a desert spoon of golden syrup, melt the two ingredients together, then stir in a desert spoon of cocoa, and simmer very gently for about 30 seconds. You want the sauce to bubble very gently, but not to boil. Then pour over the ice- cream, and leave for a few seconds to set, before adding any accompaniments, and eating.

I have not actually calculated the exact cost of this meal, but it is very little indeed, and its comfort and nostalgia value is considerable.