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A money expert has revealed the five key mistakes that people make when it comes to managing their personal finances – and shared vital tips about what they can do instead
Islay Robinson is a self-made British entrepreneur and broker who advises the super-rich on how to leverage their savings, but much of his advice can easily be applied to the average Brit’s finances.
The 44-year-old knows only too well just how important it is to make the most of your money and has shared his top tips on how to avoid five common pitfalls and boost your bank balance at the same time.
The first thing he recommends is to never accept the first offer. Unless you have a few spare million lying around, it’s very likely that you will borrow money at some point in your life for a big purchase like a car or a house. And when that happens, there’s one thing you should always remember.
“When borrowing money, many people will just take the first option that is presented to them,” Islay, founder of Enness Global and Tenn Capital says. “In my experience, they will turn to their own bank when they need a mortgage, a business loan or a similar cash injection. If the bank says yes, they’ll often just accept this – because it’s easy.
“Or they’ll take advice from a family member or mate who has a ‘good’ recommendation and means well. Neither of these are good ways to approach your personal finances because it is just that – personal – which means you might get different deals if you look further afield.
“Timing is also everything; the market and interest rates are constantly changing. You should apply this same principle to smaller purchases as well, like internet or phone deals or even your supermarket shopping. Research might cost you time now, but it will save you money in the long run.”
And he says paying a professional could save you money in the long run especially when it comes to financial advice. “As the saying goes ‘you have to spend money to make money’, Islay adds.
“While the phrase should be taken with a pinch of salt, there is one key area of personal finance where splashing some cash could boost your wallet. Some things cost money for a reason – taking shortcuts when trying to grow your personal wealth could actually cost you more money down the line.”
Buying a house and investing for the first time are two prime examples of when it’s probably best to get expert advice. Free online tools certainly have their uses but when it comes to getting the most out of a big chunk of cash hiring a professional should pay for itself.
And talking of investing, the best mindset to adopt is to ‘get rich slow’. Islay recommends that when starting any bigger financial venture – such as investing or starting a business – you should commit to a 24-month plan or longer to get the best possible result.
“Making money in one year is very difficult, regardless of whether you have a good idea or not,” he explains. “You have to come up with the plan, execute it and then build on that. It doesn’t matter if you are trying to boost your personal finances like investing money or if you are starting a business; you must give your project enough time to flourish.
“Growing wealth is allowing your assets to build in value, also known as compound investing. Let that Bitcoin or stock portfolio sit there for a few years. Meanwhile, the best entrepreneurs I’ve worked with look two or five years ahead because they know that hitting the big time and making a profit isn’t an overnight game.”
And it’s never too late to learn new things. “Talking to people – not just your best friends or family but finding new information sources – is a fundamental part of personal finance that people often don’t really think about,” Islay adds. “Don’t rely on the knowledge you already have or Google results.”
Last but not least, he says avoid splashing the cash too early. Islay adds: “I bought a Mercedes-Benz GLE a while back that was big enough for my family. I quickly discovered that living in London – where you are often stuck in traffic – I wasn’t getting the full use of my car.
“I could afford the vehicle but the cost of petrol and insurance was another dent in the benefits of having a luxury vehicle. What I’m saying is this: Don’t spend your cash on fruitless purchases. Cars depreciate quickly in value, as does furniture. There’s nothing wrong with treating yourself but if your aim is to build wealth, think long-term. And don’t spend anticipated profits before you’ve actually got them.”
