There’s also a variance between perceived and actual quality. What Car? magazine regularly lists the most unreliable cars, usually peppered with premium brands such as Porsche, Audi and Range Rover, so I’d contend that many are not basing a buying decision on functionality and true quality. When I took in my BMW for its first MOT, I was told my three-year manufacturer’s warranty had expired. My previous Vauxhall Insignia came with a lifetime 100,000 warranty, and I ran the car for six years and 125,000 miles. The BMW is arguably perceived as the ‘better quality’ brand but the warranty the manufacturer provides suggests otherwise. (For the record, the only thing replaced under warranty on the Vauxhall was a boot strut, so I can confirm it was solidly built.)
Go on, treat yourself
Finally, buying things that give you a bit of a ‘high’ and make you feel good about yourself are often associated with certain brands, and this can’t be ignored. But it’s independent of what you’re actually buying, so you have to acknowledge this impact if you’re reflecting on your shopping behaviours and habits. Psychotherapist Pamela Roberts (from the Priory Group) sums this up better than I can: ‘Society promotes the positive effects of shopping as beneficial – “give yourself a treat”, “what you need is some retail therapy”. We are exposed to highly sophisticated marketing techniques. It is easy to see how this, together with the very real, if short lived, psychological benefit and “easing” from stress or emotional pain that making a purchase can bring, is for some akin to the short-term benefits of substances.’
Ultimately, by understanding and managing your ‘brand spending’, you can spend less. If you then use those extra savings to invest in your future by paying a bit more off your mortgage or investing a little more in your pension, you’ll have started on the journey to making better decisions that will put you in a more stable financial position. Not only this, but by overcoming the marketing and peer pressure to buy more expensive brands, it will give you the confidence to be your own person, make your own decisions and ultimately have more confidence that you’re spending your money wisely.
Let me share one final example that shows how the perception of value can vary. Many years ago, a friend of mine ran a rally car as a hobby and I helped with servicing the car at events. One Christmas, as a thank you, he gave me a Snap-on ratchet screwdriver. It’s a well-known brand with a great reputation and became my go-to tool whenever I was doing DIY. I’d go as far as to say I loved it and yes, using it made me feel good! Last year, the ratchet mechanism broke and while I was looking to replace it, I recalled that Snap-on tools had a lifetime warranty. So I sent a message via the US website, explained the problem and waited. To be honest, I wasn’t expecting much. Two days later the local agent phoned me and arranged to pick it up. They repaired it and returned it to me two days later – at no cost. The customer service was fantastic and I didn’t hold back on sharing how excellent the brand was, even on social media. However, an old colleague commented that it was a £100 screwdriver and it had broken, so was it really that good? They fixed it for free but perhaps you’d have expected it not to break in the first place. There’s no right or wrong answer here. Would I have spent £100 on a screwdriver in the first place? Probably not. So I’ll admit, it’s complicated.
Key takeaways
Marketing exists to get us to buy something – whether we need it or not.
Think about function and specification – what do you actually need and what attributes of the product do you actually value?
What used to be premium has become mainstream. This doesn’t mean premium brands have dumbed down; mainstream products have generally upped their game across the board but without the price hike.
Don’t ever feel ashamed of what you buy. People really don’t notice or care as much as you think they might. Be confident in your spending.
By all means treat yourself every so often and buy whatever ‘luxury’ brand you want but keep it as an infrequent treat, not the norm.
"What can I do?"
Chapter 5
How to earn more
There are a number of ways to earn money alongside your main employment. When you think of earning more, consider it as ‘gaining wealth’ – in which case you can include pensions, investments, income from property or doing something else that generates income. This final option is often referred to as a ‘side hustle’ and is commonly misreported in the media and various internet platforms as a miracle ‘get rich quick’ scheme but, like so many things you read online, the reality is far from the truth. There are no guaranteed, highly paid side hustles that work for everyone (or even work for most people) but there are some things you can do to generate additional income. I’ll highlight a couple and explain why I don’t think they should be your main focus. From a career perspective I will cover those in full-time employment on PAYE (pay as you earn) taxed income, as my experience is mostly with this model. I’ll touch on the self-employed model but it’s not my area of expertise. However, much of the advice about your career is transferable to self-employment, contract or other fields of work.
When I was a student, I remember having a chat with one of my friends who’d finished university and was then a graduate accountant. His advice has stuck with me ever since: ‘Aim to earn £1,000 for every year of your life.’ Therefore, at 25, aim to earn £25k; at 40, £40k, and so on. I’m not sure if this stacks up with inflation but like all good metrics, it’s simple and long lasting. I’ve used it throughout my career and even though I didn’t always meet the criteria, the ethos was there. Whether it was via a bonus or pay rise, promotion or moving jobs, it gave me a focus of ‘continual improvement’ in salary that has helped our financial stability. It was an aspirational metric as well, because when I started my working life at 22 I was earning around £10,000, so I clearly had a lot of catching up to do! This ethos instils the concept of career progression – how to help you get a pay rise, what you can for the best chance of promotion or, if you’ve hit a ceiling at your current company, how you can secure a new job and a step-change in salary. If I’m honest, I haven’t followed this as aggressively as you might think, as I’m naturally a little lazy and much prefer the status quo. Most of my job changes have been forced upon me but the concept was always in the back of my mind and it’s helped me to manage my career upwards.
Later on, I also took advice from my sister (who has been considerably better paid than me) after I told her I’d received a £1,000 bonus that year and was clearly very happy with it. She was less impressed and told me to focus on increasing my base salary, as that was a year-on-year increase, not a one-off. Thinking of your salary as a pizza and your pay rise as a slice, if you’re always going to get the same percentage slice, aim to increase the size of the pizza! While I didn’t always achieve this, the idea to continually increase my base salary was there.
Before we start, I need to dispel the idea that I’ve had a stellar career, regular bonuses or pay rises and was highly paid. While researching this book, I realised I only had a pay rise about every other year and even then, only 1–2% or sometimes less than that. I’ve had a few bonus payments but that’s all. Yes, I’ve been paid well, but not as much as many of my peers. Of course, a great salary and a regular pay rise would be fantastic but realistically this isn’t always going to happen, as some companies have rigid structures and pay scales. The right mindset is to start to think about the options you have to increase your salary and then work towards them. It might be an additional qualification, taking on more responsibility or a larger team, changing companies, or even changing career.
Some career advice
I don’t know about you but in my day most people had their last real piece of ‘career advice’ at school, just after their O-levels or A-levels, as exams were known then. I grew up in an environment where university was the logical next step after school (despite neither of my parents going to university, I’m forever grateful to them for encouraging me to go). In terms of what I wanted to pursue as a career, that was even more vague; I was practical and good at design and technology, so engineering seemed like a good bet. In reality, I’ve received very little in terms of career guidance, although a pearl of wisdom from my godfather did stick in my mind. He suggested I should always be on the lookout for my next job. Actually, his exact words were ‘You have the luxury of your current company paying you while you decide where you want to work next.’ If anything, I probably learned more from my mentoring role at Amazon and guiding the careers of others than from any advice that has ever been given to me. This chapter covers what I’ve learned.
One of my early mentees showed an aptitude for technology and, as I needed some help with modernising the IT infrastructure, I took him on after his apprentice year. He was fantastic, a quick learner with new technology, and he was soon much more technically capable than I was. We were chatting one day and he asked why he was paid less than me when he knew more about our network and how it functioned. The answer was simple: I had A-levels, a degree and more experience, while he’d left school at 16 with very few qualifications. A few weeks later we came back to the subject and he asked if he could have some time off work (an afternoon per week) to enrol at a local college, which I supported. After a year, he had his first qualification under his belt. Then the crunch discussion came – he figured there was little career progression available where he was, so he concluded that he’d have to find another job with more opportunities. I was gutted to lose him but it was the right decision. I kept in touch after he’d left and supported his bold decision a few years later to take some time out from work to undertake a residential course and acquire his Microsoft certification.
A few years later, he asked me for a reference, which I gave, saying I’d have no hesitation to hire him again if I had the opportunity. The following day I received a very excited call from him, thanking me as he’d been offered a job in the Cayman Islands. It was a fantastic opportunity, which he grasped with both hands. He spent a successful few years there, met his future wife and returned to the UK to his current position as a senior solutions architect for a large PLC. The moral of this tale is that even from a low starting point, you can still build a successful career. Of course, you have to have some good luck along the way but ultimately it’s down to you to make things happen, have the courage to address the areas you need to improve and the confidence to promote yourself.
I came across this quote recently that resonated with my approach: ‘In every job you should either be earning or learning – preferably both.’ If you’re not gaining skills or experience that will land you that next job, or if you’re not earning a wage that meets your needs, you need to find another job. I know it’s not always as simple as just saying ‘find another job’ and there have been times when I’ve been unemployed and not been able to find anything for many months – but you have to maintain a positive approach and proactively try to manage your career as opposed to sitting back and waiting for it to happen. I’m a big fan of the professional networking site LinkedIn, partly because it’s a rich hunting ground for jobs but also because it’s a free advertisement for you and your skills, which is particularly helpful to recruiters when they’re searching for candidates. I’d also suggest regularly reposting or sharing posts that are pertinent to your industry and commenting on them in a way that shows you’re knowledgeable and interested in your work.
There are also other traits that will help you stand out, which don’t need any qualifications or skills, such as being punctual, your work ethic, your body language and attitude in meetings, being open to coaching and volunteering for something when no one else wants to do it. The key here is that you’re not just a ‘face in the crowd’ or a ‘name on a page’; your management will at some point be looking to develop or promote someone and you want to be that someone they think of first. Amazon manages its hiring and promotion on ‘leadership principles’, which are used across the board, at all levels and in every department. I like this transparency and the idea that you’re looking to develop people with certain traits and attitudes over pure qualifications, levelling the playing field for your personal development. Of course, it’s not guaranteed to work all the time and not all management structures and companies are perfect – but what have you got to lose?
However, make sure to check that your good nature isn’t being taken for granted. Many professional roles run over the standard 40-hour week and every so often it’s useful to benchmark where you are in terms of ‘true salary’. Let’s say you’re earning £40k a year and working five eight-hour days with two weeks’ holiday. That’s £20 for each hour worked, before taxes and National Insurance. If you find yourself regularly staying late in the office or catching up on emails over the weekend, you’re actually doing 50 hours a week, so you’re really only on £16 for each hour worked. That means you’d be on £32,000 a year at this rate on a 40-hour week, which doesn’t sound so attractive. So if you’re disproportionally losing out on your free or family time, be wary of believing you’re on a great salary. If you’re happy with the salary and work/life balance, that’s fine, but the point is that your pay might not be reflecting what you’re truly worth and there’s an opportunity to change that by increasing your pay base or reducing your hours.
However, there have been many times in my career when I’ve had positive feedback in reviews about the fact that I was prepared to do extra work or take on something outside my remit. This brings up the subject of reviews, whether formal or informal. I was shy as a child and naturally quite passive, so I understand that being assertive with your boss can feel daunting. I don’t know what gave me the courage to ask for a pay rise to secure my first mortgage but it worked and perhaps helped to build my confidence in my later career. The result was definitely a one-off but the approach of being assertive with my personal objectives has stayed with me. Ultimately, you’re working to get paid and you want to either be paid more or get more recognition. Your company won’t have unlimited opportunities, so it’s a good idea to frame these discussions with questions that help you get where you want to be, for example:
What opportunities are there for me to improve my skills as a people manager?
What could I have done differently this year?
I really want to be promoted to the ABC team, so what should I focus on to achieve that?
These are often difficult discussions to have and if you’re not getting great answers or support, then the solution is to start looking for a role in another company where you can make progress.
On the subject of driving progress, here’s a final thought on the value of qualifications. A few years ago there were big supply chain delays across post-Brexit Europe and a shortage of HGV drivers. My European boss was talking to her son and encouraging him to revise hard for his exams so he could go to university. His response was, ‘Why? I could take the HGV test and earn €70,000 driving a lorry.’ He wasn’t wrong and if it’s right for you, that’s great – you don’t need necessarily need academic qualifications unless you want to go down a particular career path. My cousin drives HGV tankers and earns a very nice living – or used to, as he and his wife have just rented out their house for 18 months and set off on a round-the-world tour. The beauty of that is, when he returns, if he wants to, he can pick up work at the same rate. Similarly, one of our tenants is a successful landscape gardener with no formal qualifications – proof that success isn’t about whether you have a degree or not but what’s right for you and how you manage your career.
An introduction to pensions
Pensions normally go hand in hand with your career, particularly if your employer contributes. But irrespective of that, there’s one simple reason why pensions are in this section – you can earn free money via the government’s tax break. For every contribution you make, the government will add 20% (40% if you’re a higher-rate taxpayer). The only downside is that you can’t access it until you’re 55 (at the time of writing). But having a savings scheme that prevents you dipping into it is no bad thing. In essence, it ensures that your money is invested for a longer period of time, so the earlier you start, the better. A popular quote relating to investments is ‘It’s not timing the market, it’s time in the market that counts’. This means that over a long time, investments are more likely to perform better (make more money) than trying to time buying an investment at a low price and selling at a higher one.
To underline this point, I’ll use an example of twin brothers with different investment strategies. One invests £10,000 a year from the age of 25, together with matched company contributions – but stops paying when he’s 40. He has personally invested £150k. His brother starts later in life and saves the same £10,000 a year from age 35, matched by his employer all the way through to retirement at 65 – 30 years in total and a personal investment of £300k. Assuming a 6% return on investment (not taking account of inflation), the first brother’s investment would be worth £1,058,912 when he was 65. However, the second brother’s investment would be worth only £838,019 at 65. Just let that sink in for a moment; the first brother invested £150,000 less but has an investment worth £220,893 more and the only difference is that he started investing earlier.
Together with the tax benefit from the government and employer contributions, pensions are a huge lever in gaining wealth, so you should plan to start saving into a pension as soon as possible. Previously, company pensions have been ‘opt in’ (you have to specifically join a scheme if there is one) but the legislation has now changed to being ‘opt out’, where you’re automatically enrolled, which is better. You can also benefit from pension tax breaks if you’re self-employed (via a limited company); if you’re not employed, you can still invest £2,880 into a pension each year, with tax relief taking this to £3,600. This is particularly useful if you’re in a relationship and one of you doesn’t work, perhaps because of childcare. Employer contributions also vary considerably, particularly between the public and private sectors. In their 2022 report, the Institute for Fiscal Studies reported that public sector (employer) contributions were an average of 18% in 2021, against the private sector growing more slowly to just under 6% for the same period. I would have loved an 18% contribution – working in the private sector meant that typically my employer contributions were in the 3–5% range but it still helped to build a solid pension pot that has contributed to us being able to retire earlier.
Buying and renting property
Property is the third big-ticket lever that will help to increase your wealth. While not ignoring the fact that getting onto the property ladder is a significant challenge for many these days, particularly in the recent climate where interest rates (and therefore mortgage repayments) are significantly higher than they have been for the past ten or so years, buying a property will likely be your single biggest investment and therefore it’s always going to be hard. However, it’s a lesson that interest rates can go up and a potential increase needs to be considered when you take out any mortgage deal. As I referenced earlier, I can remember talking to my dad in the late 1980s when interest rates were at 14% and Lou and I were hit with rates rising to more than 8% on our mortgage in the late 1990s. It’s likely to be one of your biggest monthly outgoings and that’s why I believe so strongly in it being a top priority. Putting this to one side, you can leverage money from property in other ways too.
In a similar vein to the cost of frequent remortgaging mentioned in an earlier chapter, physically moving is also expensive. Costs such as solicitors, removals, redecorating or buying new furniture can amount to several thousand pounds, so it makes sense to try to minimise how often you move. I appreciate that there are many reasons to move (for example, a growing family or a change of job) but aiming to buy a house for the longer term is a smart move.
I had many conversations with my parents about my first house as I was more than a little nervous about the size of the investment. My dad’s advice was that buying into property was always a good idea as people will always need houses. Yes, property can go up and down in value but that only matters if you’re put in a position where you have to move when your house is worth less than you paid for it and particularly if it’s worth less than what you owe on the mortgage (known as negative equity). Like pension investments, the value of housing generally increases more over the long term.
