What Habits Are Your Bank Statements Masking? Here's What To Look Out For

A Little Bit Richer

Host Iona Bain and financial expert Gabriel Nuss/That Money Guy explore how bank statements, payslips, and credit card records act as mirror

Key takeaways

• Money management is 90% emotion and only 10% logic or mathematics.
• Creating 'friction' through multiple accounts can prevent the temptation to spend savings easily.
• An emergency fund should be prioritized first, ideally covering three to six months of living expenses.
• Maximizing pension contributions is a 'superpower' due to tax efficiency and employer matching.
• Credit cards should only be used if the balance can be paid in full every month to avoid high interest.

Main topics

• Financial indicators in bank statements
• Psychological friction in spending
• Emergency fund construction

Notable quotes

Money is actually mostly emotional. I like to think that it's even 90% emotions, 10% logic and maths.

Conclusion

Financial success relies less on complex math and more on establishing

Transcript preview

Speaker 2 (0:00) This series is brought to you by LNG, helping you build a future that's a little bit richer. Speaker 1 (0:07) Hello and a very warm welcome to A Little Bit Richer with me, Iona Bain, brought to you by Legal & General. Now, many of us barely glance at our financial statements, but what if they were trying to tell us something about ourselves, our habits, both good and bad, and even our ability to build wealth? The truth is our bank and credit card statements and our pay slips reveal a whole lot more about us than we realise. So joining me to unpack it all is financial content creator, Gabriel Nussbaum, known as That Money Guy on social media. Gabriel has amassed a huge 1.5 million following across his accounts, teaching people all about money and how to be better with it. We're going to be finding out today what messages may be hiding in our financial statements and what they say about our likely financial future. Welcome, Gabriel. Thank Speaker 2 (0:56) you for having me. Speaker 1 (0:57) Thank you for joining us. So we're Speaker 2 (0:59) going Speaker 1 (0:59) to start off with a quick question. Gabriel, in 30 seconds or less, can you tell us what our income and outgoings say about us and our likelihood of creating wealth? Oh, Speaker 2 (1:08) OK. 30 seconds. I think I can do this. I can see my time has literally started. OK. Go. So I like to say that across your bank account statements, your payslip and your credit card statement, if I was to take a little magnifying glass and study all of those in intense detail, even not in intense detail, I could immediately pick out. five things, five indicators that would tell me whether or not you're good with money. And I think we'll probably run through the five throughout the whole episode. So you want to stick around and listen to all of them. Speaker 1 (1:36) Nice. You got that timing perfectly, I would say. And you mentioned there about how you can glean these clues like a sort of financial Sherlock, which I really like. What are some of the key indicators that you look for that lets you know whether somebody is on track to create a strong financial future? Speaker 2 (1:53) So I'm going to open up your payslip first and immediately going straight towards pension contributions. I think it's Speaker 1 (2:00) a Speaker 2 (2:00) clear indicator of whether or not you're being clever and smart from both a tax side of things, but from a free extra money for employer side of things. And we'll delve into that a bit later. Number two, your credit cards. Simple. Is there a balance? Again, we'll go into more detail, but I like credit cards being paid off in full. And the three, when you take a look at your bank account, is number one, is it all sat in there or do you have it across multiple accounts? Number two is, do I see savings leaving at the beginning or the end of the month? In other words, when your money comes in, do you save straight away or not? And number three is then full stop. Are you saving and investing at all? I like to see good habits, at least one pound, I say, doing something other than just being sat in a boring current account. Speaker 1 (2:39) That's a fantastic overview. So let's dig into those different areas, starting with accounts, because many people will just have one current account where everything lands and everything leaves. Why can that actually be a bit of a costly mistake? And what does the ideal account setup look like in your eyes? Speaker 2 (2:59) So it's actually costly from two sides. A lot of people think that money is purely mathematical. If you're good at maths, you'll Speaker 1 (3:05) be Speaker 2 (3:05) good at money. But money is actually mostly emotional. I like to think that it's even 90 % emotions, 10 % logic and maths. And why I say that is because your account that your money is sat in. Kind of covers both of those points. Number one, from a maths perspective, you're probably not optimising what you're actually doing with your money if it's sat in a current account, earning no interest, literally doing nothing for you. And when you put it in different places, it can achieve different goals that you want to do in life. And from a psychological perspective, all of your money being sat in one place is so bad. As humans, we are weak. We are weak creatures and we need friction to stop us doing the things that we actually don't want to do. And if it's all sat there and you're thinking, my savings are in there, my investments are in there, all of my... spending money is in there, the things I want to do next month. You're never going to actually be able to separate that money just on pure will. And that's why I think having it in different places is ultimately the key to stopping that psychological side of you, that weak side from doing things that you don't want to do with your money, which you will if it's all in one place. And you alluded to like the main places that I think you should keep it. Now, again, I like rules of five. So I'm going to stick with rules of five, five key places. Number one, your current account. Not for storing money. It's just for where your money lands. And then we're Speaker 1 (4:13) going Speaker 2 (4:13) to put it in other places. Number two, an emergency fund. Self-explanatory. Number three, short-term savings. I like you to have goals in less than three to five years. A holiday this year, a wedding in a couple of years. Start saving towards that. Four, investments. We're talking longer term, five years and above. And finally, your pension. Really big one. Your pension is for you retiring and not having to stress about money at a period in your life where you're not bringing anything in or you're wanting to take a step back from work. I'll add a little bonus one as well, which is a fun money pot. If you budget fun money pots, you'll give yourself more freedom with your spending than you've ever had in your entire life. Speaker 1 (4:48) Balance is important, right? Speaker 2 (4:50) Balance is fundamental. I like to say both current you. and future you, deserve to have a little bit of happiness in life. So it's not all for that person in 30 years, and it's not all for you here today to go and spend everything you have. Both of you deserve to have a little bit of something. You Speaker 1 (5:04) mentioned about emergency funds, and I think on the surface we all understand what that means. But there's a bit of a debate about how much you ought to save in an emergency fund, and also, can you provide some advice on how you can save at the end of the month when money might be feeling a bit tight? Speaker 2 (5:20) So