A Chat With Kat is designed to combine two key aspects of life: finance and fitness. The two are very much related. To fully enjoy your wealth, you need to be in good health – and vice versa. With my background as a Pilates instructor and strong interest in the FIRE movement, it seemed the natural choice to focus my blog on these two areas.

I started posting in March 2020 during the first UK-wide lockdown. The timing was coincidence, as I had been planning to set up my website for months, but in hindsight, the extra time spent at home really gave me a head-start.

My blog is unique not only because of the dual health-wealth focus, but also because I am an atypical follower of the FIRE movement. Unlike most people striving for financial independence in the UK, I do not have a salaried job, but am self-employed. Although work satisfaction is often higher in freelancers, they are lagging behind employees both in terms of salary and savings (I wrote a post about this recently). There’s no built-in safety net, no automatic pension enrolment, and no guarantee that we will earn the same amount next month or even next week. Because of these challenges, I think it’s important to have self-employed voices in the personal finance space.

The mechanism of being good with personal finances is very easy. You only have to do two things: spend less than you earn, and invest the difference. If you spend more money than you make, you are going backwards; if you spend all your earnings, you are staying in place; but if you save a part of your income, you are moving forwards towards financial freedom. It doesn’t matter if it’s just small amounts at the beginning – every little bit of savings helps to create a safety net you can fall back on.

Once you have amassed some savings, you must start to invest to create a new income stream. Many people opt for a simple all-world index tracker, but you could also build wealth through real estate. The key is not to let your money sit in cash, because inflation will erode its value over time.

At the end of every month, I hold a personal finance meeting with myself and complete the following tasks:

• Pay my bills: rent, council tax, gas and electricity.
• Send out client invoices.
• Calculate total money earned in the past month.
• Calculate how much tax I need to set aside for the month.
• Calculate how much I can invest and my savings rate.
• Make a record of my donations.
• Check my net worth and log it in the spreadsheet.

These steps are specific to my situation, but I believe that everyone would benefit from having a monthly finance ‘check-up’. Seeing the net worth graph moving upwards is very rewarding and keeps me motivated.

• My financial journey: The Long Road To Financial Independence: Kat’s Journey
• Helping you to understand your muscles and how to take care of them: The Body Project
• The importance of effective giving: On Signing The Pledge To End World Hunger

In the short term: If you are just starting out, you need to spend a few hours figuring out your income and expenses. Add up everything you earn and everything you spend. Which number is bigger? If you already earn more than you spend, congratulations. You’re doing great and can skip to the ‘medium term’ step. If not, this needs to change. Where could you cut expenses so that you have money left over at the end of the month? Some examples might be:

• Big ticket items: could you live in a smaller place or drive a less expensive car?
• Check that your bills are optimised. Can you switch to cheaper providers?
• Food bill: change grocery shops, buy in bulk, find discounted items, eat out less, etc.
• Entertainment: find a free or cheap hobby, sell things you no longer use, reduce the frequency of shopping trips.

Remember, if you are spending more than you earn every month, it is an emergency and you must change the situation ASAP.

In the medium term: Now that you’ve got your spending under control, you can start to build up some wealth. First, pay off any high-interest debt. Then, save up an emergency fund. You can decide how much you need, but a good starting point is three months of your living expenses, six if your job is quite unstable. Once you have achieved all this, you are in a very stable financial position and can now start to think about investing.

In the long term: With high-interest debt paid off and an emergency fund in place, it’s time to think about investing. Keep in mind that you need a long time horizon for this, so only invest funds that you don’t need in the next 5-10 years.

Every area has benefitted from improving my personal finances. When I first started out as a freelancer, I was constantly worried about earning enough at the end of the month. I worked seven days a week, accepting every opportunity, even if it meant a 24-mile round trip. But as I earned more and spent less, I became more confident. Now, I can accept only reasonable assignments and take two full days off, which has improved the quality of my life drastically.

This also allows me to be a better teacher. For example, if a student has a genuine emergency and needs to cancel a few hours before a session, I can let it go and not insist on charging the fee. Because I have more free time, I am more relaxed and happy during my sessions.

Finally, my personal life has benefitted as well. I was able to spend 9 weeks with my family in Switzerland last year, and I can attend regular zoom meetings with friends – hopefully, once the pandemic is over, this will translate to in-person meetups. I try hard to be frugal, but not cheap, so that my relationships are not affected by my spending habits.

• Mr. Money Mustache is the blog that got me started. I was always good with finances, but his posts gave me a goal to work towards and some practical advice on how to cut expenses further.
• A great UK blog is Monevator. There’s lots of advice on there, and the weekly newsletter is full of interesting articles from various bloggers and news outlets.
• Another favourite is Banker on FIRE. I read his posts every week because they are insightful and entertaining. He writes not just for other high-income professionals, but for everyone who wants to learn to improve their finances.

It’s not so much a question of better-worse, but first-second. There is no point in increasing your income if you’re going to inflate your lifestyle at the same rate. First, you have to get a grip on your spending and devise some financial goals. Once your expenses are optimised, it’s time to focus on increasing income to widen the gap between income and expenses. Personally, I’m a fan of decreasing expenses because any savings you make are 100% yours, whereas your income will be taxed. So, the impact of £100 saved is bigger than the income of an extra £100 made, especially if you are in a higher tax band.

I am really interested in writing. Ever since I was very little, I wanted to be an author. Stories are central to our experience – they are the way we learn about the world and make sense of our surroundings. I think creating your own stories can be a very powerful thing, and I’ve been spending at least 10-15 minutes every day honing my writing craft.

A 2017 article in The Guardian starts with: “Half of the UK population are financially vulnerable with one in six people unable to cope with a £50 increase in monthly bills”. With a pandemic ravaging UK businesses and causing a rise in unemployment, things are only getting worse.

If everybody learned about money early on, they might be able to avoid mistakes such as accumulating consumer debt. Although some people are more frugal than others, financial illiteracy is often just a case of misinformation. People follow the bad examples they see and don’t reflect on what they could do differently. A better system for teaching about personal finance could have a massive impact on the nation’s financial stability.

You can learn more about A Chat with Kat at https://achatwithkat.com/ and follow them on Twitter at @chatwithkatblog.