Financial evolution

Financial evolution from debtor to saver to investor

Lately I’ve been thinking a lot about my financial evolution. I’ve always been interested in personal finance, and just geekily naturally frugal. In my past I used to be about saving money and other short term goals like holidays or buying a house. It took me until my thirties before I evolved further, and now I’m all about investing and serious long term thinking.

After writing about how I increased my income, maintain an 80% savings rate and my disastrous love life, I want to consider my financial evolution. On my journey to financial independence, I have moved through different stages and a gradual evolution.

Financial Evolution Graphic


I’d consider a debtor as the initial stage of financial evolution. The stage where most of us start unless we have very generous parents or don’t go the university / house-buying route. But here is a massive caveat: I do believe debt needs to be segmented into two main and distinctive categories; good debt and bad debt.

Good Debt

In the good debt category, we have low interest debt used to fund appreciating assets. The main categories I consider here are student loans and mortgages.

debt and bills

Personally I did rack up £15k in student loans, as the first UK generation that got charged student tuition fees it hurt. But these were really good loans, with an inflationary interest rate. So in real terms, all was even. Nevertheless, I managed to spend the loans on tuition fees, living costs and having a good life. If you don’t party when you are a student, when can you party? In the UK there is no rush to pay student loans off. Student loans don’t appear on your credit rating and aren’t taken into account for other credit.  They are collected by HMRC as a percentage of your income each year. I eventually paid them all off in my early thirties. As they were good debt, this didn’t worry me at all.

Another debt I consider good debt is mortgages. I have had a mortgage since I was 19 when the rate was over 7%, which seems extreme compared to today’s much more reasonable 1.5%. Although I think I’ve seen a lot of variation in rates, older people have told many tales of 15% interest rates. Nonetheless I hold firm that mortgages are good debt, they offer the necessary leverage for the middle and working classes to get on the property ladder. They are the keystone of a property owning democracy. Currently I could pay off my mortgage with investments. I choose not to, given the interest rate is 1.5% and inflation is 3%, so inflation is nicely eroding my mortgage. In the personal finance sphere, there are many debates ongoing over paying off your mortgage. Where do you stand?

Bad Debt

The other side of the debt coin is bad debt. I’d consider bad debt as consumer credit that carries higher interest rates and is used to cover monthly shortfalls or buy depreciating assets. Luckily I’ve never really fallen into the bad debt trap. My parents were of the frugal variety, and there was mockery of people buying things on the “never never”. So thanks parents there. I have credit cards that I use for cashback, rewards and consumer protection only.

Given the high interest rates here, it’s very easy to get trapped in a cycle of bad debt. If you don’t have a plan to reduce bad debt, it can become very draining and take over your life. I’m fortunate to not have experience here, but I do know there are loads of blogs and advice sites to help you if you are. I’d urge you to avoid paying debt management companies, and instead seek free advice from your local Citizens Advice Bureau or StepChange. They will provide free tailored advice specific for your situation.

SaverSaving piggy bank

The middle stage of financial evolution is that of a saver. I spent most of my twenties and my early thirties firmly in this category. A saver is categorised as someone who is comfortable financially, and has a good stash of cash to cover unexpected events. A saver plans their finances, and always has some money for a rainy day.

Always have a float

Luckily I’ve never had any problems saving, and keeping a float of money to cover anything that comes up. Lots of people call this an emergency fund, but I like to differ. My approach is similar but nuanced, having a float means leaving extra funds in your account. Hence cashflow is never a big problem. If you are paid late, it’s not an issue. A big expense comes up – not an issue. It does concern me how many people run their finances close to the wire. Checking accounts constantly and transferring money to prevent going overdrawn. I much prefer the simpler approach and doing a quick review of transactions each month.


As for emergencies, I’m not sure there is truly an unexpected expense. The timing may come as a surprise, but the vast majority of expenses can be anticipated. Do you own a home? If so, you should expect to repair and replace all the fixtures and fittings. Do you own a car? Likewise, it will break down, or at least need preventative maintenance. Have a family? You may need to visit them in an emergency or cancel a holiday. Part of being a saver is knowing that these things will happen, but we can never predict when. We understand we may not have any of these expenses for years, then get three at once, similar to buses coming along.

Saving for a house

Luckily, I’ve always seen saving for a house as a short term thing. Being in the frugal mindset I’ve always had savings, and coupled with the fact I lived in a cheap part of the country house buying was never scary. I’ve got mixed feelings on the challenges young people face buying property today. The market is definitely overpriced, however people are much less likely to compromise on either their property or lifestyle. My first property was a bargain; it was also on the ground floor on the main road and in a very rough area. I didn’t have money, so I readily accepted these compromises. My second property was also in a rough area, but I this time I was not on the main road. Here is some commentary and that infamous avocado toast interview which drew much ire, and a more recent article that shows a millennial could change her lifestyle to save a deposit.

Bargains are not saving

I used to think buying things at a discount is saving. Yes, I fell into this trap for years…thinking how well I was doing with all my bargains. But did I truly need these items? Were they adding function and true value to my life? Now I’ve matured and reflected a lot, my thoughts have changed. I really value the bargain experiences such as holidays I’ve had. However the actual physical things I feel added much less value.


woman investingThis is a more recent development for me, the final scale of financial evolution. Now I feel I am firmly in the investor stage, with most of my income directed towards investing, and my assets firmly working for me.

I didn’t have many great role models here, my parents while naturally frugal are also unfortunately very risk averse. Both working for the government, they have the elusive gold plated final salary pensions. Neither invest in the stock market, and consider it far too complex and risky.

This is where the magic of the world wide web flies in to save the day. I am so grateful that I have some many quality resources available online for free. Passive investing is my preference, as I don’t believe I can outsmart the market. Actual I am pretty sure I’d make the wrong decisions. And now I don’t need to visit stuffy offices and meet with men in pinstripe suits to open a brokerage account. The internet allow me to invest from home in my PJ’s. This means I can save loads in fees, since I also don’t believe in paying for a financial advisor.

Financial Independence

One of the key ideas the internet has taught me is that financial independence is within reach. I can be a woman of independent means. Initially I thought this was a myth, then I doubted and disbelieved. I am a natural skeptic after all. But I do believe in math. Coming across Mr Money Mustaches Shocking Simple Maths was mind blowing. If you have not read it I urge you to. Now.  So I consider myself today in the final stage of financial evolution, as an investor. Whilst there is plenty more I could learn, I am confident I am managing my money well. But it did take me a lot of time to get here, and I wonder what life would have been like if I learned earlier?

And you?

Where are on your financial evolution?

Disease Called Debt

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12 comments on “Financial evolution from debtor to saver to investor

  1. Great question and I’m not too sure. Stage wise I am in the early mortgage years and contemplating a family. I am also starting to think about FI and thanks to my current job for the first time this may be a possibility…

    1. Hi NZ Muse, thanks so much for stopping by. Yeah, the early mortgage years where the mortgage payment seems massive, before inflation erodes the number. When I first bought my London place the numbers were scary. But interest rates have gone down, inflation has come and my income has increased. The numbers aren’t as scary anymore.

      It’s great to see more women aware and considering FI. That’s cool that you see it as a possibility due to your current job, hopeful it’s due to the fabulous salary they are paying you rather than you wanting to escape the job!

  2. Hmmm. Your comment on the “emergency” fund really got me thinking. I’m struggling to come up with a big expense that wouldn’t fall under the “expected some day” category. I guess the idea for me is I’d rather have a general emergency fund than separate sinking funds for all the eventual some day expenses.

    1. Hi, yes I struggle to think of anything that I couldn’t cover with income, so I personally just don’t bother keeping an emergency fund. Appreciate others may not be in the same situation. So yes, I can so see the logic of keeping an emergency fund as a big combined sinking fund.

      And I keep thinking I’m due an “emergency” some day.

  3. I’m with you–that tracking everything to the penny and moving money from one account to the other for every non-predictable expense is just too much work. We keep an extra couple of thousand in our checking account and if an appliance breaks we fix it or replace it but we don’t worry about it.

  4. First – I love the graphic!
    Second – Yes to bargains do NOT equal savings!! My mom often says, “I can stretch a penny till it screams.” She means I get really great bargains that makes my penny last longer, but half the time she doesn’t need the stuff she is buying.

    1. Hi Kait, thanks for stopping by and commenting. Yeah, I love the graphic too, I’m quite a visual person.

      I love your mum’s saying on stretching a penny, but agree it’s true most people are buying things they do not need.

What do you think?