Welcome to Money Matters: GLAMOUR’s weekly dive into the world of finance – your finance. These uncertain times have reminded us just how much understanding our money matters and yet… how little we talk about it and how much it’s shrouded in secrecy.
This stops now.
Keen to break that money taboo, we’re chatting all things personal finance from money saving tips to ISAs and pensions. Each week, a woman in a unique situation will give us an honest breakdown of her finances, and our expert will tell her easy tips on exactly how to tackle it. So, grab a cuppa, take a seat, and let’s talk about money…
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Sarah*, 31, is a graphic designer in London facing redundancy. She worries how long her savings will last if she doesn’t find a new job. Here’s her money month…
I’m a graphic designer and I’ve been in my current role for just over three years, but I’ve just found out I’m being made redundant from my job. I had been enjoying it, but my company is making cutbacks and a few people including me are being let go. It was such a shock, I’ve never lost a job before, and it’s really hard not to take it personally so I’ve been pretty upset. It’s also really scary, worrying about getting another job and paying my rent and bills.
My redundancy package is a week’s pay for every full year I’ve worked, plus I’ve been given two months’ paid notice. I’m still expected to work during this time but my manager is letting me take all my remaining holiday, so I won’t have to do more than a few weeks. I intend to spend the time job hunting.
I do have some savings that I’d built up over the pandemic, but I’m worried it’s not enough to keep me going longer than a few months if I don’t get a new job quickly. I don’t want to have to move back with my parents, but at least I know that’s an option.
I’m considering trying to get some freelance work if I don’t get a full-time role, but I’m not sure how to go about it – do I have to register for tax? It all feels so daunting because I’ve always had a monthly pay cheque to rely on.
MY ACCOUNTS
Current account: £342
Savings account: £4,500 in a cash ISA; another £150 in a Monzo savings pot
MY INCOMINGS
Annual salary: £32,000 gross; £25,424 after tax
Monthly wage: £2,667 gross; £2,119 after tax
Any other incoming payments: £0
MY OUTGOINGS
Rent: £825
Bills: £280 inc household bills, phone, Netflix, contact lenses etc.
Other: I try to put aside around £400 a month into savings
Splurges: Drinks and dinners out
Weekly budget: I don’t have one
What I spent this month: £500
MY DEBTS
I don’t have any
MY MONEY THOUGHTS
My financial hopes for the future: To have a steady income again, and keep building my savings so I can buy a place one day.
My worst money habit: Worrying. I get really stressed about money and figures, especially now I’m losing my job.
My biggest money worry: Losing my earnings and eating into my savings if I don’t find another job soon.
Current money mood: 😰 🤯 💸
1. Next steps
I’m so sorry you’ve been made redundant. Sadly you’re not alone but I know how difficult it can be not to take it personally. The key to handling uncertain and changing times is to make a plan. Several in fact. I’ll talk you through the steps but the goal is to know exactly what you’d do in every eventuality, even the very worst. This means 3-4 plans and in each plan, you’re going to ask yourself ‘What can I do to maximise the chances of this plan working out?’
2. Plan A
What is it? I’m assuming it’s to get a job which starts as your current job ends. Reaching out to agencies, brushing up your portfolio/website, putting out requests on Twitter and LinkedIn, all these things (which I know you’re doing) will maximise the chances of getting back to job security ASAP. Of course, while I’ve got every hope that that will happen, it’s sensible to have a Plan B to help you financially get by in London without a job and to find a new job before having to move in with your parents.
3. Plan B
If you find yourself here, the good news is that you’ve got an instant boost in the shape of New Style Job Seeker’s Allowance (JSA). To be eligible you need to be unemployed or working less than 16 hours a week and to have paid Class 1 NI contributions in the past two to three years as an employee. It might not be much at up to £74.35 for 25s and over, but it’s certainly not one to miss. Next, work out how much you realistically need to get by each week in London. With this in mind, you can use your total savings + redundancy pay + JSA payments to work out exactly how many weeks you’ve got before things get tricky.
4. Hustling
To make your money take you a little further, you could boost your income with freelance work. Either use your network or freelancer sites like YunoJuno or UpWork to find gigs. In terms of tax, don’t panic. If your side hustle income is less than £1,000 this tax year, then the taxman isn’t a worry. That means no need to prepare accounts or complete a Self Assessment tax return. If you do go over the £1,000 mark, you’ll need to register with HMRC, but this isn’t a time-consuming process.
5. Plan C
It’s very unlikely to happen but if you burn through your savings before finding a new job you can start to think about moving in with your parents while the search continues. I know it’s not what you want but try to re-frame this option as a temporary safety net. Redundancy can be devastating, but it’s rarely forever. I know many people for whom it was a painful plot twist which led to a future brighter than they could have previously imagined.
Alice Tapper is the author and founder of Go Fund Yourself. For more money advice and tips, follow her @gofundyourself.
This column offers guidance, not financial advice. For personal investment advice, it’s always best to speak with a financial advisor.
*Name has been changed.