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 daily budgets 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…
Suzy*, 30, is a freelance writer living in London. She and her partner are trying to get on the property ladder. This is her money month…
Because I am freelance, and money can come in very irregularly, my boyfriend and I decided to move in with his parents to start saving for a property (which in London is so expensive!!). We have been here five years and are finally able to start the process, but it is a very daunting prospect.
I am lucky to have been given the opportunity to save so much, but I am still worried about the financial headache around buying a property – and how to manage my budget once we are paying a mortgage. It feels like everything is just that much tricker when you are self-employed and the future feels so insecure.
I have been very good at saving but, being fortunate enough to have been living rent-free for five years has been a massive part of that and I am worried about my money management moving forward.
MY ACCOUNTS
Current account: £2,200 (I have just been paid for a few jobs!). I pay my tax via self-assessment annually.
Savings account: £60,000 (split between a Loyalty Cash ISA and a Stocks and Shares ISA). These are my life savings, bolstered by some money left to me by my granny when I was 10 and the ability to save during the past five years.
MY INCOMINGS
Monthly wage: It fluctuates because of the nature of my work, but I am lucky enough to have a baseline salary of £1,200 a month from a regular copywriting gig at a fashion company. I then make an average of £500 on top of that each month, depending on how many commissions I get. So, on average around £1,700 before tax.
Annual salary: On average around £20,400 before tax.
Monthly wage post Covid-19: The same! I have been lucky that my work has not been affected.
Any other incoming payments: N/A
MY OUTGOINGS
Rent: N/A
Bills: £40 a month for phone bill.
Other: £35 for newspaper subscription, £8.99 for streaming service, roughly £120-£150 a month for food shopping (which is our contribution to the household).
Splurges: Pre-Covid this was mostly on going out – dinners with friends, and travel, which I always try and put some money aside for! Obviously this really hasn’t happened much this year so my only splurges have been the occasional bit of online shopping to cheer me up. It has made me aware of how much I did spend on going out though!
What I spent this month: £120 on two weeks of food shops (my boyfriend did the other two) plus roughly £50 on some Christmas presents (’tis the season). I also just paid my accountant for my tax return which I have done early, that was £275. This is tax-deductible though, which is a relief.
MY DEBTS
Student loan: I’m actually shamelessly unaware of how much I still have left to pay, but I do pay back annually with my self-assessment tax bill. Other than that I have no debt, I don’t even have a credit card.
MY MONEY THOUGHTS
What I want to save for: A flat! We now have a 20% deposit, but are finding that it is still coming up short on anywhere decent to live in London, which can be so depressing when we have saved up so long and so much. It’s feeling a bit pointless. We also want to get married and start a family in the next two years and I don’t particularly want to be living with my in-laws still!
How I want to plan my money for the future: I have my Stocks and Shares ISA but other than that I don’t know if I am investing or saving my money wisely enough. I have had so many jobs over the years that I think I have a billion different pensions but have no idea how to consolidate them or what to do? As a self-employed person I am worried I am not contributing to a pension. Help!
My worst money habit: The phrase “let’s get another bottle and a cheeky Uber home.”
My biggest money worry: That I will never have enough money for a home and a family, even if I save and save.
Current money mood: 😨 🙈 😬
WHAT OUR EXPERT SAYS…
1. Practice run
You’re not wrong that buying a property can be a headache and even more so when you’re self-employed; unstable income plus the need to make regular mortgage payments can leave you despairing at having ever considered the self-employed life! Your best bet is to use the time you have left at your in-laws’ place as a bit of a practice run, pretend you have a mortgage payment to make and bills to pay. Get into the habit of following a budget; try the adapted 50:30:20 budget and creating a financial routine. You’re self-employed, but that doesn’t stop you giving yourself a pay day and salary (which you already do), so as soon as that money hits your account, you give it a purpose. Prioritise needs (mortgage payments, monthly food bill) and goals (eg saving for furniture), then what’s left is your wants (cheeky Ubers and another bottle).
2. The other costs
The next big stress when it comes to buying a place is the often unexpected costs that come with actually buying. There’s legal fees, the cost of a surveyor, removal costs and more. All in this can total anything from £1,500-£6,000. I KNOW! Then there’s that fact that you might actually need some stuff to put in the flat. Have you seen the price of sofas?! While you’re at your in-laws’ house, use your imaginary bills and mortgage payments to build up some extra savings to cover these costs.
3. The Oh F*** Fund
You’re in saving mode so you might also want to build an emergency savings fund which will cover say three months worth of mortgage payments. Think of this as your ‘Oh F*** Fund’; a savings buffer to tide you over, if the worst were to happen. I’m talking about illness, a project falling through or late payment.
4. London property prices
*Sigh* If you’re finding yourself priced out, you’ve got a couple of options. Number one, which you may have already considered are the various schemes designed to help first time buyers. You’ve the Help to Buy Equity Loan where the Government lends you up to 20% (40% if you’re in London) of the cost of your newly built home. Then you’ve got Shared Ownership where you buy a % of a property and pay rent on the rest. Understanding the risks and advantages is super important so take a look at Go Fund Yourself and this guide to the Help To Buy scheme for more. I know this can be disheartening, but if Help To Buy isn’t up your street, then it’s time to either manage your expectations and compromise on the place or look further afield.
5. Pension priority
You’ve got a lot on your plate right now but at some point in the near future, you need to think about your pension and most importantly, paying into it regularly. If you’ve been collecting pensions since ‘09 then consolidating can be a great option. It means you’ve got less to keep track of and you may pay fewer management fees. However, it’s also very important to check that combining doesn’t mean you’ll miss out on any perks such as guaranteed annuity rates. Your pension provider or a financial advisor can help you make the call.
Alice Tapper is the author and founder of Go Fund Yourself.
*Name has been changed. This column offers guidance, not financial advice. For personal investment advice, it’s always best to speak with a financial adviser.
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