welcome to Money matters: GLAMOR’s new weekly dive into the world of finance – your finance. These uncertain times have reminded us of how important it is to understand our money and yet… how little we talk about it and how much secrecy it is.
It stops now.
Eager to break this taboo of money, we discuss everything related to personal finance from daily budgets to ISAs and retirement. Each week a woman in a unique situation will give us an honest breakdown of her finances, and our expert will give her simple advice on exactly how to tackle it. So have a cup of tea, sit down and let’s talk money …
I work in education on £ 19,000 per year, £ 1,650 per month. I live at home and have paid off my debts, but I still can’t afford to buy my own home
32-year-old Tara * is an administrative assistant living in London with a salary of £ 19,000, with a part-time bar job earning her an additional £ 694 per month. It’s his silver diary …
Although my role has evolved for the better, I have taken on a lot more responsibility. Currently my salary is £ 19,201 for my lead role and I also have a part time job in a bar. I was promised a title change and a pay rise once I got back to the office but, due to the lockdown, everything was naturally put on hold.
Moving to London almost seven years ago to study has been and is one of the best things I have done for myself. Even though it has not yet worked out exactly as I had imagined!
currently i live with my family. Honestly, I thought I would be living on my own now that I’m in my 30s. Before moving to London my relationship with money was horrible, I kept it a secret until I had to face it and open up. I submitted to payday loans. I was in a vicious cycle of these loans while trying to live up to this lifestyle that I carved out for myself, with no visible outcomes at the time.
In recent years, I have had a healthier relationship with money, I no longer cringe and no longer avoid checking my accounts. I have a credit card with a small limit, but I try to pay it off as soon as I buy something and have paid it off a few times in full.
Living with a family while being on a low income allowed me to repay my debts who have followed me for many years. I now have very little debt and can’t wait to feel the relief to see this last payment leave my account.
I now have more savings than ever before. This may not seem like much to some, but it is an important step for me. I have a Help To Buy ISA, but I’m not sure if it is useful to have it. I want to lay the groundwork and eventually create generational wealth for myself and my future family.
I am a freelance writer making £ 43,000 – until I lost 4 months of income during the pandemic. This is how I manage my money
Current account: £ 400
Savings account: £ 2,758
Monthly pay: £ 1,600 before tax; after tax £ 1,327.51
Monthly salary post Covid-19: Same as before.
Any other incoming payment: I work in a bar part time. My monthly income from this job before Covid-19 was £ 614, while on leave it was £ 418.88. Now that I’m back at the bar I’m making £ 80 more than before because there are fewer staff (£ 694 per month).
To rent: £ 200 (living with family)
Invoices: £ 186.95
Other: £ 260
The follies: I splurged this month for my extravagant birthday picnic!
Weekly budget: I have no more budget to containment, but I want to put one back in place.
What I spent this month: £ 400
Student debt: £ 53,963.64. I actually underestimated the amount of my student debt. I was shocked when I saw the figure on my screen.
Other debts : I have an old housing tax bill for a shared apartment, which I am the only one to reimburse. It was £ 610, and I cut it in half by paying £ 20 a month. I have a payday loan debt of £ 334 which I now pay £ 30 per month, as well as another debt of £ 600 which I pay £ 25 per month.
Discovered: It took me a year to finally pay off my overdraft in May of this year at £ 65 per month. I never missed a payment, the fear of not being able to get one mortgage once it was time for me to buy a house, I always stayed with myself although it sometimes hurt to see the standing order leave my account.
I earn £ 2,243 a month working two jobs and save £ 14,000, but buying my own home always seems impossible. What do I do?
MY MONEY THOUGHTS
What I want to save for: A deposit for a rental property this year because it’s time to live away from family again. I also want to save for a relief fund, as i have learned, it is good to have at least three months’ salary aside, so if something does happen i know i am covered for at least three months.
How I want to plan my money for the future: I am currently paying for my work Pension funds; however, I want to do some research on setting up a personal pension. I also want to invest my money once my debts are paid off.
My worst money habit: Taking taxis to and from my part-time job and now with the lockdown makes it easier for them to see friends. I’m not quite comfortable using public transport yet.
My biggest money worry: Don’t have any. Paying off my student loan – where do I start and will I ever pay it off? Not being able to realize my dream of owning multiple properties.
Current mood for money: 😊 🥴 🤯
Stuck in a mortgage prison thanks to Grenfell-style siding? You need to write to your MP now and here’s how …
WHAT THE EXPERT SAYS …
1. Pay yourself first
The key to really winning at the savings game is to have a cash routine; a checklist of important financial actions that occur on payday and throughout the month. Part of this is paying yourself first. This means setting up a standing order to automatically transfer what you save or put on your debt, soon after it hits your checking account. Open an easy-to-access savings account (or a separate ‘hood’, if using a challenger bank) to store your emergency fund.
2. Priority to retirement
A personal pension plan may be a good option for some, but if you have an occupational pension plan, make sure you get the most out of it first. Consider increasing contributions and check out what your employer has to offer; some correspond generously to what you pay into your pension, up to a certain percentage. Remember that the government also contributes to your pension! Suppose you are a base rate taxpayer and pay £ 100 of your salary, it would actually only cost you £ 80. The government basically gives you the £ 20 you would have paid in tax.
3. Stress less about the student loan
Ah the student loan: a debt so crippling that no graduate will ever manage to access the housing ladder. Law? Well, not exactly. While the £ 50,000 figure looks alarming, we need to reframe the student loan. Instead of focusing on the price, focus on what you’re paying back. For starters, repayment is only required when you earn more than £ 2,214 per month (which comes to £ 26,575 per year). Once that happens, you pay 9% of whatever you earn above that number. Then 30 years after graduation, if you haven’t paid off all of the debt, it’s written off. Gone forever. So, stress less about never paying off your student loan!
4. Declare your rent
It seems like buying a property isn’t an option for a while, but one way to increase your chances of getting the best mortgage deal when the time comes is to report rents. It’s a relatively new system that records your rent payments, which in turn can boost your credit score (if you pay on time!). This involves you paying rent to a third party, so your landlord needs to be prepared. To find out more, here is a help rent declaration guide.
5. Towards LISA or H2B ISA?
Making the most of government programs is the way to go. Saving in your ISA Buying Aid ** means the government will increase your savings by 25% with a maximum bonus of £ 3,000. The Lifetime ISA is a similar plan; pocket a 25% government bonus up to £ 4,000 per year between ages 18 and 50. That’s a maximum bonus of £ 33,000! There are pros and cons for both, and most importantly, you can’t put the bonus of just one towards your first house. If the purchase is not likely for a few years, the higher maximum bonus on LISA and the fact that you can save more each year might make it a better choice for you. You can transfer your help to buy from ISA to LISA, if your provider allows it. Take a look at this ISA guide for more.
** ISA purchase aid is no longer available, but those who have already opened one can register for it until November 2029
Alice Tapper is the author and founder of Go finance yourself.
* The name has been changed. Join GLAMOR’s new Facebook group, Money Matters, for more exclusive financial content.
Do you like our Money Matters column? Worried about your finances? Or do you just want expert help on how to reach your financial goals? Contact us at [email protected] to submit your own financial journal and access our expert advice, tailored to your finances! These submissions may or may not be anonymous!
This is exactly how to save money long after foreclosure (and it’s a lot easier than you might think)