*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…*
Suzie is 31, works full-time in media in London and has just bought a new home with her husband. Feelings of job insecurity are making her anxious that she wouldn’t be able to pay her mortgage if she were to lose her job. This is her money diary…*
I live with my husband in London. We have just moved into our second home – we upsized from our first flat to buy a small two-bed house to take advantage of the stamp duty holiday, saving us over £25k.
I work full-time in media in London, and have been employed at my current job for five years. I enjoy my job, but there are constant restructures, so I am always worried about whether I'll be made redundant. However, there is the security of being there for five years, so I know if that was to happen at least I should be slightly looked after.
In the current climate of the pandemic and with my mortgage outgoings, it does make me worried that if I lost my job, I wouldn't be able to find another. And I worry that any redundancy money would dry up quickly, so I would be left struggling to cover my mortgage.
I have been lucky that Covid-19 has not affected my job or finances, and due to not travelling or going out during the lockdowns, I did manage to save money before we bought our new house. But I do worry that we may have stretched ourselves a bit with the new mortgage, so that if either of us loses our jobs, it would be a struggle to meet the mortgage payments.
MY ACCOUNTS
Current account: £900
Savings account: £1,000
MY INCOMINGS
Annual salary: £53,000 pre-tax; £34,440 post-tax
Monthly wage: £4,416 pre-tax; £2,870 post-tax
Any other incoming payments: £0
MY OUTGOINGS
Mortgage: £2,000 (split evenly with my husband)
Bills: (all evenly split with husband) Gas and electricity, £150; council tax, £250; broadband, £50; Sky, £40; phone bill, £30
Other: £500 into savings
Splurges: £100 (usually Amazon)
Weekly budget: I don't have one
What I spent this month: £3,000 on my credit card, and I booked holidays.
MY DEBTS
Student loan: £400 a month
Credit card: Currently £400 to pay off
MY MONEY THOUGHTS
What I want to save for: A family, a loft conversion, holidays
How I want to plan my money for the future: I have a pension, but I am slightly relying on inheritance for the future too.
My worst money habit: Spending on Amazon when I am bored.
My biggest money worry: Losing my job and not being able to cover my mortgage payments.
Current money mood: 😰 😟 😧
WHAT OUR EXPERT SAYS
1. Fear setting
Financial anxiety is real but it sounds like what’s really worrying you is the unknown and the unlikely. Let’s start with ‘Fear setting’. This is a useful technique for this kind of worry and helps you shift anxiety into action.
For every scenario you’re worried about, work through the following questions:
Define - What are the worst things that could happen?
Prevent - How do I prevent each from happening?
Repair - If the worst happens, how can I fix it?
For each fear-inducing scenario, you should consider whether you’re financially prepared.
2. The safety net
One big step towards dealing with those fears of not making mortgage payments would be building your emergency fund. The good news, you already know you can save (you’ve a house to prove it!), but a budget will be a huge help here. A budgeting strategy that I like is the adapted 50:30:20 model. In short, break down your spending into needs, wants and goals, setting realistic monthly targets for each category. For now, your priority is ‘goals’, specifically, saving for that emergency fund. Remember, you also need to account for those expensive one-off items and big wants (a new laptop, that loft conversation, the dream holiday etc.) Think about what you’ll be buying in the next year and work backwards: how much do you need to put away? Most importantly, your budget should allow you to live and save well without relying on your credit card.
3. Your plan B
Job insecurity sucks, but focusing on what you can control and the current reality is the way to go. Worrying that you won’t ever find another job is understandable, but unlikely to happen. Instead, create a game plan. At work, remain confident, professional and keep doing a great job. Check your contract for details on notice periods and be clear on your employment rights. Off duty, build a back-up plan. Keep a close eye on other employment opportunities and make friends with recruiters. Sometimes redundancy can be a blessing in disguise.
4. The pension plan
Once you’ve dealt with the immediate fears, you can look a little further down the road. As tempting as it is to rely on inheritance, it’s a risky business. Inheritance tax and the eye-watering cost of care are only likely to rise. Do what you can to make the very most of your pension; get clued up on what your employer has to offer and contribute what you can. Some will even generously match what you contribute up to a certain %. Still feeling confused? This free pension masterclass might be helpful.
5. Beat the Bezos
If there’s one man with the ability to make your savings vanish leaving you with absolutely no comprehension of what that money was actually spent on, it’s Amazon’s Jeff Bezos. Ever looked through your Amazon history to see your annual spend? Terrifying. Or, scarier still, looked at the percentage of those purchases that you would make again? If you really struggle with your Amazon habit, and want to beat the Bezos, you could (don’t freak out…) ditch Prime. First off, that’s an extra £95 a year you could be saving and secondly, without that sweet next-day delivery, Amazon becomes just a little less enticing.
*Alice Tapper is the author and founder of Go Fund Yourself.
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.
**Love our Money Matters column? Feel worried about your finances? Or just want some expert help on how to achieve your financial goals? Get in touch with us at moneymatters@condenast.co.uk to submit your own money diary to gain access to our expert-led advice, tailored to your finances! These submissions can be anonymous.
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