The Consumer Lawyer

When it comes to your money, clarity is power

warren shute

By Warren Shute @warrenshute

If you know your numbers, money isn’t as complicated as you might think. Clarity gives you the enthusiasm to make better decisions and live the life you want to live.

The lockdown might be playing havoc with your finances, but this period could also be giving you more of something you don’t typically have: time.

If you’ve been furloughed, or you’re saving hours in commuting, use the extra time productively to sort your finances out.

The hardest step is the first one – so where should you begin?

Get organised

Start by working out what’s coming in and what’s going out. If you’re struggling financially, or anticipate you will be soon, it’s so easy to bury your head in the sand and ignore the problem. It’s also the worst thing you can do.

List out all of the money coming in and going out every month (some of the online-only banks can automate this process for you) so you know where you stand. You might even find Direct Debits for things you stopped using long ago!

Next, look at what you owe and what you own. If you’ve got outstanding debts, write them down. Make sure you’re on the lowest interest rate you can get by contacting any credit card providers.

Finally, don’t forget to organise what you own, including which companies your pensions are held with.

Cut outgoings

Go through each item of expenditure and ask yourself three things: do I need this? Do I want this? Can I get a similar experience for less?

Unless you plan to rely on savings, you’ve simply got to have more coming in than going out. If you’re taking a financial hit at the moment, that might mean making tough choices and some cuts you don’t want to make. Your TV subscriptions might need downgrading, or that phone upgrade might just have to wait.

Remember this isn’t forever, it’s to get you through uncertainty until you’re back on an even keel.

Increase incomings

At the same time, think about any ways you can improve your earnings. Most of us have spent a lot of time lately going through our things – thanks to the likes of eBay and Facebook, it’s never been easier to sell unwanted items online.

If you’re on a modest income, have lost your job or have children, use the website to check your eligibility for any benefits. It’s a great resource that may surprise you.

And you could also consider any online training or upskilling you could do to improve your salary in the future.

Armed with information, you could come out of the lockdown in better financial shape than you went into it.

Big Save

Taking financial control starts with a vision

Setting money goals is essential. I call it your compelling vision, and it should be ambitious: how do you want to live the rest of your life?

But like eating an elephant, it’s important to think one bite at a time. We need stepping stones along the way to our bigger target, something like this:

  • 15 years from now: I want to own my home outright and be financially free
  • 7 years: I’m overpaying my mortgage each month
  • 5 years: I have £10,000 invested, I can take a wonderful holiday each year
  • 3 years: I have paid off all unsecured debts and credit cards
  • 12 months: I have three months of expenses saved, I have a will and power of attorney
  • 9 months: I’ve started saving into an emergency fund
  • 6 months: I’ve begun repaying my debts and sold things I don’t need any more
  • 3 months: I will become financially organised and implement the bank account system

Seems achievable now doesn’t it? By thinking long-term, you can truly see the possibilities rather than trying to cram everything into a few months, which won’t work. Think big, start small.


My tip: Changes afoot in the FTSE 100

The FTSE 100 (pronounced footsie 100) is a list of the 100 largest companies listed on the London Stock Exchange. Adjusted each quarter, the lockdown winners and losers will move in and out of the list on its next review on 22 June. Among those leaving the list will be easyJet and the British Gas owner Centrica, whose share prices have plummeted. Those taking their place include Kingfisher, owner of B&Q, thanks to our recent DIY fixation.

My Tip: Self-employment support update

A second grant has been added to the package of support for the self-employed. Opening for applications in August, individuals can claim 70% of their average monthly trading profits, paid out in a single instalment covering three months’ worth of profits, capped at £6,570 in total. Applicants will need to show their income has been adversely affected by coronavirus.

  1. I heard we may have negative interest rates, what does that mean

The governor of the Bank of England, Andrew Bailey, has said officials are actively considering all options to prop up the economy. Negative interest rates would mean savers could be charged to keep their money in an account. Borrowers with a variable rate mortgage would see their payments reduce – but most have a minimum you can be charged. In Denmark last year, negative interest rate mortgages were available which means the amount owed falls over time.

2. I’m 30, live with my parents, and I’m desperate to move out. I’ve saved a 5% deposit with no other savings or emergency fund. Should I stay with my parents another year to save for emergencies and a bigger deposit, or buy now?

I really urge you to have some savings behind you first, because if something unexpected happens you could get into trouble quickly. Regarding the deposit, while mortgage rates can become more favourable if you have a bigger one, I wouldn’t worry – it’s far more important that you’ll be happy in the property even if its value fell and the mortgage is affordable. You could use a LISA to save for 12 months and earn bonus money towards your home.

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