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…
Sarah*, 35, is a visual merchandiser who has just been furloughed again. This is her money month…
I now live alone in a two-bed flat close to a city centre of Manchester. I have been a visual merchandiser for over 15 years, working my way up from an in-store VM assistant on £17,000 to a visual manager of a £1million turnover store on £34,000 at the peak of my career. I got used to having a good amount of disposable income, and splurged A LOT on clothes and socialising. Following redundancy from this role, I relocated and took a pay cut of £7,000.
I am now field-based and find it much harder to budget on this lower wage; I don’t have a company credit card, and my expenses can be up to £500/month. I was furloughed from March to July, and have been just put back on furlough for a further four weeks. I have always loved my job, but I am getting increasingly worried that I have all this experience in a sector that is no longer relevant. During lockdown I have had so much time on my hands and this has meant I have been worrying about my finances more than ever before.
I manage the social media for an organic paint company in my spare time but I am completely unqualified and feel like I could be doing so much more. I also regularly sell things on eBay for extra money. I enjoy making jewellery and painting but have never sold anything. I thought that with lockdown making my socialising non-existent, that I would actually save money. But what I have found is that I am buying more clothes and things for my home to make me feel happy!
There is a very real possibility that my role may not exist after Christmas, and I want to use this time to put a contingency plan into place. I was supposed to have an interview last week for a VM manager position and my plan was to move in with a friend and walk to work, in order to build up some savings. The interview was cancelled following the announcement of a second lockdown. This is the second time this has happened.
Current account: £2,824
Savings account: £0
Annual salary: £27,000 pre-tax; £17,376 post-tax, pension, student loan & furlough reduction
Monthly wage: £2,250 pre-tax; £1,448 post-tax, pension, student loan & furlough reduction
Any other incoming payments: £480/month from a social media side-hustle; around £60 per month on eBay clothes/books
Other: Gym £40 (frozen during lockdown); Internet £24; Mobile £11; Osteopath treatments £45/month
Splurges: I spent £1,700 on an iPad & keyboard to produce better images for my social media project (I was previously working just on my phone)
Weekly budget: I don’t have one
What I spent this month: £3,041, which included paying off £1,100 on my credit card
Student debt: £13,000, which I pay £60/month towards direct from my wage
Credit card: £2,000 on a 30-month-fee-free (until January 2023) credit card, which I pay £25/month
Other: £1,000 borrowed from my mum!
MY MONEY MOOD
What I want to save for: No particular goal, I just want to have a savings pot rather than spending everything I earn every month.
How I want to plan my money for the future: I have contributed to a pension for the past eight years, but it’s spread over a few different accounts as I have moved job roles. Do I need to consolidate these?
My worst money habit: Clothes! Working in fashion for 15 years I am obsessed.
My biggest money worry: Having nothing to show for my hard work over the last 15+ years. No house, no car, no savings.
Current money mood: ???
WHAT OUR EXPERT SAYS…
1. Focus on the things you can do
Like a worrying number of people in the UK right now, you’re living paycheque to paycheque and facing job insecurity. We can never know what the future holds (wouldn’t that be nice), but what you can do is focus on what’s within your control; the financial levers you can pull in both the short and medium-term to get you back on track. That includes your income, spending habits, career plans, lifestyle choices. I’m not saying things don’t suck but when you look at it through the lens of what you can do, things will feel more hopeful.
2. Go to budget bootcamp
We’ll get to contingency planning in a second, but the fact is, money is a big worry for you right now. In the short term, the easiest way to win back some financial security is by radically cutting your spending, army bootcamp style. An emergency budget is a time-limited spending plan which limits splurges on excess ‘nice to haves’ and strips it back to basics. It’s pretty simple; ask yourself what you need to spend each month. It’s not fun but if there’s a chance of redundancy, building up a savings buffer and reducing the risk that you’ll get into more debt is your No.1 priority. I hate to be all sergeant major, but now really isn’t the time to be spending big money on tech and clothes. Just remember, this isn’t forever.
3. Ask the bigger questions
With the short term taken care of, you can turn your attention to the bigger questions. In the medium to long term, there are more levers you can pull. There’s your day-to-day spending, which we’ve taken care of in point 2, but there’s also:
- Your income – how can you earn more in your current role/company?
- Your lifestyle – how can you adapt your lifestyle to save you money and make you happier? This might include where and who you live with.
- Your career – how could you pivot your career to earn more?
4. Plan and upskill
Once you’ve got your emergency budget in place, and you’re feeling less worried about the day to day, take a couple of hours to work through the questions above. Today, staying relevant and future-proofing our careers is a must. We’re all going to be impacted by technological change, but it’s not the case that your years spent working in retail were for nothing. There will always be a place for visual merchandisers, both online and offline, so think about how you can level up your skillset to make yourself more employable. Take courses and look at dream job descriptions for a sense of where your skillset might be lacking. To demonstrate you’ve got practical experience, why not pitch to do some online visual merchandising for the organic paint company!
5. To consolidate or not to consolidate?
If you’ve been collecting pensions like Pokemon, then consolidating can be a great option. By putting them all into one pot you’ve got less to keep track of and you might save money by paying fewer management fees. However, it’s important to double-check that combining doesn’t mean you’ll miss out on any benefits such as guaranteed annuity rates. It’s best to speak to your pension providers or a financial advisor to 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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