Welcome to Money Matters: GLAMOUR’s new 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…Lex, 26*, is a civil servant in Dublin, working from home on her full salary of €3,600 per month. This is how she’s managing her money during lockdown.
I have been really lucky as I am a civil servant who has not been financially impacted by the pandemic. Growing up, my mum was a single parent with four kids, so money was always tight. Whenever she did have money she would always splurge on my siblings and I. When I started earning money I had the same ‘splurge’ mentally, never thinking about the future or living within my means. Thankfully, I have moved past that mentality and now I definitely spend within my means, put money away and contribute to a pension. I even managed to coach my mum to be more spendthrift and do the same. Now I want to know what I do next! Where should my money go now?MY ACCOUNTS
Current account: €1,100Savings account: €12,000MY INCOMINGS
Monthly wage: €3,600 after tax and pension deductionsMonthly wage since Covid-19: The sameAny other incoming payments: €0
Rent: €931 (my share)Bills: Roughly €110. This includes Spotify, internet, my contact lenses direct debit, phone contract and electricity. I made a conscious effort after my mobile contract finished three years ago to forego the phone upgrade and to keep my expenses down by shopping around for a sim-only deal, which I pay €10 per month for. Normally I would also pay around €50 a month for gym and cinema membership, but both of these have been frozen due to the pandemic. Other: iCloud storage – €1!Splurges: I love online shopping (clothes, beauty products and books) and that is definitely my downfall. If I want something I try to buy it out of my weekly budget but do find myself going over my budget some weeks. I try and keep my budget low enough to accommodate the weeks that I splurge to keep the weekly average around €200.Weekly budget: roughly between €150-200What I spent this month: With lockdown I have definitely spent more on food and drinks and things to occupy myself (books, a mini trampoline – for fitness purposes and for de-stressing during particularly challenging days). I have also bought some new summer outfits. I rotate my clothes for spring/summer and autumn/winter so that it feels like I am getting “new clothes” with the changing of the seasons. I used to buy much more throw-away fashion but as I have gotten older and realised the impact this has on the environment and my savings, I have been buying items that will last more than one rotation.What I was left with: I put my savings away when I first get paid so there is only usually my budget in my current account. MY DEBTS
Credit card: I don’t have a Euro credit card. I do still have a credit card from when I used to live in the UK, but there is no debt on this. I used to have a terrible YOLO attitude to money before I hit 30 and I had huge credit card debt, I have thankfully cleared it all and learned to my lesson.MY MONEY THOUGHTS
What I want to save for: A house/general security.How I want to plan my money for the future: I would like to keep saving for the future and learn how to invest money.My worst money habit: Now and then reverting to a YOLO attitude when it comes to buying things/booking trips.My biggest money worry: That I won’t be able to buy a house post pandemic if there is a recession, and I’m worried I won’t invest in the right savings vehicles. I also have several small pension pots in the UK that need to be amalgamated but it feels like an onerous process and I keep putting it off.Current money mood: ? ? ? ?️♀️ ?I’m a nurse on £24k working on the Coronavirus frontline – here’s how I’m managing my money during the pandemic
WHAT OUR EXPERT SAYS:Understand inflation – OK, so in terms of money management you’re absolutely killing it but before we get onto what to do with your savings, there’s one important concept you need to understand. While it feels good to have lots of cash in the bank, with interest rates so low, you could be losing money. Inflation is a % rise in prices and it’s like a monster that eats your savings for breakfast. If the rate of inflation is higher than your savings rate (inflation has averaged 0.4% in Ireland in 2020), your money will be able to buy you less stuff in one year, two years and so on…What’s your game plan? – According to The Economic and Social Research Institute, property prices in Ireland could fall by 12% by the end of next year as a result of the pandemic. With this in mind, create a plan of action with a realistic timeline. Using a tool like this one, work out what you could afford to buy, where and when.Save or invest? – Once you’ve got these details, you can think about where to put your money. You want a decent chunk to be accessible to cover any ‘oh ****’ situations (3-6 months worth of living expenses is the rule of thumb). With the rest, this depends on your timeframe. If buying a house is on the cards quite soon (within the next 3-5 years), investing might be too risky as you won’t have time to ride out bumps in the market. Instead, look at saving products which beat the rate of inflation, at least.Start scheming – Before resorting to standard savings accounts with pitiful interest rates, investigate what’s on offer. For example, Bank of Ireland’s MortgageSaver account will top up your savings by €2,000! Remember, you also have the Help to Buy scheme which will help you save a deposit (on a property under €500,000) by refunding income tax and Deposit Interest Retention Tax (DIRT) paid over the previous 4 tax years.Learn about investing – If however, you’ve got at least 3-5 years before buying, you could consider investing. Keep your emergency fund accessible and learn how to invest the rest. It’s more risky than saving, but historically you get a better return on your money. This masterclass is a good place to start.Eleanor Levy from workplace pensions provider Now:Pensions: Depending on your circumstances, it may be a good idea to combine all of your pensions together in order to get a full picture of your pension saving and work out any shortfall you may have. You may also benefit from potentially paying fewer charges and other administration fees associated with having multiple pots in different schemes. By combining all of your pension savings together, you have the benefit of watching your savings grow in one place. You may also benefit from government tax relief (if you consolidate into your workplace pension). It may seem like a stressful and complicated task, but the Department of Work and Pensions has a very helpful pension tracing tool in order for you to locate where you might have dormant workplace pensions. It is worth looking for your annual benefit statements from your pension providers that might be hiding in your kitchen drawers or filing cabinets as you may be required to provide your unique pension ID when you call your old providers, as well as your National Insurance number.
Visit FairPensionsForAll.com to find out everything you need to know about your pension and planning for your future.
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I’m a government worker on £17k. Here’s how I’m managing my money during the pandemic