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…
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Natasha*, is 25 and lives in a shared house in London. She’s an assistant manager in retail and is struggling to build her savings. Here’s her money month…
I live in London in a house share with three other people. A lot of my salary goes on rent, but that’s pretty normal for London – most of my friends are the same. I’m an assistant manager in a clothes shop, I’ve been there since just before the pandemic. I’ve been furloughed on and off, but now I’m back working full time. The job is OK and I get a discount, but my manager is a nightmare and there’s a horrible atmosphere when we’re on shifts together.
I’d love to leave but feel a bit trapped as there are so few jobs around at the moment. Plus it feels like there’s not much job security in retail any more. There have been redundancies at my company recently, but if I was to be made redundant I wouldn’t be eligible for the full package because I’ve been there less than two years. So that worries me a lot.
Everything is so expensive in London, I feel like my money just disappears every month and I’m not sure how – I get really anxious checking my bank balance and avoid facing up to my finances. Some of my friends talk about savings pots and starting to invest, and I just feel so clueless and stressed about it I end up burying my head in the sand. I know I need to pay off my credit card debt but just don’t know where to start.
I really need some help in first steps towards getting some control. I’m really sick of being totally skint for the last week of the month, or having to dip into the small amount I’ve managed to put into savings. Especially now we’re coming out of lockdown and I’m going out with friends again, I’ve no idea how I’m going to afford a social life while also saving!
MY ACCOUNTS
Current account: £135
Savings account: £200
MY INCOMINGS
Annual salary: £26,000 gross; £21,344 after tax
Monthly wage: £2,167 gross; £1,779 after tax
Any other incoming payments: £0
MY OUTGOINGS
Rent: £800
Bills: £120 on household bills, another £80 for phone, Spotify and Netflix, £20 on a charity donation
Splurges: I feel like I don’t splurge a lot on expensive things, but my money must be going somewhere. I guess socialising.
Weekly budget: I don’t have one, I think that’s part of the problem!
What I spent this month: £500, not including rent and bills
MY DEBTS
Credit card: £350 – I’ve been avoiding tackling it, just paying off the minimum every month and it’s really stressing me out. I want to pay it off and cancel my card.
MY MONEY THOUGHTS
My financial hopes for the future: I want to save a buffer so I’m not down to the wire at the end of every month waiting for payday. I really need some security – I would love to get to a point where I’m not living month to month. Eventually I want to buy my own place but I live in London so not sure if that’s ever going to be possible.
My worst money habit: Going out for drinks and dinners.
My biggest money worry: Not having enough of it! And worrying about losing my job.
Current money mood: 🤯 🥴 🤔
1. The uncomfortable truth
The things you’re feeling aren’t a symptom of being bad with money, they’re the unfortunate reality of living in a city with overpriced rent and working in a sector that doesn’t pay people enough. ‘Going out for drinks and dinners’ isn’t a ‘worst money habit’, it’s living. I can’t help you to tackle the deep rooted structural issues we’re talking about here, but what I can do is talk you through the steps to take to feel better with what you have now and then look at what action you might consider taking in the medium to long term.
2. Debt vs savings
Are you paying interest? If the answer’s yes, then I’d suggest prioritising your debt over your savings. The idea that you should have a six-month emergency fund before tackling debt is bad advice and will leave you with an even bigger debt mountain to tackle. While £200 in savings looks better than £200 less in debt, with interest rates so low on savings (and comparatively high on credit cards!) saving is losing you money. If having a small pot of cash makes you feel more comfortable, then great, but right now, make your debt a priority and put as much as you can towards it as soon as you get paid.
3. The B word
Of course, to make this happen you’re going to need a budget. How much do you need and want to spend each month and how much can you realistically put away towards your debt? Only you can find out the answers; take some time to go through your monthly spending and also consider the big, one-off expenses you’ll face throughout the year (holidays, phone, you get the picture). Use these figures to estimate a monthly and then weekly budget for your goals (debt/savings), needs (groceries, rent) and wants (drinks, new clothes). Overestimate your needs and wants by around 5-10% to avoid needing your credit card and dipping into your savings.
4. London life
With your budget sussed, you can hopefully take a breath and start to think longer term. The brutal truth is that you’re right; being single in London and not earning a 50k or more salary makes getting on the housing ladder very hard. There’s always Help To Buy and Lifetime ISAs (which you should absolutely investigate), but the real challenge is earning a high enough income to save for a deposit and borrow enough to make up the difference. Through the pandemic, it’s this very squeeze that has many of us questioning: is living in a city that I can’t even afford a cocktail in, let alone a house, really worth it? This is a question only you can answer.
5. Future-proofing
The second question that many of us are asking is: is my career future-proof? If staying in London and buying a property is what you really want, then you might need to consider a bigger life change. I know it sucks; this is an industry you’ve invested time into but today, staying relevant and future-proofing our careers is a must. Technological change will shift things but it’s not the case that your years spent working in retail were for nothing. There will always be a place for hard workers, with management skills, both online and offline. 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 skill set might be lacking. Good luck – you’ve got this!
Alice Tapper is the author and founder of Go Fund Yourself. For more money advice and tips, follow her @gofundyourself.
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.