Poorna*, 25, is currently on a financial graduate scheme, training to be an accountant. She lives in London with her family. This is her money month…
I live with my family (mum, dad and sister) in a rented council flat. I’m South Asian so not expected to move out until (or rather if, but don’t tell my family that!) I get married. My mum is ill and hasn’t ever been able to work, and my dad works in a factory, so growing up our household income has always been very low.
I have a lot of money anxiety stemming from this – I vividly remember in primary school the admin staff chasing me for unpaid lunch money – but the plus side is that as an adult I am careful with spending and a great saver.
I’m currently on a finance grad scheme and getting through an accountancy qualification. I’m not super excited about the job, but it pays the bills, offers opportunity for progression and thankfully hasn’t been affected by Covid-19. I would hate to throw that stability away, even if it did mean chasing my passions.
Financially I’m in a good place right now, but it’s the future that I’m really worried about. I’ve VERY recently made the decision to buy a home for my family, together with my sister. My family are immigrants and don’t have much in the way of assets – I want to buy a house so we have something to call our own.
Current account: £96.87
Savings account: £16,300 in a Halifax savings account; £2,500 in a Help To Buy fund I set up a year ago which is now just used for the interest; £6,000 in Monzo pots; £1,250 in Premium Bonds and £800 in a Stocks Shares ISA. I opened a cash Lifetime ISA over the weekend and will put in £4,000 from my Halifax account to get the 25% bonus.
Annual salary: £28.4k pre-tax; £21.5k post-tax. I’m due for an increase to £32,000 pre-tax per year soon, but it hasn’t happened yet.
Monthly wage: £2,368 pre-tax; £1,798 post-tax
Monthly wage post-Covid-19: Same, luckily!
Any other incoming payments: None
Rent: £300 a month in rent. My sister splits the rent with me, and because it’s a council flat it’s quite low anyway.
Bills and other: I’m no longer commuting to work, so my outgoings are generally low. £14 for laptop insurance (I would cancel, but I can guarantee it would break as soon as I did that); £9 on a sim-only phone contract and £8.99 for Netflix. I budget an extra £100-200 each month for household expenses such as groceries or takeaways, one-off bills like the TV licence and other misc items. I also have a monthly £25 donation to charity.
Splurges: None at the moment. I only met my friends once in October (due to Covid) and spent £30, but I don’t think this counts!
Weekly budget: I don’t have one. I move my money to my savings accounts on payday and only keep enough for rent, bills and household expenses in my current account.
What I spent this month: £1,300 into savings savings, £350 on bills so £150-ish on everything else, including misc house expenses.
Student loan: I have £35,000 in student loans. I don’t think it’s likely I’ll ever pay it off, so I will continue paying 9% over the threshold for a very long time. I have an interest-free overdraft but I know my bank will claw this back soon, so I only dip into it occasionally, mostly for cashflow issues rather than because I need to.
MY MONEY THOUGHTS
What I want to save for: Primarily I’m saving for a house deposit – aiming for £30,000 in two years, in addition to my current savings. At a much slower pace, I’m saving for a car/wedding/holiday/fun in Monzo pots.
How I want to plan my money for the future: I’m trying to put anywhere from £1,000-£1,300 towards a house deposit each month. My extended family and my friends live in London so I would like to stay here, but I think getting an appropriate mortgage will be a struggle as my sister is a low earner and I don’t earn enough for a London mortgage either.
I’ve started a Stocks Shares ISA for the future, unassigned to a goal as of yet.
I have a DB pension [a defined benefit pension is a type of workplace pension that pays out a secure income for life, which increases annually in line with inflation] so I’m not so worried about that for now. However, it’s linked to the state pension age (I feel as if this will probably 75 by the time I’m there!) so at some point I might need to consider a SIPP [self-invested personal pension] or assign the Stocks Shares ISA to that.
My worst money habit: Probably that I have too much money anxiety – while I save for the future I’m not living life to the fullest right now.
My biggest money worry: House prices outstripping the speed at which I can save!
Current money mood: 🤑 😬 🤔
OUR EXPERT SAYS…
1. Talk about it
It’s very normal to inherit some of our parents’ financial worries. Those fears were important coping mechanisms; as the admin staff chased you for lunch money, you were learning that money was something to worry about. While those fears are not useful today (you appear to be in a fantastic financial position) they’re hard to shake, particularly when your family still struggle. Talking to someone about this is key. It could be a friend who understands the cultural pressures you’re feeling or ideally a therapist who will help you to untangle your feelings.
2. Prioritise your future
It’s a wonderful thing to want to help your family, but it’s important to get the balance right between taking care of your own future and that of your loved ones. While that might feel selfish now, your long-term financial security and happiness is the priority. It’s important not just for your own wellbeing, but it’s the very thing that will help your parents to be financially secure too. So as you make plans to support them, make sure you’re also saving for your next five, 10, 30 years. Consider all the eventualities, whether that’s with a partner or not and build that into your savings plan.
3. Live a little
You’ve got all the ISAs, 5 figures in your savings account and you know your SIPP from your DB, so you don’t need me to tell you how to save! As you rightly highlight, your biggest risk is that you aren’t living life to the fullest today. Take a pen and paper and ask yourself this question: if everyone you loved had everything they needed, what would you spend money on? Like saving, giving yourself permission to enjoy life and the money you’ve worked hard to earn is a habit; if you don’t start doing it now, you never will.
4. Don’t settle
Like first boyfriends, first jobs are rarely ‘the one’. In today’s climate, having a secure job is not something to take for granted but this doesn’t mean resigning yourself to accountancy forever. Before buying a house (and signing up to the huge commitment of a mortgage) take the next two years to explore your career options and reflect on the kind of work you actually enjoy doing. In practice this could mean talking to people in other sectors, taking courses to learn new skills or volunteering.
5. Don’t sweat the house prices
Watching house prices climb to record highs is brutal when you don’t have a piece of the property pie, but don’t be too alarmed by the headlines. With the end of furlough and the stamp duty holiday looming, it’s expected that house price growth will slow in the coming months. Robert Gardner, the chief economist at Nationwide, said last week: “activity is likely to slow in the coming quarters, perhaps sharply, if the labour market weakens as most analysts expect, especially once the stamp duty holiday expires at the end of March.” Worth keeping in mind if you don’t expect to be entering the property market for another two years – the market will go up and down in the meantime so try not to stress about prices just yet.