I’ve also recently taken on a lot more responsibility in my role, meaning I’m working longer hours but for less pay. I work for a US based company but as a contractor, so I have nothing in the way of work perks or support schemes during times like this.
I haven’t applied for government support because I’d genuinely feel guilty (despite being stressed about money) – I have income coming in for the time being, and feel that there are others in a more difficult situation who need that support more.
A significant part of my salary used to be commission based, but since Covid-19 we have had to cancel the events that my team sold, meaning I only have my base salary to live on. This has meant that I’ve seen around a 25% decrease in my monthly salary, with no guarantee of when I will be able to supplement it with commission again.
Current account: £30,000
Savings account: I still haven’t set one up (which I know is bad)
Monthly wage: Used to be around £3,300
Monthly wage post Covid-19: £2,500
Any other incoming payments: None
Rent: £780 (including bills)
Other: £2 a month for cloud storage, £10 a month for music, £45 for gym, £20 for phone, £95 for an online PT, £150 for pension contributions, £8 for a newsletter subscription.
Splurges: This month I moved flats so I had a number of one-off purchases (eg deposit for the new place, cleaning bill for the old place, and things I needed for my room). It came to around £1,500 in total.
Weekly budget: I hate to admit it, but I’ve never budgeted.
What I spent this month: Pretty much broke even, so around £2,500 (including the house-related stuff above).
What I was left with: A big fat £0.
I don’t have a credit card or a student loan, so gratefully I am debt-free.
MY MONEY THOUGHTS
What I want to save for: A flat/financial security/a proper holiday when it’s safe to travel again! I rarely spend money on holidays (I took five days off last year) so I’d like to have a proper trip in 2021.
How I want to plan my money for the future: I’d like to do something with the money sitting in my current account, eg invest in stocks/shares, but I get overwhelmed when looking into all the options and don’t want to make the wrong decision.
My worst money habit: I make lots of mini purchases – eg coffee/snacks/general £5-£10 items. I also live in a shared house and have one small shelf in the fridge, so I tend to do food shopping quite regularly.
My biggest money worry: The company I work for very rarely gives bonuses or pay rises, so I’m worried about being stuck on the same salary forever. I know I’m underpaid and overworked, so really I just want to be paid what I know I’m worth and deserve. I also have slight FOMO with regard to the money I have in my current account, which isn’t growing or doing anything for me.
Current money mood: ? ? ?
OUR EXPERT SAYS
You’re losing money You’re a saving queen but having a five-figure amount sitting in your current account is not a smart idea. Not only is there an opportunity cost to leaving your money in a no-interest account, but you’re losing money too. As the cost of things increases (that’s inflation), your money is losing spending power and will be able to buy you fewer and fewer things as the years go on. Imagine that today your £30,000 could buy you a Tesla. If prices go up by 20% over the next 10 years (and the price of Teslas too), your £30,000 will only afford you 83% of a Tesla by 2030.
Instead, make your money work for you If you can be patient for at least five years (this gives you the chance to ride out any bumps in the market), you’re right that learning to invest in stocks and shares might be a sensible move. You have a few options: DIY investing, where you pick your own funds, stocks and shares. Using a ‘robo-advisor’, like a digital financial advisor which uses clever algorithms to invest for you. Finally, you’ve got financial advisors; an actual human who can give you bespoke advice. Whatever you decide, it’s also worth keeping a cash buffer in place to see you through any emergencies.
Ask for help If you’re eligible for government support and Covid-19 has impacted you financially, you should feel no shame in getting some extra help. The stress you’re feeling is to be expected, but don’t suffer in silence. If you’re a self-employed contractor, you might be eligible for the Self-Employment Income Support Scheme which allows you to claim a % of your average monthly profits. The deadline to apply for the first grant is the 13 July 2020. If you’re still under pressure in July, you can apply for the second grant in August.
Take note Those micro-purchases really do add up but now you’ve experienced life without the impulse snack purchases and £3 flat whites, do they really bring that much joy? Before lockdown becomes a distant memory, take note of the habits you want to take forward and the things that you’ve survived without. For inspiration, look at how you spent your money in January or February – but be warned, there’ll be things you can’t unsee…
Eleanor Levy from workplace pensions provider NOW: Pensions: We are seeing a lot of women choose the ultimate flexibility with their work – freelancing or working for themselves. However, they lose the safety net of automatic enrolment in a pension. There are still a lot of options out there – a personal pension, a SIPP (self-invested personal pension) or a stakeholder pension.
Lots of self-employed people have irregular income patterns so they need to choose a provider that will allow them to make contributions as and when. First up, Adele should investigate her company’s pension scheme. The treatment of contractors is a grey area here, and Adele should send a written request to her HR department asking whether she is eligible to join the company scheme and what they will contribute.
Next, Adele needs to think about whether the personal pension she is paying £150 a month to is meeting her needs. The money might be better directed to a Lifetime ISA, which provides a government bonus of 25% if the proceeds are used for either a first-time house purchase or retirement, providing greater flexibility.
There are lots of great, free advice websites out there to help you choose the right one. The Money And Pensions Service is a fantastic resource.