Free cash, maths lessons, ISAs - and budgeting
Budgeting properly for the first time - wild.
I recently heard about my friend’s genius approach to budgeting. And this week I decided to pull the trigger and get more serious about my own budgeting.
It involves switching to Monzo Plus and spending £5 per month for a minimum of three months. Then…
Set your budget for different spending categories (I started with Coffee and treats, Fun with friends (dinners etc), and Groceries)
Create different pots, and assign a virtual card to each pot (there is a five card limit)
Then, each time you spend something in each of these categories, pay using that card
So far, it’s going OK! The only difficult bit has been differentiating between the cards in my digital wallet at the point of payment.
Building a bit of gamification into spending has already started to make budgeting a bit more fun. Hopefully this sticks…
1. UK savings and benefits: are you missing out on free cash?
Potentially, is the answer!
It’s most likely that you’re not entitled to benefits (I’m making an assumption that you’re likely earning and saving amounts to keep you above the entitlement levels), but you should definitely check.
What’s more likely is that you might have money sitting in old bank account, or (especially if you’re British), have some Premium Bonds in your name, potentially the result a gift from a relative years ago. It’s definitely worth a check.
ACTIONS:
Check for any lost accounts or Premium Bonds via this free checking service
Use an online tool to see if there are any benefits you’re entitled to (EntitledTo) - it’s relatively easy, but does require information from a payslip and also information about your savings and investments
2. Six maths lessons everyone can learn to get richer
PensionBee outlines six concepts, some of which (like compounding) are quite simple. But there are a couple I think are important:
Tax relief on pensions
This is when you get additional money from the government as an incentive for putting money in your pension, rather than taking it as income
The more money you earn, the higher this percentage goes
You will get taxed when you take money out of your pension, but if you’re smart about how you withdraw money, the tax you will pay on this can be way lower than the amount you’d pay if you took the money as income today
Pound-cost averaging (also known as dollar-cost averaging)
Someone mentioned this at the last Money Brunch!
It’s the effect of making small, regular contributions to reduce the impact of market ups and downs on the value of your investment over time
When the market’s doing well, your £100 might buy 10 investment units. But when it’s doing not so well, it might get you 20 investment units. By holding your investments - and continuing to invest - you’ll get more bang for your buck over the long-term
ACTION: Make sure you’re familiar with these concepts. If you have questions, ask in the comments!
3. Hargreaves Lansdown launches cash ISAs on its savings platform
I don’t usually feature product news, so you know this one is significant. And, since it’s an ISA story, I had to get it in here (remember to use as much of your ISA allowance as you can, before 5 April!).
ISA rules are changing from 6 April. You’re currently able to contribute to one cash and one Stocks & Shares ISA each tax year. But, with the upcoming change, you’ll be able to split your £20,000 ISA allowance across multiple ISAs.
This Hargreaves Lansdown product is big news for that reason; it’s a ‘pick and mix’ approach which lets you take advantage of competitive rates within one account - removing the hassle of constantly switching.
ACTION: Check in on - and action - your ISA strategy!
Footnote
This week, I read Damaged Goods by Oliver Shah. Not a piece of feminist literature (as my friend thought when she saw me with it), but a really deep-dive into how Philip Green, the former Topshop owner became a billionaire by stripping retail chains of their assets and avoiding tax (all perfectly legally).
It’s astonishing, but a look at how capitalism is definitely not a meritocracy. That you need money to make money. And that borrowing against assets is the real hack.
A good read, if not one that might make you feel a bit nauseated.
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