A ‘smart financial moves’ thread

[crabsaremisunderstood]

A space to share anything and everything, big or small, that has helped your finances in some way recently. You never know - it might help another person on this thread!

My smart move was opening a Lifetime ISA 3 years ago. The government gives you 25% on top of everything you put in, on funds up to £4k a year. If you put in £1k, you get £250 extra! I bought my first house this year and wouldn’t have become a homeowner if it hadn’t been for this. For those that have already bought a first home, you can also use it to give yourself a retirement fund.

Retraining: I had my fees paid for and a bursary, my salary doubled after 3 years.

Taking control of my finances, I went to the library and read everything I could get my hands on on finances.

I get paid in one account, I use it as a feeder account. I set up standing orders towards:

1 account for bills. I put together all the bills, including the yearly ones, split it into 12 and that gave me the amount I need to not worry about insurances, car service, etc. It’s a NatWest reward one, I pay £2/month and get money back on my direct debits, about £10/month.

2 a regular saver account. I have had one for years with First Direct, I put £300 at 5% in and after 12 months I have a nice lump sum.

3 a spending account. All the supermarket shops, petrol, days out are from this account.

4 a living account. I put £50/month by standing order. This is used for haircuts, threading, clothes, make up, books, tickets to events. I actually need to up this to £75

5 what I call a ‘dregs’ account, whatever is left in the feeder account the day before I get paid, goes into a separate account, takes about a year to get to £1000, that I’m allowed to blow on whatever I fancy. Pre covid used to be city breaks, £300 worth of shoes, a new handbag, a piece of furniture etc.

All my big purchases are made on a 0% interest card.

I have always overpaid the mortgage, by 50%, as in, say my mortgage is £400, I overpaid by £200. I pretended I’m still paying rent, my mortgage is smaller that what I used to pay, but I kept the same payment. For my circumstances, being on my own, it makes sense to fix for 5 years, at least I know what’s what.

I chased that promotion. Boy do I chase it.

I have a notebook for all my expenses that I review every6 months.

HTH

You can still get child benefit what ever your income. It is just taxed now

Can I ask how you decided on the best option for your savings?

Of our combined salaries we spend approx 55-60% on everything household/DC/food etc related, leaving the remainder split between us to spend as we wish.

We both have our own individual savings and mine are currently in premium bonds but given the low returns and hopefully long-term view for savings I'm not sure if this is the right option. I've looked at the LISA this morning after reading this thread and will definitely be opening one tomorrow (thank you!) as I have a good chunk of time for that to make a difference to my retirement pot. I do need some flex for emergencies so wouldn't want everything tied up in long-term plans.

If you need to save really hard for a goal, draw out your weekly spending money in cash and don't touch your card.
You get a much better sense of all of those £3.50 and £1.99 that get frittered away, when all you've got to play with is £20.

I get your point, but the point of this thread wasn’t intended to target one particular demographic. If one person’s financial move is helpful to another, then it serves a purpose. I’m certainly not well off by any means and only bought my first house at 32, and could do with some helpful advice from others that have had more experience in the savings department. No judgement for those more or less wealthy than me

I'm the CB saver upthread, we weren't sloshing in money and only lost means tested CB when our youngest was 17.
It's about £25k they have saved from CB. £15 a week doesn't seem much at the time, but compound interest and the stock market do wonders with small amounts over long periods of time.
We didn't have CB "spare" as such, but prioritised saving for DCs futures over holidays abroad and other spending.
We didn't take the DCs abroad until they were teenagers, and a lot of their clothes and toys were charity shop finds. We spent a lot of time in the library and the park rather than fee-paying attractions.
I know saving is harder now than it was when my DCs were young, but we did actually make sacrifices to do it, and it's not fair to belittle them.

Overpaying the mortgage when interest rates were low and then paying it off [redundancy money]

Absolutely. Treat it like a debit card and make sure you always have enough to pay off in full - don't get in debt to it. It'll help credit rating. I have a cashback one and using it for normal purchases I get a bit back every year.

I just looked at the Govt LISA page - it says the first home needs to cost £450,000 or less - that is a lot but we live in London and my children would be hard pressed to find a flat for that much! I guess it would get them on the housing ladder but it certainly wouldn't buy them a family home.

I wasn't that good with money in my 20s / 30s. What helped me was a spreadsheet at the beginning of every month with outgoings. I also keep a manual list and tick them all off. I write down everything I spend or withdraw so I know exactly where I am at any point in the month. Works brilliantly.

We set up a Junior pension for our 10 year old a few years ago. We invest the maximum of £2880 annually and with tax relief from the government, it means it’s £3600.

Example here of what Junior pensions could grow to;

Say you invest £300 a month (including the government top-up), meaning you contribute the maximum £3,600 each tax year, from birth until the age of 18 – and then you stop your contributions.

After 18 years, £64,800 will have been invested, but the returns, less the charges, will have boosted the fund to £91,800. This assumes an average investment return of 4.5% a year and an investment-management charge of 0.75% a year.

If this £91,800 is then held in the pension for a further 42 years, with the same investment return and charges, it will be worth about £425,000 by the age of 60, according to Aviva.

I think the single biggest financial tip I can give is to know your worth and negotiate your pay.

There's a funny thing with women where we don't like to discuss money, it's been researched and shown that men will ask for higher starter salaries, pay rises and promotions where women feel uncomfortable doing that.

I definitely fell into that pattern, then my male boss told me I was underselling myself and should ask for more money, so in a very awkward, red faced way I did and I got it. From that point on I've had the discussions when starting a new role. I don't think I'm brilliant at negotiating but I'm getting more comfortable with it and my salary has nearly doubled over the last 3 years as a result.

SquirrelFan I think it isn’t supposed to be to buy a family home as a ftb but to get you on the housing ladder

@BuddhaAtSea

what a fab system! We have an account which is supposed to cover mall of our "known" expenses but it never works out that way. I am going to borrow your system - we need to keep our spending on food, petrol and kids things separate from our bills account.

Overpaying mortgage so im done by the time I'm 45, leaving me 10yrs to save up money so I can go part time and semi retire.

Taking a risk on shares and cryptocurrency
Made 19k on crypto last year which paid for a new garden.
Make at least £100 on shares a week. I just get in and out and dont wait to make large amounts. This money I make I use for frivolous things like nicer clothes, holidays etc. So my wages are mainly for bills and savings.

Best lesson is make your money work hard for you. Whether its Lisa, premium bonds, savings interest, shares etc.

@yogiil you sell it if and when you need the money.

Many workplace pensions allow you to take them early (with a penalty of course), plus you possibly have the option to make overpayments (AVC's or just increase your %) which makes taking it early more affordable.
If you can't do that then start a private pension as a secondary income stream.

My old dad always told me that my pension will be the most important thing (on par with owning my own house) and he wasn't wrong.
Mortgage & pension, the earlier you start the more you benefit.

@Kennykenkencat

You can still get child benefit what ever your income. It is just taxed now

But if you earn a certain amount the tax is the same as the child benefit so how do you still get it?

As I said the equivalent for my parents was universal.

@BonesOfWhatYouBelieve i'm aware of that & do understand it actually. 2 working parents likely spend a lot more on childcare than a family with 1 parent at home. I just don't think even 98k goes far these days when you look at childcare & housing costs plus the tax bands have been frozen for yonks.

I don't really understand how you can currently get child benefit but not need it as it's means tested. My parents saved mine for me but it was universal then

The means testing level is fairly high though.

We don't separate CB off, it just goes into the family pot at £200 a month. We save £400 a month at present though, sometimes more.

There will be households earning up to £90k (ish, can't remember the exact cut off assuming two income household) who qualify for full CB. I doubt all of them are spending every penny of income every month with no savings.

And I know we’re in a very privileged position to be able to think about our child’s pension when many people of working age can’t afford to contribute to a pension for themselves. I grew up in poverty, and in my 20’s and 30’s, I got into debt, was on debt plans (split with partner/studying/working/raising kids/life etc), wasn’t sure if my bank card would work at the tills in supermarkets etc. I spent my 40’s trying to educate myself about managing money, budgeting and saving. Now I try to live within a budget regardless of any ‘extra money’.

@Someaddedsugar

ISA stock market, I'm sure Lisa can also be invested in it?

Today my interest rate is 27%.

I have DC ISA in cash at building society and also one in stock market.
Stocks are always higher by a long way however I've kept a portion in cash in lower interest rate ( she got about A£210 interest! )

Because as we all know stocks do go up and down and this means she has stable money to draw on when she wants leaving the stocks for her capital growth.

@PackedlunchofRishiSunak
Where did you set yours up.

That's an amazing amount isn't it.

I keep meaning to open one up for DC but won't be able to put that much in.
Still if it's open and there and they get used to saving small amounts into it ...it becomes "what they do".

@Someaddedsugar I don't have a LISA as already had my home but I have some savings in PBs & a couple of s&s ISAs. I'm going to move some savings into some 2 yr fixed accounts.