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.

Credit cards are both useful and dangerous- they only work in your favour if you maintain the discipline of paying them off every month. In my early twenties I fell into the trap of gradually accumulating debt by not quite being able to pay it off when 0% windows ended. In my late twenties I moved to a place where I couldn’t get a card, and having to spend 2 years on my current account alone was a bit of a mental reset for me.

I now have a cc, but it is never more than a temporary holding place- nothing is charged to it unless I know I can pay it off in full from my current account that month.

having a cc might make sense in a purely practical way, but there a human psychology element as well. You need to be aware of the risks and pretty disciplined with how you use them

@Singleandproud

I recognise that not many earn 50k or 100k so it's high in that regard but it's the value of that salary. If you take my parents for example they bought their 2nd "forever" home in their early 30s with only one parent working. It cost about 45k in the 80s but would cost 1.7m plus now. So whilst I grew up with families with one parent working as a teacher, policeman, doctor etc my mums new neighbours are bankers & lawyers & normal earners are completely priced out.

And I appreciate that I have it easier then the generation below me, housing is just too disproportionate.

Everyone is eligible and at this present time you could be both working and the future looks bright and you think you won’t need it.

But if at any point anything happens and you find yourself having to give up work for any length of time. Then at least you still have your ni contributions taken care of.

I couldn’t have forecast that I wouldn’t be able to work for 7 years after eldest was born.

Stuff you buy regularly with a long shelf life ONLY buy when on offer and buy enough to last till the end of shelf life. eg PG Tips 240 box is currently £3.50 in Waitrose & Morrisons on offer. It's £3.95 in Tesco & Aldi. £4.80 Sainsburys. Usual price £5 or so.

What a great thread. We are starting saving more in January so will read and watch when I get time.

I honestly don't understand what issue you have? Yes everyone is eligible technically but then some have to pay it back so people who aren't actually eligible don't apply to save on paperwork.

1. listen to Martin Lewis and use his advice
2. set an annual budget in detail each year, and each month do a month end analysis, to track spends against that and adjust behaviour/decisions as necessary. We’ve always broken down into spend categories so can see where issues are easily. Particularly if a couple so you are clear with each other about spending what on what. But I still do this now I’m on my own
3. Also use this budget to project rough income/expenses for following year, 5 years, 10 years and in retirement. Ok, takes a certain mindset to forecast out that far, but many of our best financial decisions were because we planned ahead using forecasts and predictions of what income would be, what future liabilities we’d have. Still do this now even though retired.
4. understand difference between needs and wants with things you use your money for. Challenge yourself on this especially when money is very tight.
5. have a flexible mortgage deal- overpay in good years, underpay when hit with disasters like redundancy. I only experienced banks attitude not being able to fully pay mortgage monthly payments once, due to ex’s redundancy , never again. And then, years later, I paid off mortgage nearly 7 years early because I could overpay when interest rates got very low
6. Make use of your tax allowances- know the allowances you get and understand how to use them to your advantage ( and Government a as that’s why you have them) eg ISAs, paying into pensions as much as you can afford especially from mid 50s, etc etc
7. if you have savings then chase down best interest rates or best investment products to make every penny work hard for you. A few years ago we’d have money circulating through multiple current accounts that’d pay high interest on balances ( sadly products long gone like Santander 123). This alone, on a sum of £7.5k savings pot, would produce a serious amount of “ free” income per month which really helped, just took time and thought to set up the process to move cash around each bank each month . Never be loyal or lazy when banking your money. I switch my current account every 2 years to make most of free bonuses.
8. keep divorce amicable to save solicitors costs - even if he was a bastard! Bite your tongue, and compromise. Work it out between you and get solicitors to only do essential legal speak documents.

Buying my first house and overpaying as much (which was very little to start with) as I could. I now have a very healthy deposit for our new home.

Saving little bits here and there.

Buying the best quality I can afford at the time and looking after things.

Not buying lots of things.

But also if I need something or really like something to get it if I can afford it and I eat out most weeks. Everyone needs lightness in their life.

Everyone is eligible and at this present time you could be both working and the future looks bright and you think you won’t need it.

Think I won't need what? I work & pay NI contributions, have done since I was 17 when I worked around uni. If I didn't work then I would claim.

I bought 3 properties in the 1980s they all cost around £40,000. Your parents must have been incredibly lucky because none of the places I bought are worth anything like £1.7 million.
The highest priced one which was in London is about £500,000 now.

I've changed my mindset about charity shop clothes.
I used to think that if something was more than a couple of pounds in a charity shop it wasn't worth buying.

Now I think that if it's a really good brand that looks like it's only been worn a couple of times it's worth paying a bit more for because I'm actually saving a load of money compared to what it would cost new. (And as soon as something is washed it doesn't look 'new' anyway) I needed a new dress for my mum's birthday lunch - paid £7.99 in Oxfam rather than £50+ for the same brand new.

I'm going to attempt to only buy charity shop clothes for the next year.

@BuildersTeaMaker some good tips there. I really want to do an annual budget & like your analysis idea. I'm more of a natural saver than DH & pretty cautious, I think that would be a good way of getting him on board.

For me it was

• keeping my mortgage maturity date the same whenever I moved house, meaning I paid off my mortgage in my early 50’s rather than it creeping to 60’s (Yes, I know 90’s housebuyer here)
• as my endowment policies tanked, adding more to the repayment part of my mortgage. I replanned several times and although the policies paid out no where near what they were meant to they still paid off a good chunk at the end.
• keeping track of every penny I spent, starting with a notebook now a spreadsheet
• using cash £x a week to focus me on spending. When it’s gone, it’s gone.
• diverting a proportion of any bonus or payrise into pension or savings

You make a very good point. It’s easy to make money when you have money. In fact you’d have to be extremely stupid not to make a lot more. It’s a bloody sight harder and more clever to make money when you’re poor.
trouble is a lot of wealthy people think the opposite is true and wander around with hefty entitlement and belief in their superior intellect.
I have at times Ben extremely hard up, and in debt, and then been fortunate nough to now be very comfortably off. Most of that was due to an inheritance. It’s a bloody sight easier to make my money work for me now and make more money.

@Kennykenkencat parents bought in Wandsworth, not at all unusual for the area, but it is a big house which aren't built that way now. DHs parents have seen bigger growth as a % as they bought in Hackney & DHs grandparents had a flat in Lambeth which was about 1k in the 40s & sold last year for 750k.

The highest priced one which was in London is about £500,000 now.

Where in London? I presume it's a flat?

Please can you explain how this works? Is it working like a savings account?

Mind you I’m an excel freak…my financial workbook uses vlookups and pivots 🤣🤣🤣🤣

I started buying things second hand and I have saved so much money doing this. I still have to buy somethings new but overall most things I buy are second hand. Its also made me think more about what I'm buying and is it a need or a want.
I food shop in Aldi which saves a lot of money.
I've started saving money which I could never really do before as I was a stay at home mum and had no real income.
I got rid of the dh as he was abusive in many ways especially financially abusive which in the long term will save me money. He was a high earner but used to live way above his means and had debt which he really didn't even need. He barely saved any money and I could see that debt spiralling out of control.

@BuildersTeaMaker I love pivots & lookups!

I go the opposite way, I use excel all day at work so I do all our personal finances with paper and pen in a notebook!

Opened a help to save savings account. Put the max £50 a month in. 50% back at years 2 and 4.

You need to take the long view - especially at the moment when there is so much volatility. I have had my ISA for about ten years and average annual return is 9% but that includes some years at 20+% and s9me years (this year!) losses. If you need the money in next couple of years, it probably isn’t a good place for you, but if you are building longer term then just whack it in and don’t touch it!

good question on interest rates - in theory it should dampen performance as it makes corporate debt (to fund investment) less attractive and for investors a period of stagnation/ slower growth. I guess the question is alternatives - until interest rates are reflected in savings vehicles, the market feels like a better place to keep up with inflation?

I am no expert, though - mid 40s myself, so my entire adult life has been low interest rates…

But claiming takes time and effort. And you could find yourself in a position that it isn’t that easy to claim. I certainly wasn’t in any position to fill out any forms over and over for the 7 years I was off work. I was in agony and trying to fight for what should have been a simple process to help me out became so difficult I gave up.

There is a reason why people are sometimes reluctant to come off benefits. It is because it isn’t exactly easy to get back on them what ever benefit it is. You usually have to fill out the forms twice because they have lost the original one you sent in or don’t understand the benefit and point to your Dh earning £70,000 and say you don’t qualify.
I would love to think that these things were quick and easy and just a short form to fill in but nothing is that easy and it just adds to everything else going on.

Money is for 10/20 years time so i'm still feeding it monthly.
Just wondering if I should switch more now that interest rates are on the rise. I can't see emergency low ones again for years.

until interest rates are reflected in savings vehicles, the market feels like a better place to keep up with inflation?

good point