Do yourself a mahoosive favour in 2019.
As the brilliant Alex Holder rightly points out in her latest think piece for Grazia, this year will finally see millennials (particularly of the female variety) wake up to money management as the biggest act of #selfcare under the sun.
So don’t relegate money stuff to the back burner – because it will just sit there, smouldering away until it turns into a big ol’ fire that burns everything else down.
I exaggerate *ever so slightly*, but only to try and get your attention and help you understand…making concrete plans with your money, or even just resolving to look out for big developments that could affect your finances, will be one hell of a tick in the adulting box.
Because it doesn’t happen of its own accord…being good with money starts with actions, some of them surprisingly small.
You can get yourself on the right track with some of my suggestions below. Resolve to act in each area every month – a good time to get on top of things is Saturday morning, before the weekend madness gets well and truly underway. Even if it means getting up an hour earlier before bottomless brunch, you’ll step into your weekend feeling soooo good.
So here are 9 things to work on this year. Only some of these might be relevant to you, but I’ve helpfully put some emojis next to each point to indicate the real “must-dos” -❗- as opposed to the “next-levels” – 🤓 – and “great-to-haves” – 😀.
Here we go:
🤓 Save more for your first home
The Help to Buy Isa closes to new savers in November – if you’ve already got one, you might want to consider a switcheroo to the Lifetime Isa (unless you’re nearly there, in which case, keep on keeping on!) And if you don’t have the H2B Isa, but are saving for a home, you need to get on this, pronto.
The LISA is the new game in town for first-time buyers under 40, offering the same government bonus as Help to Buy (25 per cent) but a higher contribution cap of £4000 a year. It slots into your Isa allowance nicely and Newcastle Building Society currently offers the best cash rate at 1.1 per cent – beating Skipton and Nottingham by 0.1 per cent (ooooh!)
TBH, there has been about as much enthusiasm among banks/building societies for the cash LISA as there was for Ben Affleck becoming Batman. That’s saying something.
You’ll notice I talked about a “cash” LISA – there are two versions, but steer clear of the stocks and shares edition as it’s too risky to invest your home deposit.
Note there is a 25 per cent fee on money you withdraw prematurely, so you’ve gotta commit.
*CAVEAT KLAXON* – if you’re not sure about your circumstances for the forseeable future, please don’t beat yourself up about not being on the property ladder. I want 2019 to be the year we de-stigmatize millennial renters, once and for all. However, I would recommend saving money even if you’re not sure about your home buying situation. It doesn’t have to be a LISA (and it really shouldn’t be, if you’re not sure about buying) but saving means you’re keeping your options open.
❗Be an alert saver
Investing is a tricky business right now. With uncertainties about Brexit, the Eurozone AND Trump’s trade tantrum looming on the horizon, I completely get why people may want to stay in the safe zone of saving.
I still believe investment returns will beat savings rates in the long-term, as they have done historically, but of course nothing is certain. And you should keep your instant access pot topped up in case of emergencies. Don’t be daunted by the “three months of wages” rules – it’s fast losing traction as a measure of good savings resilience and ultimately anything in savings is better than nothing.
For anything NOT in an instant access account, get your savings game on point. Sign up for alerts from savingschampion.co.uk to find inflation-beating deals. Regular saver accounts and challenger banks are your best bets – though some current accounts do also pay juicy in-credit interest (borrowers need not apply – the overdrafts on those things will RUIN you).
❗Understand your workplace pension
Minimum payments into your workplace pension rise from 5 to 8 per cent in April, with at least 3 per cent coming from your employer and 5 per cent coming from you. I’d love to say this will get you the retirement of your dreams – but that would be a lie, and I only consciously fib about the number of units I consume when I see my doctor. The only remedy is to try and contribute more within the pension, or save outside it. Most people should stay in their schemes as they’re getting free from their employer AND tax relief.
But see if both you and your employer can chip in more. There is such a thing as “contribution matching”, offered by some bigger employers, and you should take advantage if they’re game. If you have already accrued a number of pots with different employers, you may want to consolidate them, but bear in mind that this will cost ya and there is no guarantee your current employer will be happy contributing into a different fund from the one they set up for ya. Hmm.
I’m sorry I can’t be more helpful on this point but it’s something I will cover in far more depth in my new crash course. For now, all you need to know is that the pension is there but ideally you shouldn’t be monogamous. A private pension or the LISA will both allow you to cheat on your workplace scheme but the PP won’t allow you to withdraw until 55, ditto with the LISA unless you’re happy to pay a whacking-great penalty, so these are only options if you have fatty cash savings and can afford the extra contributions.
🤓 Embrace open banking
Already using financial apps? Of course you are. You’re so millennial, baby! But actually, fintech is much more a minority sport among young people than we all think. That’s partly because open banking (which officially launched a year ago in the UK) hasn’t been readily adopted by the Statlers and Waldorfs of traditional banking. All that is changing in March. By then, it will be a legal requirement for your bank to offer “quick, seamless and frictionless” access to third party apps. So it will be far easier to log in, provide permissions and generally get on with the business of being an unbearably smug hipster git.
In all seriousness, open banking is, at the very least, a seriously intriguing new frontier for millennial finances. We’ll be covering the main bulwarks of this new revolution in our upcoming WTFintech? crash course but for now, it’s worth doing a deep dive on micro-investing, chat-bots, account sweepers and any other apps that could make your money life a bit easier – and dare I say fun?
❗Get tough on your outgoings
Raw Pixel (indeed!)
Since I started screening my bank account more rigorously in the past three or four months – let’s draw a veil over what happened before then, ahem – I have been shocked to see how many erroneous payments or zombie subscriptions I have lurking in my account. Shocked, I tell you! From the beauty service that charged me twice to the Netflix sub I thought I was sharing with my bro (no such luck!), this particular exercise has helped me see just how much gets sucked out of my account without me knowing it.
Now before you rush to cut up your gym membership card, bear in mind that it may not be possible to cancel a contract straightaway (unless it has been breached) but do note the expiry date in your calendar (Gmailers should get a Google Calendar, if they haven’t already! Boy has it been a game changer for me). Some subscriptions, like Netfllix, allow pauses so take advantage. Going to France to get a “I heart Macron” t-shirt (or gilet jaune?) before all the borders close and we drift off into the North Atlantic in late March? Try to plan ahead with your memberships and put them all on ice while you’re away.
😀 Reduce your waste
By the amazing Rachel Ignotofsky
Shops like Lush, Greggs and Pret a Manger offer discounts for refills – now I’m not suggesting you should go out of your way to get Vegan sausage rolls and oat milk lattes in order to save money, but carrying a reusable coffee cup at all times mean you can get a saving if you need to.
This year, I’m going to try and buy more ingredients in bulk – it can work out cheaper, but I’m mainly motivated by the environmental reasons. Zero waste stores offer this option, but a more solid and realistic bet is my local food market. It’s there, I do go sometimes but I’m going to make it 9 times in 10 – as opposed to 5 or 6.