Struggling to manage your finances? It’s all about having the right mindset and a clear strategy. Monica Bradley, Founder of award-winning mortgage broker MB Associates, explains how to get on top of your finances…
Some say money is the root of all evil, while others say it has changed their lives for the better. Money can cause turmoil if you don’t have enough of it, and happiness if you do have enough to splash out. It can’t necessarily make you happy in life, but it can certainly help you sleep at night.
Sadly, for many, money is a common source of stress. Research conducted in 2019 showed that 9.5 million people in the UK had mental health issues due to money worries. A survey by Salary Finance before the pandemic showed that 18 million adults worried about money every day.
How do financial attitudes differ between men and women? As women, we’re more likely than men to stick to a budget, according to research. Yet we don’t always feel confident with money. A 2015 study from Fidelity Investments found that 80 per cent of women refrain from discussing money with friends and colleagues. A study by UBS showed that 63 per cent of women admitted to deferring to their husbands when it came to long-term financial decisions.
Some 41 per cent of women are financially confident compared to 56 per cent of men. However, 92 per cent of women said they want to learn more about financial planning.
Once you start taking control of your finances you will feel more in control. Here’s my top tips for getting a grip on your finances:
• Have a long-term strategy. If you have a mortgage, have a plan for when and how you will pay it off. Are you going to move and downsize later? Do you have a pension and if so, will it meet your needs?
• Review your mortgage every two years. If you’re on a fixed rate term for two years, when you get to the end of that term you’ll be placed on the lender’s normal rate. This is likely to be higher than you’re currently paying. Give yourself plenty of time to shop around for a better deal. Speak to a mortgage broker who can help at least three months before your current deal is due to expire.
• When it comes to spending, ask yourself three key questions before you buy something. Do I really want it, do I need it, and will I use it?
• Only pay for items on your credit card if you know you’ll be able to pay off the balance at the end of the month.
• If you’re spending too much, figure out what triggers your spending. Do you buy things when you’re stressed or feeling low? Or do you buy items online when you’ve had a few drinks?
• Be aware of what you’re spending every month. Most people know what their mortgage and bills are but are less clear about their general spending habits.
You and your partner
If you live with someone, you may have different views on money. Unfortunately, the pandemic has created a significant financial pressure for many couples. Nine million people had borrowed more money by the end of last year according to figures from the Office for National Statistics. Self-employed people were most likely to have taken on loans above £1000 and 50 per cent of parents were less likely to be able to cover their usual expenses.
Even before the pandemic, money was a difficult topic for couples. Research conducted in 2017 by relationship charities Relate, Relationships Scotland and Marriage Care showed that money is the biggest strain on relationships. Over a quarter of UK adults said money was causing relationship problems.
It’s easy to see why. We often have an emotional relationship with money, and it can mean different things to different people. If you grew up in a household where money was in short supply, you may have learned to appreciate it more than someone who grew up where money was freely available.
How should you deal with money issues within a relationship? Follow these tips…
Talk freely about money
Learning not to have money as a taboo subject will strengthen your relationship. Bring it up and talk about it – don’t hide away from the subject.
Share the responsibility
Often in relationships, one person has the responsibility for money, but this is not healthy as it puts them under pressure and leaves the other person in the dark. Consider what would happen if the money manager became ill or passed away. It will benefit your relationship if you are equally responsible for managing your money, even if one person earns more than the other. You will feel better if you work as a team.
Talk about your buying choices
Decide where you are going to do the weekly shop, whether you can afford more expensive food brands or whether you need to buy cheaper ones. Make sure you both agree on it.
Try to understand your partner’s view
They may be cautious about spending than you. On the other hand, if they have never had to worry about money, they may not appreciate why your spending habits may be a bit more restrained. Communication is key.
Be prepared to save up for purchases
We live in a ‘now’ culture, where we want everything immediately and credit cards and loans make it all too easy to buy things right away. Saving up and having a financial target is a much more rewarding and sensible way of buying new items.
Make sure you’re financially protected
Consider taking out income protection or critical illness cover to protect you in the event of the unexpected happening. Income protection pays out a portion of your salary if you couldn’t work due to illness or injury, while critical illness pays out a tax-free lump sum on diagnosis of a serious illness.
More information
Monica Bradley is the founder and Managing Director of award-winning mortgage broker, MB Associates. Her company is based in Cheam, Surrey, and works with over 90 lenders to find the right mortgage product for her clients. For mortgage or financial protection advice, call her on 020 8652 5240 or email info@mbassociates.net. You can also visit the website at https://www.mbassociates.net/